Connecticut pier near complete; first windmill shipment heads offshore

Overdue and over budget, a project to redevelop Connecticut’s New London Pier into an offshore wind energy hub for projects along the Atlantic coast is nearly complete. Its first shipments, components for a project in the Long Island Sound, are set to leave port early Tuesday.

Launched in 2020 with an original price tag of $93 million, the New London State Pier project sought to retrofit the pier for use as a staging and shipping area for windmill components headed for offshore ventures across the Atlantic Seaboard. 

Several components for the South Fork offshore wind project in New York’s Long Island Sound that arrived at New London’s Pier over the preceding months will be moved onto to ships and out of port by midnight as the pier officially moves “from construction to operations,” said Ulysses Hammond, interim director of the Connecticut Port Authority.

“The barge has been loaded with three blades, a nacelle, and four tower sections and will be heading to the installation site 35 miles northeast of Montauk Point, Long Island, N.Y.,” Hammond told The Bond Buyer.

“This marks the beginning of what is expected to be the first large-scale wind farm completed in America, thus an exciting and historic moment for Connecticut and our nation,” he added.

It took more time and money than expected to get to this point.

Driven by inflation, tightened supply chains, labor costs and increased competition in the industry, the pier project’s price ballooned to $309 million from the original estimates.

Private partners covered a third of the whole project while some of the cost overruns were covered by the state through additional influxes of bonds, including a Connecticut Bond Commission-approved $20 million in May 2022 and $30 million in June.

The project was also helped to completion by a portion of the proceeds of four 2021 issuances by the Port Authority that totaled $63 million, as well as federal funding that included a $7 million port development grant from U.S. Department of Transportation in 2022.

The project earned the ire of local officials and lawmakers who questioned aspects of the financial arrangement, which originally saw the project’s private partners pay out $75 million to cover a majority of the originally estimated $93 million.

Today, 93% of the work is complete and no further cost overruns are expected, said Marlin Peterson, the project’s construction manager.

“We do anticipate a resolution of punch list items and other activities related to closeout, as well as the demobilization of the contractors, offices, plants and equipment will continue into early 2024,” Peterson said at the CPA’s Oct. 17 board of directors meeting. 

While the pier’s opening may be seen as good news for the state’s development efforts by some, it comes at a difficult time for the offshore industry in general. Offshore wind energy development costs have risen sharply as of late, driven by inflation, tightened supply chains, labor costs, causing the cancellation or reevaluation of major projects across the nation.

Increased competition has also become a challenging factor.

Efforts to develop the U.S. offshore wind industry, have been fueled by state regulations opening up legal avenues for new development and the implementation of federal incentives, including an investment tax credit of 30% included in the Inflation Reduction Act, in an effort to incentivize carbon-free electricity generation.

The U.S. Department of Energy reported that 22% of new electricity capacity installed in the United States in 2022 was wind, second only to solar. The industry drew $12 billion of capital investments and employed more than 125,000 people nationwide in 2022, according to the DOE.

The new reality has caused the cancellation or rollback of several major projects currently underway, including Connecticut’s biggest offshore wind project, Park City Wind, whose primary backer, Electric utility Avangrid, is seeking cancellation of its contract with the state.

In the face of rising prices, Connecticut, Rhode Island and Massachusetts earlier this month formed a first-of-its kind, multi-state joint venture, which officials hope will help reduce costs through development at scale and help keep the region ahead of growing competition on offshore development.

According to that agreement, states will begin separately accepting and reviewing proposals from offshore wind developers for multi-state projects sometime within the next year.

Combined, Connecticut, Rhode Island, and Massachusetts are seeking to produce up to 6,000 MW of offshore wind, enough to power nearly 4 million homes, with their first round of proposals.