New England states team up on offshore wind - The Boston Globe
New England states team up on offshore wind
After watching several offshore wind proposals run aground because of financing issues, three New England governors have decided to join forces with the hopes of seeing more success in the next round of bids.
Governor Maura Healey announced the new partnership during a speech on Wednesday morning at the Hynes Convention Center, where she spoke at the American Clean Power Association’s Offshore Windpower Conference.
The top energy officials in Massachusetts, Rhode Island and Connecticut signed a memorandum of understanding on Tuesday, agreeing to work together as the states solicit bids from offshore wind developers. While the three states have teamed up before to seek transmission funding from the federal government, this step toward a multistate bid for wind power contracts represents the first agreement of its kind in the country.
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“The truth is, building out offshore wind to the scale that we need requires this intense regional collaboration and approach,” Healey said. “We are all stronger when we work together.”
The hope is that by teaming up, the three states can leverage their collective buying power to encourage developers to propose larger wind farms, and possibly at lower costs than they would if bidding separately for each state, potentially increasing efficiencies and maximizing benefits for electric ratepayers. The states are also essentially laying down their arms in their competition with each other for industry jobs. Healey said the governors can take advantage of economic development opportunities in each particular state, to allow developers to pick the best places to plan their supply chains.
The Healey administration has opened a solicitation for up to 3,600 megawatts — about 25 percent of Massachusetts’ electricity needs. Bids are due in January. Similar solicitations are planned in Connecticut and Rhode Island, which are each seeking 1,200 megawatts. Combined, the three states could work together to seek and procure up to 6,000 megawatts of offshore wind power. The MOU allows developers to submit their bids to one or two states, instead of all three.
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Healey talked about how offshore wind power, still in a nascent stage in the US, is critical for Massachusetts and New England to move away from fossil fuel-fired power plants.
“Whatever turbulence this industry may be experiencing, we remain all in as your partner,” Healey told the crowd in the packed ballroom at the Hynes.
Construction on two major wind farms recently began in the waters south of New England: Vineyard Wind, to provide 800 megawatts to Massachusetts, and South Fork Wind, to send 130 megawatts to customers in Long Island, N.Y. Contracts for those projects were in place well before interest rate hikes and the Russian invasion of Ukraine helped drive up construction costs across the industry in 2022, which prompted several subsequent wind farm projects to be put on hold.
For example, energy developer Avangrid on Monday announced it was terminating its agreement with Connecticut’s electric utilities to buy power from its proposed Park City Wind, taking about 800 megawatts off the board for now. Park City was the third major offshore wind project in New England to suffer this fate.
Avangrid, a partner in Vineyard Wind, this summer scuttled its utility contracts to build Commonwealth Wind, which would have brought 1,200 megawatts to Massachusetts. And the partnership behind the SouthCoast Wind project, which was to provide another 1,200 megawatts for Massachusetts, just did the same.
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For all three, the developers said they could no longer build these multibillion-dollar projects at the prices that they originally submitted to win their bids. These developers are expected to submit new bids for their projects in the next rounds, but likely at higher prices. It wasn’t immediately clear how, or if, the tri-state agreement might affect their plans.
Avangrid CEO Pedro Azagra praised the governors of Massachusetts, Rhode Island and Connecticut, saying his company looks forward to reviewing the details of the procurement structure and building on Vineyard Wind’s success.
In comments at the conference, Azagra said the cooperation among the states is “very important to take advantage of the economies of scale.
”Large versus small,” he said, “it’s critical in this industry.”
Jon Chesto can be reached at jon.chesto@globe.com. Follow him @jonchesto.
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.