NEW BEDFORD – The next time Massachusetts goes out to bid for renewable energy, offshore wind could have some serious competition.
The state Department of Energy Resources recommended Friday that Massachusetts buy another 1,600 megawatts of renewable power but open the bidding to all sources of clean, renewable energy, not just offshore wind.
Patrick Woodcock, undersecretary of energy, said the offshore wind market has matured enough to compete with other industries. At the same time, the number of companies that hold federal leases on locations for offshore wind remains relatively small.
Without more competition, “would there be market power enough to force them to sharpen their pencils?” he said.
Changing the 2018 law that called for more offshore wind would require legislation.
The state’s third-highest-ranking representative, Patricia Haddad, D-Somerset, has been deeply involved in offshore wind. Her chief of staff, Ken Raymond, said Monday that Haddad is “not unhappy” with the idea of expanding a future procurement to other energy sources.
But whether offshore wind is ready to compete with land-based turbines, solar or other sources remains uncertain, according to John Dalton, an electricity market analyst who consulted on Rhode Island’s purchase of offshore wind. Developers have to spend quite a bit of money just to prepare a bid, and competing with a whole universe of renewables could affect their willingness to do that, he said.
“One of the risks is it would increase the level of uncertainty that the offshore wind industry would see,” said Dalton, president of Power Advisory.
The purpose of the “carve-out” for offshore wind in existing law is to help develop an industry in southern New England and realize economic benefits, he said. Dalton said the focus on offshore wind is appropriate and provides the certainty the industry needs.
Sen. Mark Montigny, D-New Bedford, said Monday that he opposes mixing other energy sources with bids for offshore wind. The Legislature has made it clear that the state should develop a robust offshore wind industry, he said.
“Any attempt to disrupt this process as the price of wind has decreased will be met with opposition,” Montigny said in an email.
New Bedford Mayor Jon Mitchell, in an email, said, “The DOER report affirms what we learned in the last last wind energy procurement, that is, that offshore wind can deliver at competitive rates with other electricity sources. This is encouraging news, given that offshore wind happens also to offer the potential for the greatest job creation among all the available sources of renewable energy to Massachusetts.”
Vineyard Wind spokesman Scott Farmelant declined to comment, saying no one at the company had yet read the DOER report.
Ørsted welcomes the competition, according to spokeswoman Lauren Burm. She said the cost of offshore wind has dropped enough to make it competitive, and offshore wind can be built at industrial scale, close to major markets.
Electricity distribution companies Eversource, National Grid and Unitil have contracted for 800 megawatts of offshore wind as required under the state’s 2016 energy law. That contract went to Vineyard Wind. The state issued a second request for proposals May 23 to fulfill the remaining 800-megawatt requirement under the 2016 law.
In 2018, Gov. Charlie Baker signed a new energy law that called for DOER to study the benefits and costs of requiring the electric companies to buy another 1,600 megawatts of offshore wind. It also asked the energy agency to recommend improvements to the procurement process.
On Friday, the agency released the study report. In addition to the recommendation to expand solicitations beyond offshore wind, the report recommends that the electric companies proceed with offshore wind solicitations for up to 1,600 megawatts of offshore wind, starting in 2022.
The report advises DOER to evaluate the idea of doing a separate solicitation for energy transmission. According to the study, independent transmission lines have the potential to reduce effects on fisheries and reduce costs.
The report also asks the energy agency to consider a separate solicitation for energy storage.
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