The race is on for what will likely be the biggest round of offshore wind energy contracts in Massachusetts so far.
The Baker administration, working with three electric utilities, kicked off the state’s third contest for offshore wind contracts on Friday. Bidders are using these contracts with Eversource, National Grid, and Unitil to finance the construction of multi-billion-dollar wind farms south of Martha’s Vineyard and Nantucket. The state published the rules for this round in March. Bids are due by Sept. 16, and a winner will be picked in December.
This round involves contracts for up to 1,600 megawatts of offshore wind power, or enough juice for about 800,000 homes. The previous two rounds, won by Vineyard Wind and Mayflower Wind, respectively, each involved contracts for 800 megawatts of power. Energy officials in Governor Charlie Baker’s administration hope that a larger bid could bring with it economies of scale, and also necessitate fewer transmission hookups to the mainland grid.
For the first time, bidders will need to submit equity and inclusion plans showing their commitment to diversity among their workforces and their suppliers. State energy officials and the utilities will weigh so-called “qualitative factors” – such as economic development potential, diversity, and environmental and socioeconomic impacts – slightly more than they did in the past.
But the cost to ratepayers will remain the primary factor, and state rules require that each successive winning bid come in at a lower price, based on the rate of electricity charged, than the previous winning bid (in this case, Mayflower’s). Price will represent 70 percent of the scoring this time, versus 75 percent in the previous two rounds, with the qualitative factors making up the other 30 percent of the scoring.
That shift probably won’t be enough to calm concerns in the offshore wind industry that states such as New York and New Jersey are passing Massachusetts in the arms race for offshore-wind jobs, even after Massachusetts was the first to start holding these state-orchestrated bids.
New Jersey officials, for example, trumpeted plans for a $250 million facility to make steel foundations for wind turbines in December, and plans for a wind-tower manufacturing plant at the Port of Albany announced by New York officials in January will draw hundreds of millions of dollars of private investment to that area. New York Governor Andrew Cuomo boasted that his state will have five active port facilities serving the offshore wind industry, more than any other state.
Katie Theoharides, Baker’s energy and environmental affairs secretary, defended the administration’s approach in an interview on Friday. She noted that the quasi-public Massachusetts Clean Energy Center, which she oversees, built and runs a wind turbine terminal on the New Bedford waterfront as well as a blade testing center in Charlestown.
“We’re getting more bang for our buck in terms of what’s included in these contracts,” Theoharides said. “We want to ensure, first and foremost, that we’re getting a low-cost, effective price for ratepayers in a state that has incredibly high expensive prices for electricity. We’re proving offshore wind can compete [with other sources of electricity] and that any other economic development we’re getting is a firm commitment and a good investment for the commonwealth.”
Only four wind farm developers have lease rights for federal waters off the coast of Massachusetts and are in the position to compete for these bids: Vineyard Wind (a partnership of Avangrid and Copenhagen Infrastructure Partners), Equinor (formerly Statoil), Mayflower Wind (a partnership of Shell, EDP Renewables, and Engie), and Bay State Wind (Ørsted and Eversource).
Although two small offshore wind farms have gone up off Block Island, and off Virginia Beach, Vineyard Wind would be the first major utility-scale project built in the US. It faced significant delays amid reviews under the Trump administration, but was recently fast-tracked by the Biden administration. The developers hope to secure financing by the end of the year before starting construction, and to start generating power by the end of 2023.