Connecticut 2 GW offshore wind RFP acknowledges financial challenges for developers
Connecticut 2 GW offshore wind RFP acknowledges financial challenges for developers | Utility Dive
Connecticut and Rhode Island have opened bid solicitations for 2 GW and 1.2 GW of offshore wind, respectively, after announcing a multistate memorandum of understanding with Massachusetts earlier in October.
Massachusetts is already underway with its fourth offshore wind solicitation seeking 3.6 GW, having issued a final request for proposals in August. The three states on Oct. 3 signed a landmark agreement to coordinate offshore wind procurement.
Rhode Island Energy issued an offshore wind RFP Oct. 13, and Connecticut issued one Friday. The final solicitation from each state includes an aligned due date of Jan. 31 for bids.
“The three-state agreement creates a pathway for a potential coordinated selection of competitive offshore wind bids as each state solicits offshore wind energy generation through their respective state procurements,” said a release from Connecticut’s Department of Energy and Environmental Protection, or DEEP.
The final Connecticut RFP also includes a provision allowing bidders to submit pricing at a rate indexed to the price of “listed macroeconomic factors and commodities and that would be fixed at a date certain in the future,” allowing prices to adjust for factors like inflation.
The addition of this provision comes as some offshore wind developers, struggling to advance projects in the face of inflation and other challenges, are asking states to allow them to exit and rebid their power purchase agreements.
The indexed pricing option adjusts for changes that might occur after the bid due date but before the project reaches final close, and allows for the final price to be adjusted either up or down by no more than 15%.
“Additionally, the RFP allows bidders to submit bids to Connecticut alone as well as multi-state bids to Connecticut along with Massachusetts and/or Rhode Island,” said DEEP’s Oct. 27 release.
All three states are aiming to have the developers execute long-term contracts for the purchase of offshore wind energy in Q3 2024. Rhode Island has set an anticipated date of Sept. 27, and Massachusetts has set one of Aug. 14, while Connecticut just lists Q3 2024.
Related Knowledge Center: Offshore wind energy
Over the next decade, U.S. offshore wind power is expected to grow from a single 30-megawatt wind farm off Rhode Island to more than 2,000 MW of capacity along the Atlantic Seaboard. There are contracts for wind power off the coasts of Massachusetts, Connecticut, New York, Maryland, New Jersey, Rhode Island, and Virginia.
The National Renewable Energy Laboratory has estimated the United States has over 4,000 gigawatts (GW) of offshore wind potential, enough to power the country four times over.
The growth in part being spurred by state solicitations, including in New York, where then-Gov. Andrew Cuomo (D) set a commitment of 9,000 MW of offshore wind by 2035, and in Connecticut, where in June 2021, Gov. Ned Lamont (D) signed legislation authorizing the construction of 2,000 MW of offshore wind by 2030.
The offshore development is also being driven by an investment tax credit set to end in December 2019 and is equal to 12 percent of expenditures. U.S. Sens. Susan Collins (R-Maine) and Tom Carper (D-Del.) have introduced a bill to extend the tax credit for up to eight years.
The Interior Department has held eight competitive lease sales that resulted in 15 offshore wind leases over 1.7 million acres that has the potential for 21 GW of capacity. In February 2022, the Bureau of Ocean Energy Management completed a bidding process that realized $4.37 billion for 488,000 acres across six lease areas in federal waters off New York and New Jersey.
Projects have also been proposed off the Southeast coast, off California and Hawaii, and for the Great Lakes.