BOSTON — Massachusetts is partnering with Rhode Island and Connecticut to coordinate a multi-state procurement of offshore wind projects. Through a formal memorandum of understanding, signed Tuesday, the three states will together solicit and potentially accept offshore wind project proposals, which would be a first for the country.
Gov. Maura Healey made the announcement at an offshore wind industry conference at the Hynes Convention Center Wednesday morning to a conference hall filled with wind developers and government officials.
“We can take advantage of the unique economic development opportunities available in each state, so you do not have to establish every component of the supply chain separately,” Healey said. “Building out offshore wind to the scale that we need requires this intense regional collaboration and approach.”
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Healey said this new agreement will leverage the states’ collective buying power, lower project costs and benefit ratepayers, increase efficiencies, and reduce project risk for wind developers.
“The clean energy transition will not, cannot be accomplished in isolation,” she said.
The announcement comes after two Massachusetts projects — Commonwealth Wind and SouthCoast Wind, collectively 2,400 megawatts — terminated their contracts with the state’s Department of Public Utilities in recent months, stating their projects were no longer financially viable under the existing power contracts.
Both developers have communicated that they plan to rebid during the next round of project solicitations.
Massachusetts isn’t alone. This week, developer Avangrid terminated its contract for 804-megawatt project Park City Wind with Connecticut, citing inflation and other supply chain issues as driving the cost of the project up significantly. Avangrid has also communicated that it plans to rebid the project, CT Examiner reported.
Industry executives and panelists spoke about the “perfect storm” hitting the industry between inflation, supply chain issues, and the war in Ukraine at the conference Tuesday, hosted by the American Clean Power Association.
In discussion about building up the U.S.-flagged installation vessels and feeder barge systems, for example, conference speakers expressed the desire for more certainty about the pipeline of projects ahead that are pending state and federal review.
The industry and government officials have also cited permitting delays and slow government reviews as a concern.
Healey joined five governors — including those of Connecticut and Rhode Island — last month in signing a letter to President Joe Biden urging him to take steps to help states progress with contracted offshore wind projects amid current economic challenges.
“As we work to expedite offshore wind projects to meet our shared goals, we ask that you work with your agencies to ensure permitting processes are expedited and streamlined for these projects to avoid unnecessary cost increases and unlock the full potential of the U.S clean energy economy,” the governors wrote.
The Biden administration has set a goal of deploying 30 gigawatts (30,000 megawatts) of offshore wind energy by 2030. So far, operating projects total less than 50 megawatts, with an additional 800 megawatts set to come online with the Vineyard Wind project, which started turbine installation last month.
The three states are asking developers to submit multi-state proposals. Combined, their solicitations total up to 6,000 megawatts of offshore wind, or 6 gigawatts, with Massachusetts comprising the largest solicitation.
Project selection will depend on how states individually assess costs and benefits to ratepayers, as well as any other specific criteria that might be included or required by state regulations. Any two or three states can agree on a proposal and split the megawatts from a project, per the agreement.
Jason Grumet, CEO of ACP, said the approach is a way to promote economic growth and drive down energy costs.
Pedro Azagra, CEO of Avangrid, in a statement applauded Healey and the other governors for this approach of regional procurement: “this bold procurement strategy rises to the level of urgency the moment demands while providing offshore wind developers an opportunity to leverage economies of scale that will unlock more competitive bids.”
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