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2 offshore wind developers submit bids  

Credit:  Process rekindling debate on price vs. economic development | Bruce Mohl | CommonWealth Magazine | Sep 23, 2021 | commonwealthmagazine.org ~~

The headlines detailing the emergence of a US offshore wind supply chain in its infancy are starting to pop up in all sorts of places – a $250 million monopile facility in New Jersey in partnership with wind farm developer Orsted and a wind tower manufacturing operation in Albany, New York, in conjunction with wind farm developer Equinor.

But so far none of these facilities are being talked about or built in Massachusetts, which is rekindling a long-running debate in the state about whether onshore economic development projects or a low price for power should be prioritized as the state builds out its offshore wind industry.

The latest Massachusetts procurement for offshore wind, for as much as 1,600 megawatts of power, weighs price over economic development by a 70-30 margin. The split on the two previous procurements was 75-25.

The previous two procurements featured bids by three companies, but only two firms – Vineyard Wind and Mayflower Wind, the winners of the first two procurements – are bidding this time. Their heavily redacted public bidding documents, which were filed with state regulators on Thursday, provide no information on price and little on economic development. The accompanying press releases are equally vague.
Vineyard Wind, in its press release, says it is submitting two bids, one for 800 megawatts and one for 1,200 megawatts. The company promises “hundreds of millions of investments in offshore wind infrastructure, the creation of thousands of jobs, and substantial commitments to environmental justice communities” as well as “transformational investments across the state.”

Mayflower Wind, the other bidder, is more specific in its press release. The company said it is submitting an unspecified handful of bids – the biggest for 1,200 megawatts. The company promises to build an operations and maintenance facility in Fall River and, if its largest bid is accepted, spend another $81 million on economic development, including “the building of the offshore wind supply chain,” workforce training, port and infrastructure investments, and “diversity, equity, and inclusion measures.”

Michael Brown, the CEO of Mayflower, said in a telephone interview that his company’s focus would be on supporting lower-level tier 3 businesses in the offshore wind supply chain.

In the last procurement, which it won, Mayflower offered three pricing options – one with the absolute lowest price and minimal onshore economic development, one with a higher price and more onshore development, and a third with a still higher price and the most onshore wind development.

Brown said his company was working with Marmen Inc., one of North America’s largest wind tower manufacturers, to set up a manufacturing facility in Massachusetts at the time of the last procurement, but that didn’t move forward when the company’s lowest-price option was selected.

Under current state law, a price cap is in place requiring bids on the latest procurement to be lower than the winning bid on the last procurement, which would seem to indicate that onshore development will not be a high priority this time whomever is selected.

Brown said he had no position on what Massachusetts should make a priority. “It’s not for me to tell Massachusetts what to do,” he said.

House leaders earlier this week went out on a boat to look at the tiny wind farm near Block Island and used that backdrop to say they would seek to approve an energy bill this session that would remove the price cap, encourage more bidders, and promote greater onshore development.
“We’re going to be looking at those price caps. We’re going to be looking at quantifying and increasing the weight of economic development impacts in future bids,” said Rep. Jeff Roy of Franklin, the House chair of the Telecommunications, Utilities, and Energy Committee, according to a report from State House News Service. “We’ll make investments in offshore wind through an investment fund, trying to emulate what we did for the life sciences. We’re gonna’ look at port infrastructure … we’re going to look at grid modernization and transmission planning issues, and increase funding for higher ed institutions who are working in the space.”

But there is another school of thought circulating on Beacon Hill, within the Baker administration and the Legislature, that holds that obtaining the lowest price for offshore wind electricity should be the state’s top priority instead of engaging in a costly bidding war for onshore manufacturing facilities. After all, the state wants to use electricity from offshore wind to decarbonize the power grid and it wants to use a decarbonized power grid to electrify and decarbonize the transportation and heating sectors. Why accept higher prices for electricity to help finance onshore development if the ultimate goal is to use electricity as a tool to wean residents off of fossil fuels?

It’s also not clear if the absence of Orsted and Equinor from the current bidding process was because of the state’s price caps. Orsted is busy with projects in New Jersey and Equinor is tied up with projects in New York, so now may not be a good time for either firm to submit bids in Massachusetts.

Transmission concerns may also be keeping Orsted and Equinor from bidding. Power from the wind farms has to be brought ashore and then fed into the regional power grid. Vineyard Wind and Mayflower Wind are planning to bring the power from their first projects ashore on Cape Cod. Mayflower, if it wins the current contract, would bring the power ashore at Brayton Point in Somerset. Vineyard Wind has not disclosed where it would bring its power ashore if it wins the latest procurement.

As more wind farms come online, it becomes more expensive to access the grid, and the companies building the wind farms have to pay those costs. Industry sources say the state is already beginning to see a logjam for grid interconnection agreements, with costs rising.

Like most offshore wind developers, Brown said he prefers to control construction of both the wind farm and the connection to the power grid. But he said it may make sense at some point in the future to centralize and socialize transmission – building a facility near the wind farms to serve as a collection point for the electricity and then running power lines to areas ashore where the power is needed.

New Jersey is already exploring such an approach, although that’s just one of many ideas it is examining to reduce transmission bottlenecks and costs.

Source:  Process rekindling debate on price vs. economic development | Bruce Mohl | CommonWealth Magazine | Sep 23, 2021 | commonwealthmagazine.org

This article is the work of the source indicated. Any opinions expressed in it are not necessarily those of National Wind Watch.

The copyright of this article resides with the author or publisher indicated. As part of its noncommercial effort to present the environmental, social, scientific, and economic issues of large-scale wind power development to a global audience seeking such information, National Wind Watch endeavors to observe “fair use” as provided for in section 107 of U.S. Copyright Law and similar “fair dealing” provisions of the copyright laws of other nations. Send requests to excerpt, general inquiries, and comments via e-mail.

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