Electric customers across New England could be saddled with up to $500 million in additional annual supply costs if work does not resume on the nearly-completed Revolution Wind project, officials with Connecticut’s Department of Energy and Environmental Protection said.
Work on the wind farm — which is four-fifths of the way through construction off the coast of Rhode Island — was suddenly halted last month by the Trump administration, citing unspecified national security concerns.
The decision was roundly condemned by elected officials, labor unions, utilities, renewable energy advocates and the project developer, Ørsted. They said canceling Revolution Wind would result in job losses, reduced grid reliability and higher utility bills for customers who already pay some of the highest prices for electricity in the nation.
Revolution Wind was expected to produce up to 704 megawatts of electricity — about 2.5% of all the power generated across New England — once it began operating, which was projected for early next year.
While that electricity was to be sold through power purchase agreements with utilities in Connecticut and Rhode Island, the electricity itself would have been delivered onto the regional power grid that serves customers in all six New England states.
“This affordability impact is not limited to Connecticut or Rhode Island,” DEEP Commissioner Katie Dykes said in an interview last week. “It’s actually something that would increase the cost of energy, of electricity for businesses and residents across the entire New England region.”
According to the “rough” estimate Dykes shared, losing that supply would raise electric costs by up to half a billion dollars annually starting in 2028, an increase of between 5% and 7%.
In addition, the agency warned in a briefing that the loss of backup power provided by Revolution Wind would make the region more susceptible to rolling blackouts during periods of peak demand.
Dykes said DEEP’s estimate came from its analysis of the wholesale electricity markets, run by ISO New England, which ensure an adequate supply of power for the region. Power generators bid into those markets, and the ISO automatically selects the lowest-priced bidders needed to meet demand. The highest bid that‘s selected to clear demand is known as the “price setter,” as it establishes the price paid to all other selected generators regardless of their bids.
Because wind turbines can run at little to no cost, Dykes said projects like Revolution Wind tend to be among the first bids selected, driving down prices throughout the market.
The ISO operates both day-ahead energy markets and more forward-looking “capacity” markets that ensure enough generators are available during periods of peak demand, such as on hot summer days and during winter cold snaps. Capacity auctions are run three years ahead of time, which is why DEEP’s estimates begin in 2028.
In addition to the supply costs borne by residents across New England, DEEP also estimated that Revolution Wind’s power purchase agreement with Connecticut would save the state’s ratepayers $150 million to $200 million over the 20-year life of the contract.
Under that agreement, the state guaranteed Revolution Wind a price of $99 per megawatt for up to 304 megawatts of power. If that electricity and its associated renewable energy credits ended up being sold for less, utility customers would be obligated to make up the difference through a portion of the public benefits charge on their utility bills.
But if prices for the electricity and credits were higher than $99 per megawatt, customers would receive a credit back on their bills.
Dykes said Revolution Wind’s impact on the public benefits charge was likely to fluctuate over time, but she acknowledged that it could result in ratepayers being charged slightly more during the early years of the contract.
“The whole reason that we enter into this contract is because we want to see generation rates go down, right?” Dykes said. “The goal here is that we want to invest in resources, through these contracts… because we expect that they will generate more savings on the [supply] charge than the cost that would come into the public benefits charge.”
In a statement on Monday, a spokesman for Ørsted said the project’s contracted price would help “lower wholesale energy costs and stabilize prices for decades to come.”
A spokesperson for the U.S. Department of the Interior declined to comment on DEEP’s projections.
While ISO New England has not independently evaluated DEEP’s analysis or produced its own estimate for how much the loss of Revolution Wind would cost customers, the grid operator did release a statement last month saying that it has already planned for the project to come online starting next year.
“As we’ve noted, unpredictable risks and threats to resources that have made significant capital investments, secured necessary permits, and are close to completion will stifle future investments, increase costs to consumers, and undermine the power grid’s reliability and the region’s economy now and in the future,” ISO spokeswoman Mary Cate Colapietro said in an email.
Others, however, have expressed skepticism of the promises of savings from Revolution Wind and other offshore wind projects.
In a statement reacting to the Trump administration’s stop-work order, a group of Connecticut Senate Republicans said allowing Revolution Wind to come online would result in an increase in public benefits charges.
One of those lawmakers, state Sen. Ryan Fazio, R-Greenwich, called DEEP’s estimates “conjecture,” based on assumptions about the cost of energy, particularly natural gas, several years into the future. Fazio noted that the average day-ahead wholesale price of electricity in New England in 2024 was $41.47 a megawatt — much lower than the price of Revolution Wind’s contract.
“People can argue one way or another whether the deal will save or lose consumers money” over the next few decades, Fazio said in an email. “However, it is entirely unreasonable to say with high confidence that the Revolution Wind contract will save hundreds of millions of dollars in that time. There is no traded market or price for electricity in New England in 10 years time. The market only exists in the near term.”
