Energy Musings - May 18, 2026
The $1.1 billion contract dispute between Vineyard Wind and GE Renewables has produced some interesting details about the peril facing the offshore wind project.
Vineyard Wind’s Dispute With GE Renewables
The legal battle between Vineyard Wind 1, LLC (VW), and its key supplier, General Electric Renewables (GER), over unpaid invoices and GER’s notice of termination of its involvement in the project has reached a key stage. A Boston federal judge issued a temporary injunction preventing GER from leaving the project, but the ruling was appealed, and a hearing was scheduled for last week to reconsider it.
We have been reading the documents and testimony of various officials from both VW and GER about the details of the conflict. In late February, GER filed a termination notice with VW, citing $308 million in unpaid invoices for supplying and commissioning the wind turbines. VW opposed GER’s action, claiming its poor performance had cost the project over $800 million due to delays and impacts from the 2024 wind turbine blade failure. Since $800 million exceeds $300 million, VW is permitted to offset the charges under the contract. At issue is whether GER was responsible for the cost overruns.
Enter the realm of contract law. Both sides are arguing over their interpretations of the meanings of words and phrases in clauses spanning hundreds of pages of contracts. However, as the lawyers present strong rationales for their client’s positions, we can learn from the officials’ testimony about the state of the project.
At issue is whether the project is complete. VW claims it is not complete and requires further work by GER to commission all 62 wind turbines, allowing the project to meet its guaranteed output. VW needs the output to generate sufficient income to repay the banks, which lent it $2 billion to construct the project. VW indicated that only 49 of the 62 turbines were actually working at the time of “completion,” April 24, 2026. Failure to generate sufficient revenue to repay the bank loans would allow the banks to foreclose and seize the wind farm’s assets.
In response, GER presented the press release from Massachusetts Governor Maura Healey announcing the completion of the VW project. The opening paragraph from the April 27, 2026, press release reads:
“Boston — The Healey-Driscoll Administration today is announcing the activation of the Vineyard Wind contracts, which ensure stable, affordable prices for 20 years and save Massachusetts customers a projected $1.4 billion on electricity bills over the next 20 years.”
Presumably, the governor’s office would not have issued such a press release without authorization from VW officials.
GER also presented language from the NSTAR Electric Company (Eversource) power purchase agreement (PPA) with VW detailing when the project would be considered complete, and the PPA would be in force. Lastly, they presented excerpts from Iberdrola, S.A.’s first-quarter earnings report, one of the owners of VW, which discussed the completion of VW and that it was working. Here is the question and answer from the transcript posted on the Investing.com website.
“Unknown, Event Moderator/IR Professional, Iberdrola, S.A. Next, could you provide an update on the construction status and operational ramp-up of Vineyard Wind 1 offshore power plant?
“Ignacio S. Galán, Executive Chairman, Iberdrola, S.A. Pedro?
“Pedro Azagra, Chief Executive Officer (CEO), Iberdrola, S.A. Practical terms, the wind farm is completed. You know, we finished the construction of all the positions. The levels of availability we expect to be in line with other offshore wind farm in operation. Very important, these, many of the positions have been exporting power for many months. The financing is advanced, both tax equity, tax credits, but also the debt financing. We are moving forward very well with the asset.
“Ignacio S. Galán, Executive Chairman, Iberdrola, S.A. I think from the, if I’m not wrong, from the 24th of April, it’s in commercial operations.
“Pedro Azagra, Chief Executive Officer (CEO), Iberdrola, S.A. COD was declared on.
“Ignacio S. Galán, Executive Chairman, Iberdrola, S.A. I think that is in commercial operation now.”
GER’s view is that when the PPAs began operation, the Massachusetts Governor told her constituents that VW was operational and saving them money. Additionally, a co-owner of VW tells the investing public that the project is in commercial operation. These statements refute VW’s claims that the project was “unfinished” and “not operat[ing] in a commercial way,” as stated in a legal filing.
What caught the media’s attention were statements from a declaration submitted to the court on May 4, 2026, by Klaus Møller, formerly the CEO of VW but now a member of its Executive Committee. He told the court:
“The wind farm continues to produce less than half of its expected capacity, which is well below what is needed for the Project to comply with its financing obligation,” he said. He noted that only 49 of the 62 wind turbine generators have achieved the production level GER warranted in the SMA (supply contract). As a result, Møller stated, “The Project cannot survive at its current levels of actual power production…”
While the nameplate capacity of VW is 806 megawatts (MW), Møller said, “The Project’s current actual average output remains well below even that – and is closer to 300 MW.”
VW Power Generation
Although the PPAs didn’t start until April 24, 2026, VW has been sending power to the grid for nearly a year. The amount of electricity generated is reported to the Federal Energy Regulatory Commission (FERC) by the purchaser, in this case, the Independent System Operator – New England (ISO-NE). The FERC data is aggregated and published quarterly, making timely analysis challenging.
