The Baker administration this week approved the contracts for offshore wind power generation from the Mayflower Wind project, an offshore wind farm that is expected to provide the state and its electric ratepayers with total economic benefits of about $2.4 billion over the next two decades.
The Department of Public Utilities issued an order Thursday approving the contracts between Mayflower Wind and National Grid, Eversource and Unitil. The final agreement confirms that the price of power from the Mayflower Wind project will be cheaper than the power from Vineyard Wind, the Massachusetts development poised to be the first utility-scale offshore wind farm in the country.
A joint venture of Shell and EDPR Offshore North America, Mayflower Wind was picked unanimously by utility executives to build and operate a wind farm approximately 26 nautical miles south of Martha’s Vineyard and 20 nautical miles south of Nantucket. The 804-megawatt project is expected to be operational by December 2025.
“The approval of these contracts furthers the Commonwealth’s development of an offshore wind industry that will create local jobs, spur economic development and provide Massachusetts ratepayers with clean, affordable and resilient energy,” Gov. Charlie Baker said.
Electricity generated by Mayflower Wind will cost 7.8 cents per kilowatt-hour (kWh) in levelized nominal dollar terms – meaning it has been adjusted for inflation based on the timing of payments – or 5.8 cents per kWh in levelized 2019 dollars. Contracts for Vineyard Wind, the 800-megawatt wind development tapped first by the state and utilities for clean power, called for a price of 6.5 cents per kWh in levelized 2019 dollars. Both prices include the cost of transmission to the grid.
Top state energy and environment officials said Mayflower Wind’s power purchase agreements with Massachusetts utility companies, filed for DPU approval in February, could save ratepayers between 0.1 and 1.8 percent on their bills compared to a future in which the utilities did not procure renewable generation. Over the life of the contracts, Mayflower Wind is expected to provide an average of 2.4 cents per kWh of direct savings to Massachusetts ratepayers.
The average cost of electricity for a residential customer in Massachusetts was 21.68 cents per kWh in August, according to the most recent data from the U.S. Energy Information Administration. For commercial customers, the average price was 16.29 cents per kWh. The U.S. average for residential customers was 13.31 cents per kWh and the nationwide average for commercial customers was 10.95 cents per kWh, according to the EIA.
When the DPU approved contracts for the unsuccessful Cape Wind project, the power generated from those turbines was to cost 18.75 cents per kWh with annual increases of 3.5 percent built in. The Cape Wind project faced opposition from lawmakers, fishermen, local officials, residents and environmental groups, and ceased development in late 2017.
In addition to the expected economic benefits of the Mayflower Wind project, developers have also committed to putting more than $77 million towards economic development, including the creation of an Offshore Wind Development Fund, $10 million for marine science and fisheries research, $7.5 million for port upgrades and $5 million for a low-income strategic electrification program.
The Mayflower Wind team said in its bid that it is committed to locating “our operations and maintenance jobs and base in Massachusetts with at least 75% of O&M jobs being local, with a commitment of $20,000 additional funding per employee shortfall to support further workforce development if required.” It also committed to a supply chain strategy that would have the company turn to local providers first.
In the publicly-available version of Mayflower Wind’s bid, the project developers pledged economic impacts up to “$3.7 billion in electric rate reductions, 10,680 jobs over the life of the project, and direct spending by Mayflower Wind of more than $1.2 billion with virtually all in” economically-distressed areas.
Last week, Vineyard Wind announced that it had struck an agreement with ISO New England that will allow its planned 800-megawatt offshore wind generation development to connect to the New England electric power grid at the NSTAR 115kV switch station in Barnstable. A federal decision on a final permit for the stalled Vineyard Wind I project is expected by Dec. 18 – more than a year later than first anticipated.
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