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Pricing announced for latest offshore wind farms
Credit: They come in under cap, but may actually cost more | Bruce Mohl | CommonWealth Magazine | May 25, 2022 | commonwealthmagazine.org ~~
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Baker administration officials say the two latest offshore wind procurements are in compliance with the state’s price cap even though their electricity will probably end up costing more.
Under the cap, the price of electricity with each successive procurement must come in lower than the previous one. The cap has become somewhat controversial of late, with those wanting offshore wind companies to spend more on economic development initiatives advocating for elimination of the cap. Gov. Charlie Baker and House leaders are in favor of eliminating the cap, but Senate leaders have expressed reservations about doing that.
Beth Card, the secretary of energy and environmental affairs, announced on Wednesday that Mayflower Wind is charging a nominal price of 7.7 cents a kilowatt hour for its latest 400-megawatt project and Commonwealth Wind is charging 7.2 cents for its 1,200-megawatt project.
Both prices are below the 7.77 cents that Mayflower charged on the last procurement.
Mayflower Wind, however, announced early last year that it intends to lower the price on its first Massachusetts procurement to 7 cents a kilowatt hour if, as expected, it qualifies for a 30 percent federal investment tax credit. A company spokesman said the Massachusetts price cap applies only to the original award price, not any subsequent adjustments.
Both of the latest Mayflower and Commonwealth Wind procurements come with economic development initiatives. Mayflower is providing $42 million to partner organizations and Commonwealth is providing $35 million. Commonwealth’s project also enticed the Prysmian Group to build a manufacturing plant to produce subsea cable at Brayton Point in Somerset.
State officials also announced that Mayflower Wind is shifting the interconnection point for its first project from Cape Cod to Brayton Point, where the power from Mayflower’s second project is expected to come ashore. The move will allow Mayflower to build one transmission line to serve both projects and cut costs considerably.
Avangrid Renewables is the company behind Commonwealth Wind and part owner of Vineyard Wind, the state’s and the nation’s first industrial scale offshore wind farm. The 800-megawatt Vineyard Wind is expected to begin producing electricity next year.
The first 800 megawatts of Mayflower Wind’s project is beginning its federal review and expected to come online in 2025.
The four Massachusetts projects combined will have the capacity to produce 3,200 megawatts of power, enough to power 1.7 million homes, according to Card. The state has authorized another 2,400 megawatts of procurements.
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