Avangrid Receives Full Federal Approval for Construction of New England Wind Offshore Projects

Rhea-AI Summary

Avangrid (NYSE: AGR) has received full federal approval for its New England Wind 1 and 2 offshore projects' Construction and Operations Plan (COP), completing most of the permitting process. The New England Wind 1 project, expected to begin construction in 2025, will generate 791 megawatts of clean energy, powering nearly 1 million homes. This initiative promises thousands of job opportunities and significant local investments. The COP approval follows extensive stakeholder engagement and rigorous reviews by the Bureau of Ocean Energy Management. Avangrid is also advancing the Vineyard Wind 1 project, contributing to Massachusetts' clean energy goals by generating power for 64,000 homes.

Positive

• Full federal approval received for New England Wind 1 and 2 projects.
• New England Wind 1 to begin construction in 2025, delivering 791 megawatts of clean energy.
• Projects expected to create thousands of jobs and significant local investments.
• Vineyard Wind 1 project contributing to Massachusetts' clean energy by powering 64,000 homes.

Negative

• None

Insights

Energy Market Analyst

Avangrid's recent federal approval for the Construction and Operations Plan (COP) of its New England Wind 1 and 2 offshore projects marks a significant step forward for the company and the broader renewable energy sector. This represents a critical regulatory milestone, allowing the company to proceed with construction groundwork as early as 2025.

From an investor's perspective, the federal approval is noteworthy because it greatly reduces regulatory risk, a major concern in the energy sector. The COP approval comes after extensive stakeholder engagement and environmental reviews, which adds a layer of credibility and reduces the possibility of future legal challenges. This green light also means that Avangrid can further its advantage as a leader in the renewable energy space, potentially securing more favorable contracts and partnerships.

It's important to note that offshore wind projects typically have long lead times and significant upfront capital expenditure. However, once operational, they tend to deliver stable and predictable returns due to long-term power purchase agreements (PPAs) with utility companies. In this case, New England Wind 1 alone is poised to deliver clean energy to nearly 1 million homes and businesses, creating a steady revenue stream for years to come.

Environmental Economist

The approval of the New England Wind projects highlights a significant investment in renewable energy infrastructure. The environmental benefits are substantial; the projects are expected to reduce carbon dioxide emissions by nearly 4 million US tons annually. This equates to taking approximately 700,000 cars off the road each year, a substantial contribution to climate change mitigation efforts.

Further, the inclusion of local communities and stakeholders in the planning and approval process aligns well with sustainable development goals. The projects promise to inject $8 billion in direct investment and create up to 9,200 full-time equivalent jobs. This is particularly meaningful for regions like New Bedford and Bridgeport, which stand to benefit from increased economic activity and job creation.

However, investors should be aware that large-scale projects like these often encounter delays and cost overruns. While the federal approval reduces regulatory risk, logistical and environmental challenges could still impact timelines and budgets. Investors must weigh these potential hurdles against the long-term environmental and economic benefits.

Financial Analyst

For retail investors, Avangrid's COP approval for the New England Wind projects could have several financial implications. The company's stock may see a positive bump owing to the reduced regulatory risks and the green light to move forward with construction. Importantly, the execution of the Large Generator Interconnection Agreement and supply chain contracts further solidify the project's credibility.

From a financial perspective, the project aligns with the broader market trend toward sustainable investments. ESG (Environmental, Social, Governance) factors are increasingly influencing investment decisions and companies like Avangrid that demonstrate strong commitments to renewable energy are well-positioned to attract ESG-focused capital.

However, investors should remain cautious about the high capital expenditure associated with offshore wind projects. These investments are capital-intensive and have long payback periods. While the long-term contracts provide revenue stability, the initial financial burden should not be underestimated. The project's success will also depend on efficient project management to avoid delays and cost overruns, common issues in large infrastructure projects.