In a speech in Washington, D.C., on Friday, U.S. Energy Secretary Chris Wright also blamed offshore wind projects for raising electricity prices while questioning their reliability. Wright, a former executive for a fracked-gas company, also dismissed the potential impacts of climate change in remarks that were rebutted by scientists and clean-energy advocates.
Neither of the state’s two largest electric utilities, Eversource and United Illuminating, would comment directly on DEEP’s cost projections.
However, Eversource spokesman William Hinkle expressed support for Revolution Wind’s completion in a statement Monday. The utility had previously partnered with Ørsted to develop the project, before selling its stake last year. Eversource was still involved in some of the onshore construction of transmission infrastructure for the wind farm at the time of the federal government’s order.
“This is an American project, supporting American jobs, and making sure Americans have reliable power, and it is absolutely essential for affordability, resilience, and reliability in New England,” Hinkle said.
Abe Silverman, a researcher with the Ralph O’Connor Sustainable Energy Institute at Johns Hopkins University, conducted his own analysis of Revolution Wind and similarly concluded that the project’s cancellation could end up costing ratepayers nearly half a billion dollars annually over the next several years.
Silverman said his estimates relied solely on calculating how much impact the additional supply of generating assets such as power plants and wind farms had on prices within ISO New England’s capacity markets. (DEEP, by contrast, based its estimates on both those forward-looking markets as well as the real-time cost of producing electricity.)
“For every additional megawatt of capacity available to the market, the price goes down a little bit,” Silverman said. “So if you have a lot of excess in the market, the price is really, really low. If you’re in shortage, the price is really, really high. At the simplest level, that’s what we’re talking about.”
Silverman cautioned that attempts to calculate the potential impact of the loss of Revolution Wind are complicated by a lack of information about what sources of power are next in line to fill the gap in the project’s output. If the new price-setting source — whatever it may be — is only slightly more costly than what it would have been in a scenario where the wind farm were producing power, he said the impact would be less.
Colapietro, the ISO New England spokeswoman, said in an email that the price of wholesale electricity is usually determined by the price of natural gas, which supplies most of the region’s power.
Many experts say the price of natural gas is inherently volatile — subject to a number of factors including foreign conflicts, pipeline capacity and even extreme weather. In New England, gas is also used to heat millions of homes during the winter and can lead to occasional shortages that cause electricity prices to spike.
Winter also happens to be the time of year when the winds off the Atlantic coast are blowing almost constantly, allowing wind farms to operate at or near their peak output.
A separate analysis performed earlier this year for RENEW Northeast, a clean energy trade group, found that having 3,500 megawatts of available offshore wind power — about five times the planned capacity of Revolution Wind — would have saved New England customers $400 million during the most recent winter, when generation costs rose to nearly $115 per megawatt.
Francis Pullaro, the president of RENEW Northeast, said that the group’s analysis was based on offshore wind prices in more recent power purchase agreements that were significantly higher than the $99-per-megawatt price Connecticut negotiated with Revolution Wind in 2018.
“We looked at prices that were almost double that, and we still found savings,” Pullaro said.
At other times of year, however, critics argue that offshore wind is more variable than traditional power plants, making it difficult to plan for those resources to be available when needed.
State Rep. Tracy Marra, R-Darien — who, with Fazio, serves as a ranking member of the legislature’s Energy and Technology Committee — said that DEEP’s analysis appeared to her to be based on an overly-optimistic expectation for how much power Revolution Wind could produce. “I would be interested in seeing if anybody else could possibly back those numbers up outside of the state of Connecticut and their assumptions,” Marra said.
Still, Marra said she’s not opposed to offshore wind, and she echoed the concerns of DEEP and others who said the Trump administration’s stop-work order could stifle further investment in the region.
“I have some issues with the federal government stopping a project that is mostly complete,” Marra said. “I do have issues with that.”
Currently in New England, there are no plans in place to build any new natural gas plants or other large-scale generating facilities that could take the place of a large wind farm such as Revolution Wind, according to Dan Dolan, the president of the New England Power Generators Association, an industry trade group.
While Dolan declined to weigh in directly on DEEP’s analysis, he noted that Revolution Wind had already successfully navigated the time-consuming and costly process of getting state and federal approvals before beginning construction.
“No large-scale energy infrastructure is cheap,” Dolan said. “These are multi-billion dollar projects, and so alignment in the financial markets, making sure you’ve got the right debt and equity structure that you can bring this to the market, is critical.”
Dykes also noted that the price for Revolution Wind’s power has remained the same throughout the construction process, despite wider economic challenges that have led other wind developers to attempt to renegotiate their agreements.
“Ørsted has not requested any increases to the contract cost,” Dykes said. “They’ve stood by their commitment to deliver this project under the terms that they agreed to.”
This story was originally published in the Connecticut Mirror.