We have written about our issue with VW’s failure to report its monthly generating data to the U.S. Energy Information Administration (EIA) as required by law. When we discovered the FERC data late last year, we contacted the EIA about why it was not publishing monthly generation data under its Electric Plant Data survey. The supervisor was unaware of the FERC data. Over more than a month of interaction, the EIA administrator reported he contacted VW, which told him it believed it did not need to report generation data until it was in the testing stage. At that point, they still considered themselves to be under construction. Failure to report data to the EIA is a felony. Still, the EIA supervisor accepted VW’s explanation and allowed them to change their status to testing and begin reporting data in January. VW has still not reported the data, which is published two months after its receipt by the EIA. We have yet to receive an acceptable explanation from the EIA for why the data hasn’t been reported.
Given the commentary about the amount of power VW is generating, we decided to examine FERC data to assess the project’s status. The following chart shows VW’s quarterly data for the final two quarters of 2025 and the first quarter of 2026. There was a significant increase in output between quarters 3 and 4, which is not surprising given the project’s construction.
The decline in VW’s output in 1Q2026 is obvious.
The decline in production between 4Q2025 and 1Q2026 was 12.8% and might be explained by weather conditions, although the six winter months are normally the strongest wind months off the East Coast. This is one of the arguments for building offshore wind farms in New England, because winter is when the region is challenged by its lack of natural gas pipeline capacity to bring supplies to serve both home heating needs and power generation. Wind is seen as a cheaper alternative to high-priced liquefied natural gas imports during winter.
To address whether the quarterly decline was weather-related, we examined monthly EIA generating data for Block Island Wind (BIW), the longest-operating U.S. offshore wind farm. While a much smaller project (30 MW versus 806 MW), VW is located roughly 50 miles from Block Island and 15 miles south of Martha’s Vineyard. In contrast to onshore, where wind is more susceptible to topography variation, offshore wind tends to be more uniform.
Due to the two-month lag in EIA reporting monthly plant generating data, we were missing BIW’s March output, which prevented us from having a complete 1Q2026 power generation record. Fortunately, we have a long history of BIW’s operations ‒ 9 years to compare monthly generation changes between February and March. On a full-month basis, of the 9 years, 2 experienced declines, while 7 showed monthly increases. The two declines were in 2021 and 2025. The declines were 17.9% and 3.0%, for an average decline of 10.4%. The annual monthly gains ranged from 34.8% to 4.3%, for an average of 19.4%. If we estimate BIW’s March generation based on the average of the declines and increases, we can see projected quarterly totals for 2026.
BIW shows a possible flat quarterly comparison.
The result of these decline and increase estimates is that BIW’s quarterly generation could be flat to potentially 8% higher than last year’s fourth quarter. These estimates are merely that, estimates. The actual March total generation could be substantially more or less.
However, February has only 28 days compared to 31 in March. Therefore, even if the average daily generation were similar in February and March, the total monthly change would always demonstrate an increase. Therefore, we track the average daily output for each month. Performing the same monthly change calculations based on daily data, we find that even with the daily decline, the additional days in March would see a higher March total and therefore, a quarterly increase.
The daily change record suggests a stronger 1Q2026.
The record of the 9 monthly changes based on daily volumes was 5 increases, averaging a gain of 14.2%, and 4 declines, averaging a loss of 11.8%. The result is that even with a daily decline from February to March, the total monthly generation enables 1Q2026 to be higher than 4Q2025.
VW’s Operational Challenge
Our analysis suggests that VW has an operational performance issue rather than a weather challenge. We are open to further data proving us wrong. However, if it is a performance problem, is it due to poor performance by GER or a design flaw? If there were fewer functioning wind turbines in the first quarter than in the fourth, what does that mean?
To answer our question, we read through many of the documents and testimonies filed in court by the two parties. One filing included the two contracts entered into by VW with GER. One dealt with the supply of wind turbines, while the second dealt with long-term service and maintenance.
Within the turbine supply contract was a technical document dealing with the power curve and thrust coefficient of the Haliade-X Platform (the wind turbine generator supplied to VW). In reading this document, we learned that certain weather conditions cause the 13.6-MW turbine’s output to be derated.
Below is the page showing the details and a power curve derated for atmospheric temperatures. The turbine’s rotor diameter is 220 meters (722 feet), and its output is designed to comply with the grid’s requirement for the electricity to be 60Hz. What was interesting was the generic external factors, including air density and ambient air temperature. We were not aware of how much the temperature and air density play in the turbine’s output.
By implication, the air density of 1.230 kilograms per cubic meter (km/m3) matches the air temperature of 10oC. However, when we searched for air density, we found a website that calculates it from air temperature, assuming a standard absolute pressure of 101.325 kPa (kilopascal). It shows 10oC equates to 1.247 kg/m3. We guess there is a difference in the absolute pressure used in GER’s calculations.
The GER turbine is limited in its output.
