3 takeaways on the offshore wind RFP

Getting the $8 billion procurement right

IMAGINE WIND POWER delivering electricity at prices well below today’s rates. It’s not the fantasy of some wildly idealistic environmentalist: In fact, it’s happening today in Texas, and the potential exists in Massachusetts for abundant and cheap wind power if only we are bold enough to imagine a future largely devoid of fossil fuel energy – and plan accordingly.

One year ago, the Massachusetts Legislature took the first bold step by requiring the procurement of 1,600 megawatts of offshore wind. This will transition the Commonwealth from 20th to 21st Century fuels and will make the Bay State one of the largest producers of offshore wind power in the world. New York is right behind us, and together the two states will truly create a dynamic and exciting new clean energy industry.

Massachusetts has already begun to work toward meeting this requirement by issuing a request for proposals (RFP) for 400 to 800 megawatts of offshore wind. But as Massachusetts takes its crucial first steps, it’s vitally important we don’t short-circuit the process for future generations. That means making sure that this RFP process is right, right from the start.  Here are three critical building blocks.

First, because offshore wind relies on transmission to reach shore, and that transmission is infrastructure lasting 75 years or more, it must be carefully planned to create competition among wind generators. An infrastructure plan will also require as few electric cables as possible and position them where they do the least damage. The RFP does not get high grades on this requirement. Transmission was an afterthought. It needs to be “front of mind” so that the winning project can be built on schedule, on budget, and with a minimum of public complaints.

Second, the RFP process must create a level playing field. Again, the current RFP doesn’t get high grades here. The RFP was designed by electric utilities, who will select the winning projects and who will also likely submit projects into the RFP. That’s not a level playing field. It’s remarkable to give such discretion to the utilities, and it’s therefore incumbent on the Baker administration to oversee the process to eliminate even the perception of self-dealing that’s inherent in this design. A better model would be for a government/quasi-government entity to be administering these RFPs.

Third, the price of the power that will come out of this RFP will be higher than the market price. Customers will be asked to pay a big premium for this clean energy. The RFP is likely to reveal a tension between obtaining the cheapest price by sourcing equipment and services abroad, versus getting maximum economic development in Massachusetts by committing to local equipment and services.

But there is extraordinary news: renewable energy is becoming mainstream and legacy fossil-fuel generation is starting to be written off. Cost reductions of wind and solar follow the declining costs of technology, while the cost increases of legacy generation — gas-fired plants, nuclear, and even hydro follow the increasing costs of traditional manufacturing industries. In Texas, some 20,000 megawatts of wind power flow into its grid, thanks in part to a new, competitively bid transmission system that was designed to unlock Texas’ wind potential. The combination of planning for future clean generation and introducing competition into the transmission sector has allowed wind developers to generate energy at ridiculously low prices, with huge benefits to Texas consumers and the environment.

Meet the Author
Massachusetts doesn’t have the landmass of Texas, but it has the ocean. At Anbaric Development Partners, we’re excited by the opportunity to play a role in this first round of energy procurement while apprehensive about who will call the shots on such an important project. Remember, the 1,600 megawatts of offshore wind authorized by the legislation represents a commitment of about $8 billion in capital. And that could be just the beginning. If leaders get this right by thinking long term it will usher in a remarkable new age of clean energy in Massachusetts.

Edward Krapels is the CEO of Anbaric Development Partners, a clean energy transmission company.