OWA | Siemens raises prices unexpectedly, Invenergy offshore wind project 'fatal back stab'

U.S. developer Invenergy has applied to the New Jersey Public Utilities Commission (NJBPU) to suspend its 2.4GW Leading Light offshore wind project due to turbine supply issues, a decision that further highlights the challenges facing the U.S. offshore wind industry. Invenergy faced a double whammy after turbine supplier GE Vernova cancelled its planned 18MW model in favour of a 15.5MW model, while alternative supplier Siemens Gamesa significantly increased the price of its turbines.

Invenergy detailed its predicament in a filing to the NJBPU in July. The company had planned to use GE Vernova's Haliade-X platform 18MW turbines for the Leading Light project, but GE's decision forced Invenergy to re-evaluate its supplier options. Although Siemens Gamesa and Vestas also made offers, Vestas was ruled out for cost and technical reasons. Ultimately, Invenergy chose Siemens Gamesa as its second choice and submitted a bid for turbines based on Siemens Gamesa after GE canceled the 18MW model.

However, in June of this year, Siemens Gamesa informed Invenergy that the price of its turbines would increase significantly, making it difficult for Invenergy to find a suitable equipment solution. Invenergy noted in the filing that the changes resulted in it currently having "no viable equipment solution" for the Leading Light program, and requested a moratorium to allow more time to evaluate market options and identify alternatives.

Invenergy warned that if the suspension was not granted, the company would face "potentially unquantifiable economic losses" and "irreparable damages." In particular, in terms of project finance, Invenergy has committed to a number of large payments upon entry into force of the agreement, including a $105.25 million payment to the EEW Infrastructure Plant and a $120 million deposit. If these obligations are not met, the funds will be used to develop offshore wind infrastructure in New Jersey or returned to power customers.

It is worth mentioning that the feed-in tariff of the Leading Light project starts at $112.5 / MWH and has an annual index adjustment of 2.5%, which is much higher than that of similar projects. Earlier, Danish developer Orsted abandoned a number of projects in New Jersey due to financial pressure, which further affected the development of offshore wind in the state.

Invenergy is still in active discussions with suppliers such as GE and Siemens Gamesa to find suitable alternatives. The New Jersey state government is also closely monitoring the progress of the project and plans to achieve a target of 11GW of offshore wind by 2040. However, it is not clear when the suspension application for the Leading Light project will be approved by the NJBPU.

The incident not only sheds Light on Invenergy's struggles with Leading Light projects, but also once again highlights the supply chain and cost challenges facing the U.S. offshore wind industry. As the global demand for renewable energy increases, how to ensure a stable supply of turbines and reasonable costs will be key to the future development of the industry.