Ignoring the difference in absolute pressure, we were fascinated to see how quickly the turbine’s output declines with increases in air temperature. At a 18oC (64.4oF) or lower air temperature, the GER’s turbine output is the maximum of 13.6 MW. At 40oC (104oF), the turbine’s output is zero. At 30oC (86oF), the turbine will only be capable of 10 MW of output, and the drop-off accelerates as temperatures warm. In other words, the turbine’s best output occurs during winter, with significantly less output during the summer.
However, the problem for New England wind farms is the region’s average wind speed. A posting on Citizens’ Task Force on Wind Power – Maine by Frank Haggerty, under the title “Vineyard Wind’s Lack of Power Production,” outlined how the wind turbine’s operations are affected by wind speed. He wrote:
“When you see the blades spinning, the turbines do not engage the generator to produce power until 6 miles per hour. After 6 mph, they start generating, and they don’t produce full power until around 23 miles per hour. In other words, a 13 megawatt wind [turbine] at around 12 miles per hour may only produce half its power. Additionally, the turbines are automatically shut down during storms due to high winds or shifting winds.”
The problem is that Massachusetts’ offshore wind averages about 20 miles per hour, which is below the turbine’s maximum output.
Haggerty also pointed out that if offshore wind turbines are not producing power, they need power to charge their batteries, computers, generator cooling systems, and heated blades if they have ice-prevention systems installed. The required power either comes from shore via transmission lines that deliver the electricity generated by the turbines or from onboard diesel generators. The diesel generators need to be refueled periodically and are subject to leaks polluting the ocean waters beneath the wind turbines. Technically, the power from shore used by the turbines should be subtracted from the wind farm’s output.
In the battle over the amount of power generated by VW, we are never told specifically what the project’s theoretical output should be. Various reports suggest that an average offshore wind farm should produce 35-45% of its nameplate capacity. A good offshore wind farm is expected to generate 45-55% of its nameplate capacity, with an excellent wind farm producing in excess of 55%. These capacity estimates reflect the strength and consistency of offshore winds in the various regions where farms are located.
During the debate in the 2010s over constructing BIW, the developer and GE, the wind farm’s turbine supplier, assured the public that it would produce 47.6% of its nameplate capacity. Since BIW began generating electricity in late 2016, it has never achieved the projected output in any year. Obviously, because of the seasonal output of BIW, there are winter months where the theoretical capacity is exceeded. Still, those excellent months are offset by dismal spring, summer, and fall months.
VW’s Financial Peril And Massachusetts’ Role
As far as we can determine, last week’s scheduled hearing over the preliminary injunction preventing GER from terminating its VW contract produced no significant developments. Therefore, we assume the ongoing battle over the $1.1 billion in costs VW has absorbed remains unresolved. From the testimony of VW official Klaus Møller, “If GE does not continue to perform under the (contracts), the project will fail.” That could leave VW as “a turbine ‘graveyard’…”
An interesting question is, what responsibility does the Commonwealth of Massachusetts have in this fiasco? Haggarty reminds us that the Wind Technology Testing Center (WTTC), operated by the Massachusetts Clean Energy Center, was built by the state to accelerate wind energy development by providing testing, validation, and certification of large wind turbine blades, primarily those used offshore.
WTTC only tested one VW blade, manufactured in GER’s Cherbourg, France facility. The blade was tested for structural integrity; however, to fit within the testing facility, 50 feet of the 351-foot-long blade was cut off. To meet the testing requirement, the test results were extrapolated to the full length of the blade. Moreover, none of the 150 blades manufactured at GER’s Gaspé, Canada, facility was tested, even though they were approved based on the test results of a single blade.
It was one of these Canadian blades that self-destructed in July 2024, spreading toxic waste across a wide swath of Massachusetts’ waters, polluting coastal and island beaches. The disaster happened in the middle of the summer, impacting the tourism that many Massachusetts businesses rely on.
Eventually, every blade manufactured in Canada had to be replaced to comply with U.S. regulatory orders, many of which had already been installed. Many of the blades were shipped to France for repair and returned for installation. The construction time lost due to the accident and its cleanup, and the additional work required and associated costs to remove, ship, repair, return, and reinstall the blades are part of the $800 million in losses that VW claims GER is responsible for.
Some people believe it would not have mattered if a Canadian blade had been tested, because it would have required the same removal of part of the blade. Since the blade approvals were based on extrapolated data rather than actual stress test results, the problem likely would not have been discovered. Since the testing facility was a state-owned operation, what liability does Massachusetts have for the costs in debate? Of course, anything the state were to pay would come from the tax bills or utility payments of Massachusetts residents and rate-payers, who are reportedly going to save $1.4 billion in electricity costs over the next 20 years. Is there a possibility that the PPAs for VW will be renegotiated to provide more revenue for the wind farm? If so, the cheap energy Gov. Healey is touting may turn out to be a mirage.
We will be watching for the next developments in the VW and GER contract dispute. We wonder if and when Massachusetts will become involved in the dispute.
Glad you liked it, Constance.
So many OMGs! in this arduously researched piece, Allen. Thank you for your exacting diligence and persistence.