Vineyard Wind is in talks with U.S. tax officers about extending the federal Investment Tax Credit (ITC) for its delayed 800-megawatt offshore wind project south of Massachusetts.

Vineyard’s project, anticipated to be the primary large-scale offshore wind farm inbuilt U.S. waters, deliberate on securing its closing permits this summer time and wrapping up development in two phases over 2021-2022 — kick-starting the American offshore market within the course of.

Those plans hit a snag, nonetheless, when the federal authorities unexpectedly determined to conduct extra “cumulative impact” research on the now-large pipeline of initiatives shaping up alongside the East Coast, estimated at round 25 gigawatts and rising.

Vineyard now expects the federal government to challenge the findings of its extra research in a so-called Supplemental Environmental Impact Statement in late 2019 or early 2020, mentioned James Torgerson, CEO of Avangrid, which is one among two homeowners of Vineyard Wind alongside Copenhagen Infrastructure Partners.

A interval of public remark will observe, earlier than the Bureau of Ocean Energy Management points Vineyard’s closing environmental influence assertion and the project can proceed.

“Once the [supplemental EIS] is out there, we think that in a period of about a couple of months, BOEM should be able to issue the final environmental impact statement,” Alejandro de Hoz, head of Avangrid’s renewables unit, mentioned on an earnings name this week.

“Everything depends on when BOEM is ready to challenge that draft environmental influence assertion,” said de Hoz, who recently took the top job at Avangrid Renewables from the departing Laura Beane. “So this is actually the most critical part of the process and the one that is less clear in terms of timing.” 

A delay of six months or a 12 months could not sound like a lot for an trade that is simply getting began and anticipated to growth over the approaching many years. But Vineyard’s aggressive profitable bid for an offtake contract in Massachusetts final 12 months was predicated on maximizing the fading ITC — with the primary 400-megawatt section to be accomplished in 2021 on the 24 % ITC degree, adopted by the second section in 2022 on the 18 % ITC.

BOEM’s delay makes that schedule all however unimaginable, and longer delays might imply even larger challenges. While Vineyard’s shareholders have publicly affirmed their intention to construct the delayed project, suppliers have acknowledged that could mean financial pain.

Silver lining?

This week Torgerson confirmed Vineyard is pushing the Internal Revenue Service to increase the 24 % ITC to the primary 400-megawatt section even when it comes on-line later than deliberate. He additionally mentioned the delay might maintain a silver lining.

“Since the business case is being impacted by external delays, we are requesting an extension from the IRS for the originally planned ITCs of the project,” Torgerson informed analysts. “We’re petitioning the IRS to get an extension of that ITC at the 24 percent level…through the 2022 timeframe.”

The delay means Vineyard might be able to improve to longer rotor blades for its 9.5-megawatt MHI Vestas generators, Torgerson mentioned — leaping from a 164-meter rotor diameter as much as 174 meters. Longer blades imply extra electrical energy may be generated.

The delay may enable Vineyard to reconfigure the 84 generators in its project to an east-west structure, from the at the moment deliberate northwest-southeast orientation, whereas including a bit extra distance between the machines. Fishing teams and a few authorities businesses have reportedly pushed for these modifications, however Vineyard had resisted as a result of it will have meant delaying development for extra design and engineering work.

The east-west structure “is what the fishermen want, and that seems to be where things may be heading,” Torgerson mentioned. The extra distance between generators means “there’s less of a wake effect…and it improves the capacity factor a little.”

Rarely has a single project held such colossal significance for a brand new trade. 

In addition to providing the primary actual incentive for the availability chain to start contemplating localizing within the U.S., the surprisingly low value of Vineyard’s contract with Massachusetts opened the door to quite a few states following with their very own aggressive offshore wind targets and procurement applications.

Industry figures say the end result of BOEM’s deliberations might have a giant impact on a deliberate lease public sale for extra zones close to New York, more likely to occur in 2020.

This week Shell and EDP Renewables won Massachusetts’ second offshore wind tender, promising power at a good decrease fee than Vineyard whereas apparently planning to qualify for the 12 % ITC.

Avangrid’s massive shift towards solar

Avangrid is the third-largest proprietor of U.S. onshore wind capability, however like many wind builders it’s putting a much bigger emphasis on solar as of late — and, certainly, its pipeline of solar initiatives eclipsed onshore wind throughout the third quarter. 

Avangrid Renewables’ solar pipeline grew by practically 1 gigawatt throughout Q3 and now stands at 5.8 gigawatts, making it the most important technology share inside the firm’s big 16.5-gigawatt renewables pipeline.

In addition to its half stake in Vineyard Wind’s two initiatives in New England, Avangrid can be the only real proprietor of an offshore wind improvement zone going through North Carolina, the southernmost such zone in U.S. waters.

Avangrid, a big utility group based mostly within the Northeast, is majority owned by Spain’s Iberdrola, the world’s largest wind generator.

During the convention name, Torgerson declined to remark on a current press report that Avangrid is in merger talks with PPL Corp., one other U.S. utility group.

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