Offshore wind firms split on size of initial contract

Offshore wind firms split on size of initial contract

Big disagreement on whether bigger is better

THE THREE COMPANIES vying for Massachusetts offshore wind contracts sharply disagree on how big the initial procurement should be, but they are united in their belief that electricity generation and transmission should be handled by them and them alone.

The companies spelled out their positions in responses to a Baker administration request for ideas on how to write a request for proposals scheduled to go out this summer. A law passed last year directs the state to procure 1,600 megawatts of offshore wind in individual solicitations of no less than 400 megawatts. The law also requires that, in each contract after the initial one, the winning bid for electricity must be lower than the winning bid in the preceding contract.

The contracting process is attracting nationwide attention as Massachusetts races to kickstart what could become a major industry over the next decade with the potential to generate economic development in the southeastern part of the state, particularly New Bedford. The Conservation Law Foundation, in its filing, said this summer’s request for proposal “will be the first-ever competitive solicitation for commercial-scale offshore wind in the United States, and undoubtedly will serve as a model for future solicitations of this valuable energy resource in New England and other regions.”

The three windfarm developers all took different positions on how big the initial procurement should be, and there was even disagreement on what the law allows. One of the Baker administration’s questions asked for the pros and cons of awarding multiple contracts in the initial procurement that, combined, would add up to 400 megawatts.

Baystate Wind, a Boston-based partnership of DONG Energy and Eversource Energy, said in its response that the law does not allow for contracts less than 400 megawatts. (The Conservation Law Foundation adopted the same position.)

Baystate Wind recommended that the initial procurement go for a project in the 400 to 800 megawatt range. “Large projects provide efficiencies of scale, and would be expected to directly result in a lower cost of electricity for Massachusetts electricity customers,” wrote Fred Zalcman of Baystate Wind.

Deepwater Wind, in its response, didn’t voice any concerns about the legality of a contract less than 400 megawatts. In fact, the Providence-based company suggested the state should require bids on projects of 200 megawatts, 400 megawatts, and 600 megawatts. Deepwater Wind said the multiple proposals would help sort out how scale affects cost, but noted that a contract above 600 megawatts, which would be among the largest in the world, would be “massively risky” because of the lack of a local supply chain.

Vineyard Wind, which is located in New Bedford, recommended a procurement of 400 megawatts every year for four years. The company said its approach would promote competition among suppliers and avoid the “winner-take-all” scenario that would materialize if one firm grabbed half of the total procurement in one fell swoop.

All three companies were in agreement that they should build the wind farms and the transmission lines needed to bring that power to shore. Baystate Wind said this “full-scope approach” would keep the solicitation simple and allocate risk appropriately. “The full-scope approach allows the design of the transmission network to follow the needs of the offshore wind farm and not vice versa,” the company said. “Finally, the full-scope approach ensures that competitive pressure is applied to all assets from the wind farm up to the onshore interconnection point.”

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Bruce Mohl

Editor, CommonWealth

About Bruce Mohl

Bruce Mohl is the editor of CommonWealth magazine. Bruce came to CommonWealth from the Boston Globe, where he spent nearly 30 years in a wide variety of positions covering business and politics. He covered the Massachusetts State House and served as the Globe’s State House bureau chief in the late 1980s. He also reported for the Globe’s Spotlight Team, winning a Loeb award in 1992 for coverage of conflicts of interest in the state’s pension system. He served as the Globe’s political editor in 1994 and went on to cover consumer issues for the newspaper. At CommonWealth, Bruce helped launch the magazine’s website and has written about a wide range of issues with a special focus on politics, tax policy, energy, and gambling. Bruce is a graduate of Ohio Wesleyan University and the Fletcher School of Law and Diplomacy at Tufts University. He lives in Dorchester.

About Bruce Mohl

Bruce Mohl is the editor of CommonWealth magazine. Bruce came to CommonWealth from the Boston Globe, where he spent nearly 30 years in a wide variety of positions covering business and politics. He covered the Massachusetts State House and served as the Globe’s State House bureau chief in the late 1980s. He also reported for the Globe’s Spotlight Team, winning a Loeb award in 1992 for coverage of conflicts of interest in the state’s pension system. He served as the Globe’s political editor in 1994 and went on to cover consumer issues for the newspaper. At CommonWealth, Bruce helped launch the magazine’s website and has written about a wide range of issues with a special focus on politics, tax policy, energy, and gambling. Bruce is a graduate of Ohio Wesleyan University and the Fletcher School of Law and Diplomacy at Tufts University. He lives in Dorchester.

Edward Krapels, the CEO of Anbaric Development Partners, a Wakefield transmission firm, recommended separate solicitations for wind power and transmission. “There is no need or justification for duplicative transmission cables in the ocean any more than there is for such transmission lines on land. Moreover, joining generation and transmission allows the former to earn monopoly profits on the latter,” he said.

Associated Industries of Massachusetts, in its filing, said it favored an initial solicitation for 400 megawatts. The business group took no stand on whether power generation and transmission should be decoupled, but recommended the imposition of financial penalties for winning bidders who suffer cost overruns and delays.