Offshore Energy Projects Will Need Years To Power Up

"The multi-state offshore wind bids unsealed today are a major milestone in the Northeast’s transition from fossil fuels to clean renewable energy. We must build offshore wind if we are going to have an economy powered by clean electricity for our cars, our homes, our businesses and our industries. Without offshore wind, there is no clean electric future," Kate Sinding Daly, senior vice president of law and policy at the Conservation Law Foundation, said. "If we are going to abate climate change, improve our health, clean our air and water – major offshore wind projects like those envisioned here for Massachusetts, Rhode Island and Connecticut have to become reality."

The bids will be evaluated by a group led by DOER and which includes the utilities required to buy the cleaner power (National Grid, Eversource and Unitil), the Executive Office of Economic Development, and the consultation of an independent firm. The state's request for proposals spelled out what the evaluation team will consider: a quantitative evaluation of the project’s cost and energy market impacts, and a qualitative evaluation that assigns points to bids based on economic development potential, environmental and fisheries impact, and support for low-income ratepayers.

Massachusetts projects or a project are to be selected for contract negotiations by Aug. 7, and the long-term contracts are to be executed by Oct. 9 and submitted for Department of Public Utilities approval by Nov. 13.

The trio of states will have discretion to cover their entire procurement authority with a multi-state project, or instead to combine single-state and multi-state projects within their allowable capacity, according to the MOU. Any two of the states can select a multi-state offshore wind bid with power capacity up to their maximum procurement authority, opening the possibility of a Massachusetts-Connecticut wind project, or a Rhode Island-Connecticut wind project, or a project that would deliver clean power to all three states.

Vineyard Wind 2

Vineyard Offshore, one of the companies behind the Vineyard Wind 1 project that represents the only offshore wind currently in the Massachusetts pipeline, announced Wednesday morning that it submitted a proposal for a 1,200 MW Vineyard Wind 2 project, which it said could start delivering power in 2031. The company said it offered the project to Massachusetts, Rhode Island and Connecticut individually, and to the three states together under the joint solicitation process.

The Vineyard Wind 2 project would be developed in a lease area about 29 miles south of Nantucket, to the south and east of the Vineyard Wind 1 project. It would use Salem as its offshore construction staging site, get steel components for foundations from a Providence-based company, connect into the New England grid in Montville, Conn., and run its operations and maintenance out of New Bedford, the company said. It's designed to produce enough power for more than 650,000 homes.

"Vineyard Wind 2 has been conceived with a focus on deliverability, achieved by mitigating supply chain risks, maximizing potential federal tax credits, utilizing a robust delivery point, and leveraging New England’s port infrastructure," the company said in its bid. "With construction as well as operations and maintenance (O&M) activities based in Massachusetts, secondary steel fabrication in Rhode Island, and a delivery point in Connecticut, Vineyard Wind 2 offers the region the most economical project configuration possible while advancing the Commonwealth’s ambition to be a global leader in offshore wind."

If selected, Vineyard Offshore said its project would displace 2.1 million tons of carbon dioxide emissions per year across New England, roughly the same as taking 414,000 cars off the road. Officials said Vineyard Wind 2 would generate about $2.3 billion in direct expenditures and 3,800 job-years of employment across New England, with more than $1.5 billion in spending and 80 percent of the employment coming in Massachusetts.

Energy giant Avangrid put forward bids connected to what it is calling New England Wind, which represents two projects -- a 791 MW New England Wind 1 project and a 1,080 MW New England Wind 2 project. The company said it submitted a tri-state bid for New England Wind 1, a second tri-state bid for New England Wind 1 and 2 combined, and additional bids for the single-state procurements in Massachusetts, Connecticut, and Rhode Island.

Avangrid, which is also behind the operational Vineyard Wind 1 projecy, said its New England Wind projects are "among the most mature offshore wind opportunities in the nation, with the ability to achieve commercial operations before the end of the decade, delivering an urgent energy, climate, and economic solution to the region."

The New England Wind 2 label rebrands the former Commonwealth Wind project, which was canceled in August (in conjunction with $48 million in penalties paid by Avangrid) after the developer said it could no longer finance the project at the price it agreed to accept for its power. That project is offered only as part of the combined New England Wind 1 and 2 project and was not submitted as a standalone project.

