Nighttime I-95, Merritt lane closures planned in Norwalk, Darien, New Haven for pavement upgrades

Katherine Lutge

To extend the lifespan of the pavement on the Merritt Parkway and Interstate 95, the state Department of Transportation is conducting an $18.8 million preservation project on those roadways in Norwalk, Darien and other municipalities.

“The Connecticut Department of Transportation is announcing the start of a pavement preservation program to improve the existing wearing surface and extend the life of the pavement on Route 15 and Interstate 95 in Orange, Woodbridge, New Haven, Darien and Norwalk starting on April 8, 2024,” a DOT statement said.

Between Exits 10 and 16 on I-95, lanes will be closed at night on weekdays from 8 p.m. to 6 a.m. Daytime lane closures will be limited to between 9 a.m. and 3 p.m.

“Traffic signal detection systems will be upgraded at two intersections in Darien and one intersection in Norwalk” as a result, DOT said.

In Orange, Woodbridge and New Haven, lane closures along the Merritt Parkway will also occur between exits 56 and 59 from 8 p.m. to 6 a.m.

“Construction will require various ramp closures on I-95 and Route 15" and traffic detours overnight, the DOT statement said. “Traffic control personnel and signing patterns will be utilized when needed to guide motorists through the work zone. Motorists should be aware that modifications or extensions to this schedule may become necessary due to weather delays or other unforeseen conditions and seek alternate routes.”

The project began on April 8, and will last until December.

Tilcon Connecticut Inc. of New Britain was awarded an $18,861,960 contract for the project, which is administered by the Bureau of Engineering and Construction.

Offshore Sector Gathers Second Wind After Several Setbacks

Geert De Lombaerde

Let’s call it a reset in real time.

Players in and observers of U.S. offshore wind energy say the sector is showing encouraging signs of recovery and progress after in the past year producing a series of headlines about investment write-downs, project exits and attempts to secure higher future prices.

Among the recent happenings:

Four development teams, including Avangrid Inc. and Ørsted A/S, responded to a solicitation from New England states with proposals to build up to 5.5 gigawatts of capacity

The Federal Energy Regulatory Commission approved a large generator interconnection agreement between Equinor’s Empire Wind 1 project, New York ISO and Consolidated Edison, the first time the agency gave the nod for an offshore wind project to connect directly into New York City’s transmission system

National Grid Ventures and a Con Ed subsidiary submitted a proposal to build transmission infrastructure to carry offshore wind power to New Jersey’s electric grid

Lots of work remains to be done to complete those plans but it appears unlikely they’ll face the same buffeting that projects started a few years ago have had to endure. Those developments—which include the Empire Wind 2 plan, whose contract Equinor and bp canceled early this year—faced something of a perfect storm: After developers penciled out business models and secured power purchase contracts before the arrival of COVID-19, supply-chain snarls caused by the pandemic jacked up prices for the materials and equipment they needed and the Federal Reserve’s interest-rate hikes added immensely to their financing costs.

On top of that, Enverus Vice President of Commercial Product Sarp Ozkan said, the costs of interconnection infrastructure also have climbed, putting more pressure on wind farms’ financial models. In all, S&P Global analysts recently projected that project costs have risen nearly 50% from their pre-pandemic starting points. That’s more than enough for some serious soul-searching and spreadsheet revamps.

Some policy support—but not yet from interest rates

Few people are questioning the long-term growth prospects of offshore wind. Analysts at Intelatus Global Partners early this year stuck to their forecast that developers will build more than 65 projects with a combined capacity of 94 GW by 2040. Technologies are becoming more powerful and efficient and the supply chains needed to support the sector’s growth are growing.

In addition, government agencies and regulators at the federal and state levels haven’t wavered in their support of long-term goals. A recent case in point for the latter is a U.S. Department of Energy evaluation of transmission needs off the Atlantic Coast that recommended connecting projects’ transmission networks offshore and creating shared transmission corridors. Such a strategy, researchers said, could be at least twice as cost-effective as individual transmission connection projects.

Add to the federal regulatory momentum FERC’s Order No. 2023, which was announced last November and aims to speed up work on interconnection projects. That will help, Ozkan said, but it is only in the early stages of being implemented.