Federal approval of Construction and Operations Plan positions New England Wind 1 to start construction as soon as 2025

BOSTON--(BUSINESS WIRE)-- Avangrid, Inc. (NYSE: AGR), a leading sustainable energy company and member of the Iberdrola Group, today announced that it has received full federal approval of the Construction and Operations Plan (COP) for the New England Wind 1 and 2 offshore projects. The approval of the COP follows the favorable Record of Decision (ROD) issued by the Biden Administration in April 2024. The approval represents a critical milestone, and largely completes the federal, state, and local permitting process for Avangrid’s 791 Megawatt New England Wind 1 project. The approval of the COP by the Bureau of Ocean Energy Management comes after years of robust stakeholder engagement with Tribal Nations, members of local residential and fishing communities, and other ocean users. The New England Wind 1 and New England Wind 2 projects have the potential to create thousands of jobs and provide enough clean, reliable energy to power nearly 1 million homes and businesses in the region. As the leading offshore wind developer in the United States, Avangrid is spearheading the development of the first-in-the-nation Vineyard Wind 1 project, currently under construction and delivering clean, reliable power to 64,000 homes and businesses in Massachusetts.

A GE Haliade-X Turbine Stands in the Vineyard Wind 1 Project Area South of Martha’s Vineyard. Photo Credit: Eric Haynes

“Completing the federal permitting program for New England Wind is a remarkable achievement made possible by diligence of our team, the engagement of our stakeholders, and the thorough and rigorous review from our federal partners,” said Avangrid CEO Pedro Azagra. “Building offshore wind infrastructure is a complex and unique endeavor, and rightly held to a high regulatory standard. The approval of our COP reflects the depth of our expertise, our exhaustive and detailed planning, and our ability to deliver these critical projects. By securing all federal, state, regional, and local permits, New England Wind 1 has the potential to put shovels in the ground next year and deliver thousands of jobs, local investment, and needed clean energy before the end of the decade.”

On March 27, 2024, Avangrid submitted multiple proposals for the New England Wind projects to the Massachusetts-Rhode Island-Connecticut Multi-State Procurement for Offshore Wind. The states are anticipated to announce selected projects from the competitive procurement in August 2024. New England Wind 1 is the only project in the solicitation that has all federal, state, and local permits; the ability to start construction in 2025; and deliver power by 2029.

The COP approval comes after years of analysis of potential environmental impacts and benefits of Avangrid’s construction, operation, and conceptual decommissioning plans by BOEM. Stakeholder engagement for this critical environmental review included three virtual public meetings hosted by BOEM to solicit additional feedback on the Draft Environmental Impact Statement (DEIS) published in late December 2023 and consideration of over 750 comments received from the public. BOEM’s responded to all comments received in the Final Environmental Impact Statement (FEIS), recently published on February 26, 2024. The DEIS, FEIS, and ROD are available on BOEM’s website. Avangrid anticipates receiving a final Letter of Authorization from the National Marine Fisheries Service on or around July 22, 2024.

New England Wind 1 is an exceptionally advanced and shovel-ready project in federal lease area OCS-A 0534, roughly 30 miles south of Barnstable, Massachusetts and making landfall under the Craigville Beach parking lot. The project will border Vineyard Wind 1 to the south.

New England Wind 1 has achieved numerous critical milestones that position the project to start construction next year:

• Secured full federal approval with the Record of Decision and Construction and Operations Plans
• Completed the state and local permitting process
• Completed the interconnection process and signed the Large Generator Interconnection Agreement
• Executed a Host Community Agreement with the Town of Barnstable for the cable landing at Craigville Beach
• Supported the construction and energization of phase one grid upgrades through a Transmission Support Agreement
• Finalized design and engineering
• Signed a Project Labor Agreement (PLA) with the Massachusetts Building Trades Council
• Secured contracts for major portions of the Supply Chain
• Executed a lease agreement with Crowley to advance the construction of and utilize the Salem marshaling port
• Executed agreements to locate O&M facilities in New Bedford and Bridgeport
• Executed a partnership agreement with Liftra to bring the first crane manufacturing facility to New Bedford
• Proposed $50 million in investments for local workforce and supply chain development, environmental conservation and monitoring, investments benefitting fisheries stakeholders, low-income ratepayers and energy justice communities.
• Executed a first-of-its-kind agreement with City of Boston to provide 15 MW of offshore wind energy
• Executed an agreement to provide offshore wind energy to 20 municipal electric companies in Massachusetts
• Proposed the construction of an offshore wind training hub with Survival Systems USA at the Port of Davisville in North Kingstown, Rhode Island.

