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HomeMy WebLinkAboutKarcomment letter Schulte FW_ NOI - Park City Wind (8_30_23 News Articles Regarding Troubles in Offshore Wind Industry)From: Karle, Darcy Sent: Thursday, August 31, 2023 7:54 AM To: Cavanaugh, Kimberly Subject: comment leer Schulte FW: NOI - Park City Wind (8/30/23 News Arcles Regarding Troubles in Offshore Wind Industry) Good morning Kim, Please forward this comment leer to the Commission and copy the file for Park City Wind. Thank you From: Bob Schulte [mailto:bob.a.schulte@gmail.com] Sent: Wednesday, August 30, 2023 8:29 PM To: Ells, Mark; Tracy Shaughnessy; Jessica Rapp Grassetti; Eric Steinhilber; Precinct3 Ludtke; Paula Schnepp; Paul Neary; Matthew Levesque (matthewlevesque02648@gmail.com); Kristine Clark; Gordon Starr; Jeffrey Mendes; Nikolas Atsalis; Jen Cullum; Paul Cusack Cc: Lovell, Cynthia; Karle, Darcy; tomfplee@gmail.com; Bob Schulte Subject: Fwd: NOI - Park City Wind (8/30/23 News Articles Regarding Troubles in Offshore Wind Industry) All, I am forwarding you an email which I sent to the Barnstable Conservation Commission (BCC) care of Tom Lee and Darcy Karle and ask that you please take the time to read it. I requested Ms. Karle and Mr. Lee forward my email to all BCC members and post it to the NOI - Park City Wind Comments file. As my email was sent several days before the 8 hour cutoff requested by the BCC for comments, I trust my request will be completed well in advance of the 9/5/23 meeting at 6:30 pm. Regards, Bob Schulte Centerville, MA ---------- Forwarded message --------- From: Bob Schulte <bob.a.schulte@gmail.com> Date: Wed, Aug 30, 2023 at 4:20 PM Subject: NOI - Park City Wind (8/30/23 News Articles Regarding Troubles in Offshore Wind Industry) To: Karle, Darcy <darcy.karle@town.barnstable.ma.us>, <tomfplee@gmail.com> Cc: Swails-McCarron, Heather <hmccarron@capecodonline.com>, Bob Schulte <bob.a.schulte@gmail.com> Dear Ms. Karle and Mr. Lee, I ask that you please: 1) forward this email to all of the Commissioners' individual email addresses, and 2) add it to the comments folder for the Continued NOI - Craigville Beach and 2 Short Beach Road, Centerville - Park City Wind, LLC. I believe the Commissioners will find the two articles included below of significant interest. If they don't, then the public deserves an explanation on 9/5/23 as to why the financial uncertainties/risks being faced by the applicant, Avangrid, and its proposed Park City Wind project aren't relevant to the decision(s) to be made by the BCC. As the CEO of Orsted is quoted in the Bloomberg article (8/30/23), the "situation in U.S. offshore wind is severe''. If Orsted, the largest player in offshore wind development, is experiencing such serious financial difficulties, can Avangird and its proposed Park City Wind project be far behind? As the Commissioners are no doubt already aware, Avangrid announced last fall that the Park City Wind project was no longer financialy viable and has since been trying to renegotiate the project's Power Purchase Agreements with the CT utilities and Public Utilities Regulatory Authority (PURA). Does the BCC really want to approve a project that either never ends up getting built, or even worse, starts trenching/digging under Craigville Beach, the Centerville River, and the streets of Centerville only to get abandoned by a Limited Liability Company that runs out of money or files bankruptcy? In my opinion, the financial uncertainties surrrounding the offshore wind industry in general and the Park City Wind project in specific must be considered by the BCC. To do otherwise, would simply be looking at this project in a vaccum and not considering all relevant facts. Regards, Bob Schulte Centerville, MA cc: Heather McCarron, Cape Cod Times https://news.yahoo.com/finance/news/orsted-shares-plunge-company-warns-101633418.html Orsted Shares Plunge as Company Warns of $2.3 Billion US Hit · Interest rates, tax credit talks add to potential impairments · Wind developer ’s stock price falls the most on record (Bloomberg) 30 August 2023 -- Orsted A/S shares plunged the most on record after the renewable energy company warned of impairments of as much as 16 billion Danish kroner ($2.3 billion) to its US portfolio because of supply chain issues and soaring interest rates. The drop of as much as 23% was the steepest since the company’s 2016 initial public offering and erased the equivalent of about $7 billion in market value. It’s a further blow to the offshore wind industry struggling with soaring materials costs. The company’s Ocean Wind 1, Sunrise Wind, and Revolution Wind projects in the US are being hurt by supplier delays, which could lead to writedowns of up to 5 billion kroner, it said late Tuesday. High interest rates could also add another 5 billion. In addition, the developer is still in talks with federal stakeholders to qualify for additional tax credits, which haven’t progressed as expected. If unsuccessful, it could lead to impairments of as much as 6 billion kroner. “While the bulls could argue many of these issues related to the impairment are already known, the announcement is unlikely to bode well for an already-weakened Orsted share price,” Citigroup Inc. analyst Jenny Ping said in a note Wednesday. “We continue to see a number of challenges to offshore wind,” including affordability and fierce competition. Orsted’s troubles are the latest in a series of struggles for the wind-power industry, just as