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Vineyard eyes faster timeline for largest US offshore wind farm

Avangrid-backed developer has chosen preferred offshore substation supplier for 800MW Massachusetts project

Developer Vineyard Wind is considering pulling forward the timeline for its 800MW Massachusetts offshore wind farm, potentially completing the full project in 2021, as major equipment orders fall into place.

Vineyard, which secured a contract to sell 800MW of output from its zone south of Massachusetts last year, is racing to pull the project together quickly, with an eye to securing as large a chunk as possible of the fading federal investment tax credit (ITC).

Vineyard’s pioneering project has faced challenges recently, including the longest-ever shutdown of the federal US government and pushback from some local fishing groups.

But James Torgerson, chief executive of Avangrid, owner of Vineyard Wind alongside Copenhagen Infrastructure Partners, says the project remains on schedule – and may be finished sooner than anticipated.

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The first 400MW phase remains on track for completion by the end of 2021, and the second 400MW phase in 2022, Torgerson said Wednesday on an investor call. “We’re looking to see if we can accelerate to see if we get everything in in 2021,” he added. “That’s still a work in progress.”

While such a timeline would not be unheard of in Europe, where the construction of large offshore farms has become much more efficient in recent years, the US remains uncharted territory for such a large project.

Torgerson revealed that Vineyard recently signed a preferred supplier agreement for the project's offshore substation, without disclosing the supplier. In Europe, such orders have often gone to Siemens of Germany or the power grids business of ABB, recently acquired by Hitachi.

In late 2018 Vineyard awarded the turbine supply contract to Denmark’s MHI Vestas, which will deliver 84 of its V164-9.5MW machines – a huge order for any market, let alone the US, where just 30MW of offshore wind is in operation today.

Vineyard expects all of its long-lead-time equipment orders to be finalised this year, and project construction to begin in 2020. The Port of New Bedford in Massachusetts will serve as the project’s central onshore staging ground.

Vineyard is already moving beyond its first 800MW project, recently securing the rights to a second lease area south of Massachusetts with a record $135m bid.

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The developer submitted project bids from that new zone into New York’s current offshore wind solicitation. One of those bids is for a 1.2GW version of the Liberty Wind project, which would be one of the world’s largest offshore wind farms. If selected, that project would be completed around 2026, Avangrid says.

Vineyard committed to buying foundation components for Liberty Wind from a facility along the Hudson River in New York state.

Disappointing onshore wind conditions

After several years of weaker-than-expected wind conditions onshore, Avangrid, among the largest owners of US wind capacity, announced a new forecasting method for its vast fleet of existing wind farms – as well as a software boost to squeeze more out of its turbines.

In 2018, “below normal” wind conditions knocked 10 cents off Avangrid’s earnings per share of $1.92, the company says.

Avangrid had been relying on average wind farm output data from the 2011-14 period for its future projections, but going forward it will switch to a broader “life-to-date” methodology, a shift that will lower its forecasts.

The switch resulted in an 8 cent reduction in the company’s earnings-per-share guidance for 2019.

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To help offset the lower wind speeds, Avangrid added “wind boost software” across 1.7GW of its operating fleet in the fourth quarter, and the software rollout continues, Torgerson says.

Avangrid is the owner of a group of US utilities as well as its Portland, Oregon-based Avangrid Renewables unit, one of the country’s most important wind developers and a growing player in solar.

Avangrid’s largest shareholder is Spain’s Iberdrola, one of the world’s leading renewables operators.

Like many wind developers, Avangrid is racing to take advantage of the fading US production tax credit, with roughly 1GW of onshore wind under construction and expected on line in 2019.

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