THE BAKER ADMINISTRATION placed a bold bet on the economic and environmental benefits of offshore wind Wednesday, selecting one company to build an 800 megawatt wind farm off the coast of Martha’s Vineyard and working with Rhode Island to procure another 400 megawatts at another location in the same area.
State officials said they hope the two procurements will kickstart a regional industry with the potential to generate thousands of jobs across southeastern Massachusetts and Rhode Island and introduce a huge chunk of renewable, emission-free electricity into the region’s power grid. The 800-megawatt procurement, at full capacity, would represent nearly 6 percent of the state’s electricity load, state officials said.
“We’re trying to send a very strong signal to the industry that we’re serious about this resource. This is a very strong first swing,” said Matthew Beaton, the governor’s secretary of energy and environmental affairs.
Judith Judson, the commissioner of the Department of Energy Resources, which oversaw a procurement process that was carried out by the state’s utilities, said the state should realize long-term benefits by hosting the largest offshore wind project in the United States. “With the leadership we’re showing today, it does position us well for regional and local jobs,” she said.
Vineyard Wind, a partnership between Copenhagen Infrastructure Partners and Avangrid Renewables, a subsidiary of a utility holding company, won the 800 megawatt contract from Massachusetts. Deepwater Wind, which built the nation’s first commercial offshore wind farm off of Block Island (30 megawatts), won the 400 megawatt procurement from Rhode Island.
While Massachusetts is the first state in the country to push forward with large-scale offshore wind development, other states up and down the East Coast are racing to launch their own projects.
Lars Pedersen, the CEO of Vineyard Wind, said his project will use New Bedford as its main staging area for construction, which is expected to start in 2019 and be completed in 2021. The wind farm’s transmission line will connect to Barnstable on Cape Cod and, once the turbines are turning, the operations and maintenance for the project will be handled out of Martha’s Vineyard.
Pedersen estimated the 800 megawatt project will yield 2,000 job years of employment, the equivalent of 2,000 people working one year. But he said the total value of the project will be realized over time as the industry expands. “We think that these projects are the beginning of an industry,” he said.
As part of its bid, Vineyard Wind promised $10 million for the creation of an offshore wind supply chain of businesses, $2 million for the recruitment and training of workers, and $3 million for the development of ways to protect marine mammals who will become exposed to the wind farms.
Jon Mitchell, the mayor of New Bedford, said offshore wind should be good for the city. “We’ve been working hard to attract capital to our city and this is a significant source of potential capita,” he said.
Rhode Island’s role in the procurement was an interesting wrinkle that few expected. Rhode Island and Connecticut had participated in the procurement process but hadn’t received much public attention. As part of the process, the bidders were asked to explain how they would push forward with their projects if Rhode Island selected them.
Jeffrey Grybowski, the CEO of Deepwater Wind, said his company had bid on the Massachusetts procurement with the plan to use New Bedford as its staging area and Brayton Point in Somerset as its transmission connection to the mainland. Now that Rhode Island has selected his company, Grybowski said, Deepwater Wind will use either Providence or Quonset as its construction staging area and Quonset as its transmission connection to the mainland. Deepwater Wind’s transmission partner is National Grid, a utility that serves Rhode Island.
Under the Massachusetts law that authorized the state to procure offshore wind power, the Baker administration was directed to secure as much as 800 megawatts out of a total 1,600 megawatt procurement in the initial round. There had been much debate among the bidders and industry advocates about whether to start small and then gradually expand or whether to start big right out of the gate. The Baker administration chose to go big immediately.
Grybowski, who had advocated starting small to allow time for the supply chain of industries needed for the wind farms to develop, declined comment on the start-big strategy announced Wednesday. He did praise the states of Massachusetts and Rhode Island for working together. “This is an acknowledgement by Gov. Baker and Gov. Raimondo that regional procurement is a smart way to go,” said Grybowksi, who rode an emotional roller coaster Tuesday night – learning he lost the Massachusetts procurement before being informed he had won a Rhode Island procurement.
Beaton said Vineyard Wind scored first in nearly every evaluation category. The big questionmark now is how much the offshore wind power will cost. Officials in the two states will now negotiate contracts with the companies and then release the pricing information publicly. Beaton said he was very happy with the price offerings, but declined to go into any detail. In subsequent procurements, the prices of bidders are required to drop below the levels in the earlier contracts.
Three companies with leases in federal waters off the coast had vied for the offshore wind procurement, and the only one left with nothing at the end of this first round was Bay State Wind, a partnership of the Danish company Ørsted and Eversource Energy. The loss was another setback for Eversource, which is now 0 for 2 in the state’s procurement processes for clean energy. Eversource’s Northern Pass transmission line was earlier selected to deliver hydroelectricity from Quebec into the region but was then dropped when New Hampshire regulators refused to give it a key permit.
Several sources who followed the procurement process closely expressed surprise at the state’s choice of Vineyard Wind and guessed that the Baker administration made its decision primarily on price. The sources said they were also surprised Massachusetts didn’t split its procurement between two companies in case one of them ran into regulatory hurdles that would delay the project. Vineyard Wind, for example, is facing some resistance on the Cape to its plan to bring a transmission line ashore there.
Many hurdles remain as Massachusetts seeks to develop an offshore wind industry. One major one is opposition from the state’s fishing industry, which views the wind farms as a nuisance. In its press release announcing the procurements on Wednesday, the Baker administration highlighted the fishing concerns and a number of steps being taken to conduct research and open lines of communication with the fishing industry.