"There's a lot of infrastructure costs that the first project will bear. If, for some reason, that project weren't awarded, those same infrastructure costs and additional ones would be loaded on the second project. So what we want to make sure of is that the costs that are needed to make New England Wind 1 happen are borne by New England Wind 1 and not by New England Wind 2," Avangrid's chief development officer for offshore wind, Ken Kimmel, said. "It's really about that, making sure the costs are properly allocated to each project."

Avangrid CEO Pedro Azagra suggested that the single New England Wind 1 project is the priority since it is furthest along in the permitting process and could come online before the end of this decade. The Bureau of Ocean Energy Management issued a final environmental impact statement for the project in February, and is expected to issue a record of decision in April and approve the project's construction and operations plan in July.

"At this historic turning point for climate action, New England Wind answers the region's call for projects that reflect the urgency, ambition, and certainty the moment demands," he said in a statement. "In powering up the first-in-the-nation Vineyard Wind 1 project, Avangrid proved that American offshore wind is possible. New England Wind 1 in particular builds on this momentum by offering a shovel-ready project that is prepared to start construction as soon as next year. With nearly all local, state, and federal permits in hand, all interconnection rights secured, and a Project Labor Agreement signed with a skilled, local, union workforce, Avangrid is ready to go."

The New England Wind 1 project is "an exceptionally advanced and shovel-ready project" that used to be known as Park City Wind, Avangrid said. The company last year paid a penalty to Connecticut to terminate the contracts it had to develop Park City Wind for that state's utilities.

It would be located in a lease area just south of the Vineyard Wind 1 project, and Avangrid plans to provide $30 million in upfront investment and $100 million in lease payments to the marshaling port being developed in Salem.

"This port can be a catalyst for our North Shore region, but only if it's deployed into use. As the first contracted tenant at the Salem Port, we believe Avangrid is uniquely positioned to deliver a transformational project to Massachusetts that will help the state meet its critical energy needs and secure new economic opportunities for its residents here on the North Shore," Sen. Joan Lovely and Rep. Manny Cruz, both of Salem, said in a statement provided by Avangrid.

Avangrid said the project could generate enough power for approximately 400,000 homes and reduce emissions equivalent to taking 300,000 gasoline-powered cars off the road each year. It is projected to create more than 4,400 full-time equivalent jobs and spur $3 billion in direct investment in the region.

"New England Wind 1 offers extraordinary certainty and viability. With complete state, regional, and local permitting, a signed host community agreement with the Town of Barnstable, and a nearly complete federal permitting program, the project can begin construction as soon as next year and achieve commercial operations in 2029, helping achieve ambitious 2030 state climate targets set by the New England states," the company said in its announcement.

The project proposal also includes a plan to deliver basically the power generated by one turbine (15 MW) to the city of Boston, which Avangrid said would power the "equivalent to 1/3 of all Boston Public Schools (BPS) buildings, as well as 5,000 residential homes."

The combined New England Wind 1 and 2 project would generate 1,870 MW for New England, enough to power almost 1 million homes and reduce emissions by roughly the equivalent of taking 700,000 cars off the road annually. Avangrid said its combined project would create as many as 9,200 full-time equivalent jobs and bring $8 billion in direct investment to New England.

The combined project also includes the intention to use the first subsea export cables produced at the cable-manufacturing facility to be built by Italian company Prysmian Cable Manufacturing, in Somerset, but Avangrid said the facility would not be ready in time for New England Wind 1.

SouthCoast Wind, a project owned by OW Ocean Winds, submitted a tri-state proposal for a 1,200 MW project that would essentially match the SouthCoast Wind project that was also canceled last year -- a 800 MW project selected in 2019 and a 400 MW project selected in 2021 that were combined.

"The punishing inflation of 2020-2023 profoundly impacted infrastructure costs, upending the economics of projects that had fixed revenues but still needed to fix their costs. For SouthCoast, losing the financial viability of our awarded projects was incredibly difficult – not only because we knew how important they were to Massachusetts and New England but also because those awards were the pride of our team," the company said in its bid. "The clear lesson is that a quick turn from award to construction is critical to de-risk a macroeconomic environment that no one can control. Recognizing that imperative, SouthCoast spent the last 18 months making sure the Project will be construction-ready immediately following an award."

The SouthCoast Wind bid document refers to it as a "fully bankable project ready to start construction in 2025" and one that can offer "quantifiable project benefits that significantly exceed contract costs."

SouthCoast Wind CEO Michael Brown said the project "is on schedule to deliver abundant and renewable power to New England’s electric grid by 2030."

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03/27/2024