Denmark-based DONG Energy, one of the leading energy groups in Northern Europe, and developers of what will be the largest offshore wind farm array in the world in the Irish Sea, has turned its attention to the waters south of Martha’s Vineyard for its first project in North America.
DONG Energy said it plans to build a wind farm comprised of up to 100 wind turbines and capable of generating as much as 1,000 megawatts (MW) of electricity on a leased site, one of four, designated for the development of offshore wind power that the federal Bureau of Ocean Energy Management (BOEM) put up for bid in January.
“We are thrilled to announce the formation of Bay State Wind, and that our first major project in the U.S. will be located in Massachusetts,” Thomas Brostrøm, general manager of DONG Energy’s North America, Wind Power, who opened a newly created Boston office, said in an email to The Times Tuesday.
“With favorable offshore wind conditions, a need for cost-effective renewable power, and an extremely skilled work force, this is an ideal location for offshore wind,” he added. “We believe that with the necessary regulation in place, offshore wind will create significant jobs and provide measurable, long-term value to the communities, businesses, and residents of New England.”
The site of the proposed development has water depths between 130 and 165 feet. Bay State Wind said that over the long term, it expects to generate up to 1,000 MW, enough to power more than 500,000 homes, and the company expects the first power to be delivered in the early 2020s.
It is not clear how this announcement will affect Vineyard Power Cooperative, a local renewable energy cooperative, whose stated mission is to produce local renewable energy in ways that benefit Martha’s Vineyard.
Vineyard Power teamed up with Offshore MW, a New Jersey–based sister company to Wind MW, a German firm that recently completed construction of a 288 MW offshore wind farm in the North Sea, to bid on one of the four sites offered for lease.
Before the auction, the two companies crafted a community-benefits agreement. Under the federal process, that agreement entitled Offshore MW to a 10 percent discount on the winning bid.
RES America Developments submitted the winning bid of $1.50 per acre for a second tract of 187,523 acres in the same offshore area. In April, DONG Energy signed an agreement with RES to take over its lease.
In a front-page story published Tuesday, Mr. Brostrøm told the Boston Globe the wind turbines would be “barely visible on a clear day” from the south shore of the Vineyard.
Deepwater Wind has the right to develop 164,749 acres in a region between Martha’s Vineyard and Block Island, very near the area auctioned in January.
Audra Parker, president of the Alliance to Protect Nantucket Sound, which battled Cape Wind and its plans to build a 130-turbine, 25-square-mile wind farm on Horseshoe Shoal, told the Globe that the offshore plan was far superior.
In January, following more than a decade of litigation and grassroots opposition, Northeast Utilities and National Grid terminated their power purchase agreements with Cape Wind, dealing it a significant financial blow.
Unlike Cape Wind, which relied on outside financing, DONG Energy, with annual revenues of approximately $11 billion, brings plenty of financial power and expertise to the project.
In October, DONG Energy announced it would construct the 660 MW Walney Extension Offshore Wind Farm, located in the Irish Sea, approximately 12 miles off the west coast of Britain. “Walney Extension is expected to be fully commissioned in 2018, at which time it will be the biggest offshore wind farm in the world, surpassing the 630 MW London Array Offshore Wind Farm, which was commissioned in 2014 by DONG Energy and its partners,” the company said in a press release.
The company has built about one-third of the world’s offshore wind capacity, with 2.5 GW in operation and another 1.3 GW under construction, according to published reports.
What all this will mean to the average Islander looking at his or her electric bill has yet to be determined. Gov. Charlie Baker and legislative leaders are striving to set policy that will help the state meet emission-reduction goals of the Global Warming Solutions Act, which set economy-wide goals to reduce greenhouse gas emissions to 25 percent below 1990 statewide levels by 2020, and 80 percent below 1990 levels by 2050.
Governor Baker has filed separate bills to authorize long-term contracts for hydroelectric power from Canada and to increase the net metering cap for solar generators in an effort to more quickly meet the 2020 goal of 1,600 MW of solar generation.
Senate President Stanley Rosenberg has spoken recently of finding the right balance between energy sources to contain costs, reduce emissions, and maximize efficiency.
A comprehensive climate change adaptation bill (S 1979) passed by the Senate also includes a move to lift the net metering cap. Speaker Robert DeLeo has said a net metering bill could emerge from the House before the Legislature breaks for winter recess on Nov. 18.
Most Island households purchase electricity through the Cape Light Compact (CLC), a municipal buying group that consists of 21 towns and two counties on Cape Cod and Martha’s Vineyard.
Austin Brandt, CLC power supply planner, said it is still too early to comment on the DONG Energy project.
Asked about the possible implications for Island ratepayers, he said, “It’s difficult to say what the implications of this particular project will be at this point, but generally speaking, a large amount of new wind power generation being sold on the wholesale energy market could put downward pressure on the energy prices. Since wind power production peaks in the winter and spring months, this could potentially help alleviate high winter prices due to natural gas pipeline constraints.”
The current CLC residential rate is 10.16 cents per kWh. Cape Wind had estimated it would sell electricity at 21 cents per kWh in its first year of operation.
Mr. Brostrøm told the Globe he expects Bay State Wind to produce electricity for below that rate.
“DONG Energy has a firm commitment to reduce the cost of electricity from offshore wind by at least 40 percent compared with 2012, for projects sanctioned in 2020,” the company said in a press statement. “Real progress toward meeting this target is being made, with recent auctions in Denmark and the U.K. showing costs falling 32 percent in Denmark and 27 percent in the U.K., relative to earlier projects in those countries. Furthermore, all offshore wind costs are known, from the transmission cables to wind turbines, so the cost to the ratepayer can be seen upfront.”
The company faces state and federal review and permitting before the first electric bill can be sent out. That envelope is still years away.
Correction: An earlier version of this story incorrectly reported the number of homes the project could power at 5,000. The number is 500,000.
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