Connecticut to offer inflation protection in forthcoming wind tender
Connecticut to offer inflation protection in forthcoming wind tender | Windpower Monthly
Connecticut's Department of Energy and Environmental Protection (DEEP) said it was releasing two ‘Requests for Proposals’ (RFPs) to build grid-scale renewables projects in Connecticut’s territory, including an offshore wind project. Both RFPs have a deadline of 31 January, 2024.
The DEEP said the offshore wind tender would consider bids for up to 2GW of offshore wind capacity and would align with efforts in Massachusetts and Rhode Island to procure up to 6.8GW of offshore wind between all three states by 2024.
Inflation mechanism
The DEEP also said that the offshore wind tender that would allow bidders to submit pricing proposals at either a fixed rate, or a rate indexed to the price of macroeconomic factors like inflation with an up or down margin of 15%.
The move follows regulators in neighbouring New York state rejecting requests from offshore wind developers - including Danish energy firm Ørsted, and oil companies BP and Equinor - to charge customers more for the energy from their planned wind farms because of soaring costs.
New York recently awarded conditional contracts to three offshore wind proposals submitted by energy majors, including French oil company Total, German utility RWE and Danish renewable investment major Copenhagen Infrastructure Partners (CIP).
Connecticut is hosting the development of two offshore wind projects — the 704MW Revolution Wind and the 804MW Park City Wind.
In addition to offshore wind, DEEP said the second RFP will consider “zero carbon electricity generating resources, which include solar, onshore wind, energy storage paired and co-located with a zero carbon resource, zero carbon fuel cells, geothermal, energy efficiency, and run-of-river hydropower".
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.