Contract Dispute Threatens Future of Vineyard Wind Offshore Windfarm

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Written by Eric Funderburk for IIR News Intelligence (Sugar Land, Texas)

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Summary

U.S. offshore wind developer Vineyard Wind is suing GE Renewables to keep it from backing out of a supply and maintenance contract that affects the future of the project.

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Blade Failure & Construction Delays

The Vineyard offshore windfarm off the coast of Nantucket--like other offshore windfarms in U.S. waters--has been plagued by headwinds. A blade on one of its installed turbines broke and fell into the sea in July 2024, causing substantial debris to wash up on Nantucket beaches at the height of tourist season and leading to a stop-work on the 800-megawatt (MW) project. According to Industrial Info Resources data, all of the turbines have been installed and completed, but the windfarm is still in the commissioning phase and not supplying full power. Subscribers to Industrial Info Resources' Global Market Intelligence (GMI) Power Project Database can learn more by viewing the project report.

That blade failure, which prompted a stop-work order of around six months and the replacement of 68 installed blades that had come from the same factory, has prompted Vineyard Wind to withhold funds from GE Vernova for damages incurred from the delay.

This withholding of funds has prompted GE Vernova to attempt to back out of its contract with Vineyard, which involves ongoing and future service and maintenance for the turbines' operation and, essentially, most of the tools and manpower needed to ensure delivery of power from the windfarm.

Dire Warnings

The dispute has had a lingering development that grew from the initial days of the project. This came to the fore in late February, when GE notified Vineyard that it was exercising its rights to back out of the contract due to nonpayment of more than $300 million. In its defense, Vineyard Wind claims that as within its rights under the contract, it has withheld the money because of the delays.

Executives from both companies have attempted to reach a resolution, but with nothing coming, Vineyard has launched a lawsuit to prevent GE's departure from the project, insisting that GE's continued involvement is critical to the project and its withdrawal would leave what Vineyard attorneys described as "a dormant wind farm graveyard."

Vineyard attorneys wrote "Only GER [GE Renewables] is able to perform the remaining work necessary to bring the performance of the GER turbines up to the capacity and reliability standards required for Vineyard Wind to supply power to Massachusetts consumers. Even if it were doable, however, it will be virtually impossible to find a turbine supplier that would be willing to take GER's place." The filing implied that the turbines are still under the purview of GE and not Vineyard, suggesting GE has not completed its job: "Not one of the 62 GER (turbines) has yet met the contractual requirements for Vineyard Wind taking them over, the line demarcating the construction and operation phases," the Vineyard complaint said.

Vineyard claimed that if the project is not fully commissioned and operational soon, it could prompt a default on loans secured for the project, leading to foreclosure. "Such an event would threaten the financial viability of the entire Project and, consequently, Vineyard Wind's ability to survive, depriving the ratepayers of Massachusetts of low-cost renewable energy," the company stated.

The heart of the issue is whether Vineyard Wind is within its rights to withhold $308 million from GE Renewables, which is prompting the turbine-maker to justify its contract exit. A judge has scheduled a hearing on April 16 on whether to issue a preliminary injunction on GE's withdrawal, which has prompted GE to state, "We will vigorously defend our position through the appropriate legal process."

Other U.S. Offshore Windfarms

Industrial Info Resources is tracking four other major U.S. offshore windfarms in various phases of construction and commissioning. Like Vineyard Wind, which is a joint venture of Spain's Iberdrola and Denmark's Copenhagen Infrastructure Partners, these primarily are headed up by Europe-based developers. Other offshore windfarms under construction in U.S. waters include:

• The 704-MW Block Island Windfarm being developed by Denmark's Orsted off the coast Rhode Island. According to Industrial Info Resources data, this should wrap construction and enter commissioning later this year. Subscribers can click here to learn more about the project.
• The 880-MW Sunrise offshore windfarm off the coast of Long Island, also being developed by Orsted. According to Industrial Info Resources data, construction should finish up toward the end of this year. Click here to see the project report.
• The Empire Wind 1 offshore wind project being developed by Norway's Equinor. According to Industrial Info Resources data, construction of this 816-MW facility should be completed next year. Subscribers can learn more by viewing the related project reports.
• Virginia-based Dominion Energy's Coastal Virginia Offshore Windfarm, which at 2,600 MW is the largest under construction. According to Industrial Info Resources data, this windfarm also is on track to be completed next year. Click here to see the project report.

Key Takeaways

• Vineyard Wind has filed a lawsuit to prevent GE Renewables' exit from the Vineyard Wind offshore wind project, which is in the late stages of commissioning.
• GE's exit was prompted be Vineyard's withholding more than $300 million in payment, which Vineyard says it within its right due to construction delays caused by a catastrophic blade failure on one of the installed turbines.
• The windfarm is generating partial power.
• A judge has set an April 16 date for a hearing on the matter.
• Vineyard insists GE's exit would be detrimental to the completion of the project and its continued operations.

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About Industrial Info Resources
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, Industrial Info Resources is tracking over 250,000 current and future projects worth $30.2 trillion (USD).