The New England Wind lease area is projected to reduce carbon dioxide emissions by nearly 4 million US tons, or the equivalent of taking approximately 700,000 cars off the road each year during the lifespan of the project. Combined, the projects will create up to 9,200 full-time equivalent jobs and bring $8 billion in direct investment to the region.

On June 26, 2024, Avangrid announced that it has placed 10 turbines into production for the nation-leading Vineyard Wind 1 project, making Vineyard Wind 1 largest operating offshore wind farm in United States.

Vineyard Wind began offshore construction in late 2022, achieved steel-in-the-water in June 2023, and completed the nation’s first offshore substation in July 2023. Construction flows through the New Bedford Marine Commerce Terminal. In July 2021, Vineyard Wind signed the first Project Labor Agreement for an offshore wind project in the United States, which outlined the creation of 500 union jobs through the project. In December 2023, project shareholders announced that Vineyard Wind 1 has delivered nearly double of its commitment through the PLA by creating 937 union jobs through two years of construction.

An 806-megawatt project located 15 miles off the coast of Martha’s Vineyard, Vineyard Wind will generate electricity for more than 400,000 homes and businesses in the Commonwealth of Massachusetts, create 3,600 Full Time Equivalent (FTE) job years, save customers $1.4 billion over the first 20 years of operation, and is expected to reduce carbon emissions by more than 1.6 million metric tons per year, the equivalent of taking 325,000 cars off the road annually.

About Avangrid: Avangrid, Inc. (NYSE: AGR) aspires to be the leading sustainable energy company in the United States. Headquartered in Orange, CT with approximately $45 billion in assets and operations in 24 U.S. states, Avangrid has two primary lines of business: networks and renewables. Through its networks business, Avangrid owns and operates eight electric and natural gas utilities, serving more than 3.3 million customers in New York and New England. Through its renewables business, Avangrid owns and operates a portfolio of renewable energy generation facilities across the United States. Avangrid employs approximately 8,000 people and has been recognized by JUST Capital as one of the JUST 100 companies – a ranking of America’s best corporate citizens – in 2024 for the fourth consecutive year. In 2024, Avangrid ranked first among utilities and 12 overall. The company supports the U.N.’s Sustainable Development Goals and was named among the World’s Most Ethical Companies in 2024 for the sixth consecutive year by the Ethisphere Institute. Avangrid is a member of the group of companies controlled by Iberdrola, S.A. For more information, visit www.avangrid.com.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240701953952/en/

Media Contacts:



Avangrid

Craig Gilvarg

craig.gilvarg@avangrid.com

(857) 998-1130

Source: AVANGRID, Inc.

FAQ

What recent approval did Avangrid (AGR) receive for its New England Wind projects?

Avangrid received full federal approval for the Construction and Operations Plan (COP) for the New England Wind 1 and 2 offshore projects.

When is construction expected to start for the New England Wind 1 project?

Construction for the New England Wind 1 project is expected to start in 2025.

How much energy will the New England Wind 1 project generate?

The New England Wind 1 project will generate 791 megawatts of clean energy.

How many homes will benefit from the clean energy produced by New England Wind 1?

The clean energy produced by New England Wind 1 will power nearly 1 million homes.

What is the significance of the Vineyard Wind 1 project for Massachusetts?

The Vineyard Wind 1 project, currently under construction, will generate power for 64,000 homes in Massachusetts.