The state’s utilities on Monday set in motion a first-of-its-kind procurement for 1,600 megawatts of offshore wind power by asking Massachusetts regulators to approve a bid process that gives companies some flexibility in setting the size of their projects while requiring them to price out two very different approaches to delivering the electricity to the mainland.
The draft request for proposals, or RFP, also raises the possibility that Massachusetts could invite a Rhode Island utility and the state of Connecticut to participate in the solicitation.
Legislation authorizing the offshore wind power procurement was approved in 2016. The law allows the state’s utilities to sign contracts for 1,600 megawatts of offshore wind power over the next 10 years. The power price is required to drop with each successive contract. The contracting process is being run by the state’s utilities – Eversource, National Grid, and Unitil – and being monitored by the Baker administration, Attorney General Maura Healey, and the Department of Public Utilities.
The procurement process is a lengthy one. The final RFP is expected to go out June 30, proposals are due December 20, and approved contracts are scheduled to go to the Department of Public Utilities for approval on Nov. 1, 2018. The minimum bid fee is $300,000, but can rise depending on how many pricing offers a company makes.
The three companies vying for offshore wind contracts off the coast of Martha’s Vineyard have very different views about the size of the initial power contract, but have been united in their belief that each firm should build its own transmission line to the mainland. The draft RFP accommodated the varying views on contract size, while leaving the door open to an alternative approach on the transmission line.
The draft RFP would require each of the companies to bid on an initial 400 megawatt contract but would also allow them to submit other bids for as little as 200 megawatts and as much as 800 megawatts. Bay State Wind, a partnership of DONG Energy and Eversource Energy, has lobbied for an initial procurement of as much as 800 megawatts, half the total procurement. Bay State says a contract of that size would yield the lowest price for electricity.
The other two companies, Deepwater Wind and Vineyard Wind, say 800 megawatts is way too big. Deepwater Wind, which has supported initial bids in the 200 to 600 megawatt range, has called an 800 megawatt proposal “massively risky.” Vineyard Wind, which favors four procurements of 400 megawatts each, said its approach would avoid a “winner-take-all” scenario and secure the best possible prices.
In a footnote to the draft RFP, the utilities said the state could bring Narragansett Electric Co. of Rhode Island and the state of Connecticut into the procurement process if their participation would have “positive or neutral impact on Massachusetts ratepayers.”
All three offshore developers have said they want to build their own transmission lines to their wind farms, but the draft RFP calls for bidders to price their projects two ways – one with them building their own transmission line and one with them building a transmission line that could later be expanded to not only serve them but also other future wind farms in the area.
Since Eversource is involved both in the procurement of offshore wind power and in a partnership for the development of it, the RFP includes a standard of conduct document that bars officials at the company in the two areas from talking with each other except in special circumstances.
Erich Stephens, the CEO of Vineyard Wind, said in a statement he was glad to see the state requiring a 400-megawatt bid. “We’re concerned that the timeline for the process is a lengthy one, but we remain hopeful the final RFP will provide for a quicker schedule, so that Massachusetts can get to work building its new offshore wind industry. We look forward to submitting a highly competitive bid,” he said.
Thomas Brostrom, general manager for North America at DONG, said in a statement that large-scale wind farms will produce the lowest cost for electricity. “We have seen through the development of more than 20 projects around the globe that utility-scale offshore wind drives the greatest economic benefits for local communities and the supply chain,” he said. “Additionally, we are excited to take part in developing a long-term viable offshore wind industry along the eastern seaboard and are encouraged by the commitments from states such as Massachusetts but also the growing interest of neighboring states. We can see the large volume potential here, which is the single most important driver for cost reduction and economic development through local supply chain developments.”
Officials at Deepwater Wind said they were still studying the RFP.
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