While there is some potential risk that federal support could wane if Donald Trump is again elected president in November, it’s important to remember that many of the key decisions made about these projects come from state officials, said Kevin Beicke, vice president of asset finance at credit ratings agency Morningstar DBRS.

“There’s a lot going on at state levels,” Beicke said. “I don’t really see that changing. They have their own climate mandates and they want to realize those.”

Even if that means upsizing power purchase agreements for offshore wind energy from their ranges of just a few years ago. In a recent report, Beicke wrote that offshore wind development should be successful over the long term as inflation recedes further and the sector’s supply chain matures. What will also contribute, he wrote, is “a fresh view from all stakeholders that incorporates the current economic environment”—i.e., one where regulators acknowledge developers’ and operators’ higher costs and are willing to approve payment for many of those.

In the short term, however, the biggest factor driving development will be a retreat in interest rates. With budgets in the billions—by way of benchmarking, Dominion Energy’s 2.6-gigawatt Coastal Virginia Offshore Wind project is on track to meet its budgeted cost of $9.8 billion—even a small Fed cut can add up to big savings on construction financing. That, Biecke said, makes it easier for project backers to then ask for power prices amenable to both regulators and the consumers they represent.

“You don’t want to risk a spike right before construction starts,” Biecke added.

A deepening pool of financing options

That renewable-energy ventures are particularly sensitive to interest rates was made apparent April 4 after Neel Kashkari, president of the Federal Reserve Bank of Minneapolis, said there’s a possibility the central bank’s Federal Open Market Committee won’t cut its benchmark rates at all this year. Shares of renewables firms were among the hardest hit in the afternoon sell-off that followed Kashkari’s comments.

Dec. 4 – Startup EnergyRe Raises $1.2 Billion for Transmission Development, Renewables

The pool of financing options isn’t yet as deep for offshore wind work specifically and renewables more generally. For many investors—including some infrastructure specialists—the risks are still too opaque and the economics not as predictable as those of other investment classes. Indicative of that dynamic are comments made last September by Connor Teskey, CEO of Brookfield Renewable Partners, at the company’s investor day.

“The only reason we don't have greater exposure to offshore today is because of our discipline to adhering to that principle of, ‘We don’t take on basis risk,’” Teskey said. “Historically, you had to commit huge sums of capital upfront many years before you knew the cost of building the project or the revenue that project would attract.”

And yet: Here, too, progress is apparent. Immediately after those comments, Teskey said:

“Increasingly around the world, projects are closer to development. They're closer to construction and it's going to create opportunities for us to invest without taking on that basis risk that we've historically been averse to.”

Infrastructure-focused funds such as the one run by Teskey and his team have become big players in the investing world. Despite a slower 2023, they have put to work an average of $391 billion each year since 2019, according to investment data company Preqin, and they finished 2023 with nearly $330 billion on hand.

Energy-transition projects will get a large share of those dollars, particularly as the list of completed and transacted projects grows. For example: Vineyard Wind, one of the teams responding to the recent New England solicitation, is a partnership between Avangrid and 12-year-old Copenhagen Infrastructure Partners.

Alex Ellis, a co-founder and partner of Excelsior Energy Capital, said a more diverse set of investors is looking for deals over the range of renewable assets’ lifespans. Excelsior is investing from its second fund, which has a target of $750 million, and typically steps into projects as they near completion to hold them through what Ellis calls “the teething process.” The team in March sold a portfolio of 38 solar and solar-plus-storage assets to BlackRock’s Evergreen Infrastructure Partners Fund, a deal he said is indicative of the sector’s maturation.

“The market is better understanding development risk. The rules of the road have been better defined, whether that’s for permitting or interconnection,” he said, comparing today to when Excelsior was founded in 2017. “The average investor is better informed, more aware of the risk profiles and knows which questions to ask.”

Offshore wind developers will need those backers and others to continue to step up. Biecke said that, while the focus of the U.S. sector has so far been primarily on East Coast projects, the potential for massive floating wind projects off the West Coast is becoming clearer. And with that big potential will, over time, come many more big-dollar asks.