Avangrid's 8-GW offshore Vineyard Wind project appears on track to be the first large-scale US offshore wind farm, with the developer expecting a final investment decision in the second half of 2021 and start generation in 2023, executives said May 4.
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Avangrid's 23-GW pipeline of renewable energy projects and "leadership in offshore wind will drive significant growth opportunities supported by favorable federal policies and strong demand for clean energy," Dennis Arriola, the company's CEO said during its first-quarter 2021 earnings conference call.
Avangrid is "pioneering the US offshore wind industry" starting with the first large-scale offshore wind project in the US, the Vineyard Wind 1 installation off the Massachusetts coast, Arriola said. Avangrid is owned by Spain's Iberdrola.
The total lease area represents as much as 7.5 GW of offshore wind capacity in the northeast and mid-Atlantic including the 1.6 GW that has already been contracted, he said, adding the utility expects its offshore wind investments to start delivering "growth and financial results" beginning in 2024 and 2025.
The federal Bureau of Ocean Energy Management issued Vineyard Wind's final environmental impact statement in March and a record of decision from the agency is expected "very soon" in May, while financial close is expected in Q2 2021, with full commercial operation in 2024, Arriola said.
First power generation from Vineyard is expected in 2023, according to Avangrid's investor presentation. The project is a joint venture between Avangrid Renewables, a subsidiary of Spain's AVANGRID, and Denmark's Copenhagen Infrastructure Partners.
The US currently has a 30-MW offshore wind project operating in state waters off Rhode Island and a 12-MW pilot project in federal waters offshore Virginia.
All major Vineyard Wind construction contracts with suppliers and contractors have been secured and the utility is finalizing the "evaluation of optimal financing structures" including tax equity and project financing, Arriola said.
The 804-MW Park City Wind offshore project that has power purchase agreements with Connecticut utility offtakers is on schedule for commercial operations to start in 2025 and the 2,500-MW Kitty Hawk offshore wind project that would supply power to North Carolina and Virginia is expected to start up "post 2025," according to the presentation.
Arriola said Massachusetts is expected to conduct an offshore wind lease auction this year for 1.6 GW of demand followed by more than 3 GW expected in Rhode Island, New York and Connecticut starting in 2022.
BOEM plans to conduct a federal waters lease auction in the New York Bight region between Long Island and the New Jersey coast in late 2021 or early 2022.
Regarding onshore renewable energy development, Avangrid in 2021 commissioned the first PPA of its 300 MW La Joya Wind Farm in New Mexico and expects to commission the second PPA in May, Arriola said.
The utility has an additional 1.3 GW of projects under construction in 2021 and 2022, consisting of about 390 MW of wind and roughly 915 MW of solar capacity. Approximately 690 MW of the 1.3 GW are currently under construction across the US.
"As we learn more about President Biden's ambitious clean energy goals, I believe Avangrid is in the sweet spot to help lead the clean and connected energy transition in this country," Arriola said.
Biden recently committed to reducing carbon dioxide emissions by 50%-52% by 2030 relative to 2005 levels which aligns with the administration's target to decarbonize the US power sector by 2035, according to the presentation.
This is a "cornerstone" of the administration's $2.3 trillion infrastructure plan, including a $100 billion plan to upgrade and buildout the country's aging power transmission system, Arriola said. Biden has also set a goal for 30 GW of offshore wind power capacity by 2030, he added.
"These definitely are exciting times in our sector and Avangrid is poised to play an important role in leading the clean energy transition," Arriola said.
Avangrid reported consolidated US generally accepted accounting practice net income of $334 million, or $1.08/share, for Q1 2021, compared to $240 million, or 78 cents/share for Q1 2020.