What’s the best bet on wind?
Three bidders seem receptive to notion of splitting contract
A clarification was added to this story after its original publication.
TWO OF THE THREE COMPANIES vying to build offshore wind farms off the coast of Massachusetts say it would make sense for the state to select two companies to split an 800-megawatt procurement. The third company said an 800 megawatt procurement is the way to go, whether it’s split or not.
The Baker administration is preparing to award the first contract of a 1,600-megawatt, multiyear procurement. Officials can award as much as 800 megawatts in the first round, and Vineyard Wind and Deepwater Wind say there would be benefits to awarding two, 400-megawatt contracts to two firms.
Matthew Morrissey, a vice president at Providence-based Deepwater Wind, which is calling its Massachusetts project Revolution Wind, said his preference would be for his company to receive a 400 megawatt contract, but he said if the state wants to go with a bigger project his choice would be to split the 800 megawatts between two firms. He said splitting 800 megawatts among two companies would incentivize competition throughout the construction process and send a clear signal to the world’s offshore wind industry that Massachusetts is serious about launching a new industry here.
“People started to appreciate the risk of putting all your eggs in one basket,” said Erich Stephens, chief development officer of Vineyard Wind.
Bay State Wind, the third company bidding for an offshore wind contract, has made clear from the start of the procurement process that it wants the state to award an 800 megawatt contract. Officials from the company, a partnership of a Danish firm called Ørsted and Eversource Energy, have indicated they would like to land the 800-megawatt contract, but they indicated on Thursday that they would not be averse to having it split in two. [An earlier version of the story indicated Bay State Wind wanted the 800-megawatt contract to itself, but officials said they want 800 megawatts even if it’s split between two bidders.]
Thomas Brostrøm, president of Ørsted North America, issued a statement saying he believes an 800-megawatt project offers the best value in terms of jobs, reduced energy costs, and infrastructure development. “We can certainly see the appeal of splitting the contracts, but the economic benefits for Massachusetts customers come with a larger contract,” he said.When they filed their original bids, both Deepwater Wind and Vineyard Wind didn’t mention splitting an 800 megawatt procurement. In fact, Deepwater Wind said there was merit in starting with a smaller project to allow local infrastructure time to develop.
The companies were required to submit 400 megawatt proposals and were given the option of submitting bids for other amounts up to a maximum of 800 megawatts. Deepwater Wind submitted bids for projects of 400, 200, and 256 megawatts. Vineyard Wind submitted bids for 400 and 800 megawatts.