countries around the world demand more of the clean energy technology. Rising supply chain costs have clouded the outlook for some developers’ revenue, with others facing turmoil from critical mechanical issues. “Further signs of supply chain headwinds on the offshore segment may spur a bigger focus on onshore wind and solar development,” Bloomberg Intelligence analyst Patricio Alvarez said. Share Decline Orsted shares are down about 30% this year, trading at their lowest since January 2019. The stock has also weighed on the European Renewable Energy Index this year, while other wind developers such as RWE AG, EDP Renovaveis SA and Vestas Wind Systems A/S dropped on Wednesday as well. Orsted earlier this month reported a decline in earnings for the second quarter, pressured by weak wind speeds and lower margins in some divisions. Still, it expects its return on capital employed target for the 2023-2030 period at about 14%. Wind Power Is in Crisis Just When the World Needs It Most In another sign of the stressed industry, Swedish developer Vattenfall AB halted a UK project last month as surging costs made it no longer viable. Meanwhile, Siemens Energy AG has tried to delay the delivery of new wind turbines from its 5.X platform amid flaws in its machines. Orsted said it will continue to press on with US near-term offshore wind projects and work to mitigate supply delays. Still, Danske Bank said the impairments “will have no bearing” on earnings before interest, taxes, depreciation and amortization, and it could also also reduce the company’s development capital expenditure budget. “Our overall impression from this is that it is only slightly credit negative,” the bank said in a note. https://www.zerohedge.com/markets/worlds-largest-offshore-wind-farm-maker-crashes-most- record-after-catastrophic-results Wo rl d 's L a r ge s t Offsho re Wi n d F ar m-Ma k e r C r a s h e s Mo st O n R ec o rd A f te r Ca t as tro phi c R e s u l t s BY TYLER DURDEN WEDNESDAY, AUG 30, 2023 - 11:05 AM Shares of the world's largest offshore wind farm developer crashed in Copenhagen trading on Wednesday after it warned: "The situation in US offshore wind is severe." Orsted A/S was hit with a massive 16 billion Danish kroner ($2.3 billion) impairment on its US portfolio due to snarled supply chains, soaring interest rates, and easy money tax credits drying up -- a warning sign the green energy revolution bubble is in trouble. CEO Mads Nipper warned investors on a conference call: "The situation in US offshore wind is severe." Shares in Denmark-listed green energy giant crashed 25%, the largest daily decline since it went public in early 2016. Bloomberg explained more about the headwinds plaguing Orsted: The company's Ocean Wind 1, Sunrise Wind, and Revolution Wind projects in the US are being hurt by supplier delays, which could lead to writedowns of up to 5 billion kroner, it said late Tuesday. High interest rates could also add another 5 billion. In addition, the developer is still in talks with federal stakeholders to qualify for additional tax credits, which haven't progressed as expected. If unsuccessful, it could lead to impairments of as much as 6 billion kroner. Analysts at Bernstein warned clients in a note: "Today's announcement flags risks in the US portfolio and does not do anything to improve the downbeat investor sentiment on the stock." "While the bulls could argue many of these issues related to the impairment are already known, the announcement is unlikely to bode well for an already-weakened Orsted share price," Citigroup Inc. analyst Jenny Ping told clients. Analysts across the board were overwhelmingly pessimistic about the news (list courtesy of Bloomberg): BNP Paribas Exane (cut to neutral from outperform) The potential write-down of DKK16b dwarfs the DKK2.5b impairment announced in January, analyst Harry Wyburd writes in a note Investor confidence will probably be "compromised" for some time UBS (buy) Sam Arie puts the focus on which targets will remain valid in this context Says today's announcement is a negative and somewhat of a surprise Adds investors may be concerned in the change in tone since the June CMD where management seemed more confident in regulatory changes that would help to protect the return profile of these US projects Jefferies (buy) The update is a "clear negative," analyst Ahmed Farman (buy) writes in a note The impairments are equivalent to as much as ~7% of the Danish power generator's market capitalization Still, Jefferies says recent share price weakness suggests the market hasn't priced in "much value" in the company's near- term US offshore pipeline RBC (sector perform) Alexander Wheeler also calls it a clear negative, with further doubt cast on the overall outlook for US projects, which many believed had been resolved at the capital market day With ~$4bn invested in the US projects to date, the impairment of up to DKK 16bn ($2.4bn) represents just over half of the overall value The DKK5b supplier charge is believed to be the maximum number, while on interest rates, if rates stay at current levels then the DKK 5b will be the impact booked at 9M We ought to label Orsted's crash as the 'Green Panic.' Bulls eager to ride the climate energy revolution might want to rethink their mid-term views. CAUTION:This email originated from outside of the Town of Barnstable! Do not click links, open aachments or reply, unless you recognize the sender's email address and know the content is safe!