GOV. MAURA HEALEY launched what she described as the region’s largest offshore wind procurement this week. “With our top academic institutions, robust workforce training programs, innovative companies, and support from every level of government – Massachusetts is all-in on offshore wind,” she said.
But what her press release failed to mention was that this procurement comes at a very risky time for offshore wind, with the industry battered by economic and supply chain challenges and developers responding by pushing for higher prices for the electricity being produced.
In July, Rhode Island’s largest utility opted not to move forward with a wind farm deal because the cost “was deemed too expensive for customers to bear.”
A new study released this week indicates the developers of four proposed New York wind farms are seeking revisions to previously approved power purchase agreements that would boost the price anywhere from 27 percent to 66 percent, with a weighted average increase across all four wind farms of 48 percent.
The study, by the New York State Energy Research and Development Authority (NYSERDA), raises questions about some aspects of the wind developers’ proposed price increases, but overall it says the market conditions that have engulfed the industry are legitimate and real.
“These market conditions, driven in large part by increased demand for raw materials, an increased demand for large-scale renewable energy caused primarily by the COVID-19 pandemic and the war in Ukraine, as well as supply chain constraints and bottlenecks, are unprecedented in recent history, outside of reasonable developer control, and were unforeseeable at the time of each bid,” the study says.
The study says the normal approach in such situations would be to terminate the existing contracts and rebid them, which is what Massachusetts is doing with two of its wind farm projects. But the study says the proposal from wind farm developers in New York to rejigger the existing contracts without rebidding them has some advantages, given all the tradeoffs involved.
According to the NYSERDA study, rebidding the projects would push back the timetable for offshore wind development, delay all the climate and economic benefits associated with the projects, “and hurt New York’s ability to tap the scarce offshore wind supply chain.”
The study also suggests that rebidding could end up being more expensive. Tweaking the existing contracts to adjust for the unforeseen pricing pressures isn’t easy but the study suggests it is doable. Terminating the projects and starting over is simpler to implement, but it comes with no assurances that prices will be any better and could get worse.
“While it is impossible to predict future bid prices accurately, a number of factors indicate that average bid pricing in future solicitations is likely to be relatively high compared with prior solicitations,” the NYSERDA study says.
Massachusetts Attorney General Andrea Campbell’s office raised similar concerns in its testimony on the governor’s proposal to secure up to 3,600 megawatts of power in the upcoming procurement. The office suggested a go-slower approach, lowering the target amount to 1,600 megawatts.
“During this time of prolonged and compounded uncertainty, the [procurement], as proposed, could lock ratepayers into massive long-term offshore wind generation contracts at a time when the cost of those contracts is at an unprecedented high,” the attorney general’s office said in a filing with the Department of Public Utilities. “Instead, the Commonwealth should take a more measured approach in this solicitation by seeking to procure a smaller amount of offshore wind generation, while allowing matters impacting the economy generally and issues specifically affecting the offshore wind industry (e.g., supply chain issues and availability of wind turbine installation vessels) to settle.”
The Department of Public Utilities rejected the attorney general’s recommendation, noting the procurement doesn’t require the Healey administration to procure all 3,600 megawatts if the pricing isn’t favorable.
The “all-in on offshore wind” Healey administration doesn’t sound as if it wants to go slow with this next procurement, but time will tell. Bids from offshore wind developers are due at the end of January.
BRUCE MOHL
FROM COMMONWEALTH
Healey calls up National Guard: Gov. Maura Healey calls in up to 250 National Guard members to help with the state’s emergency shelter program, which is having difficulty accommodating an influx of migrants needing shelter. “We need all hands on deck,” Healey says. Read more.
FROM AROUND THE WEB
BEACON HILL
Gov. Maura Healey recommended four people for pardons, bringing to 11 the total number of such recommendations she has made, an unusual move for a governor early in their first term. (Boston Globe)
MUNICIPAL MATTERS
Local and federal authorities are investigating $2.7 million in payments made by the city of Lawrence in connection with what appears to be a scam. (Eagle-Tribune)
HEALTH/HEALTH CARE
UMass Memorial Medical Center held an event recognizing those who died from overdose deaths and highlighting efforts to combat the opioid epidemic. (Worcester Telegram)
ELECTIONS
The Globe endorses challenger Enrique Pepén over embattled incumbent Ricardo Arroyo in the race for the district Boston city council seat representing Hyde Park, Roslindale, part of Mattapan.
A Los Angeles-based advocacy group has ponied up $50,000 to the ballot campaign pushing to allow Massachusetts communities to adopt rent control. (Boston Herald)
Brockton candidates sparred at an NAACP forum, with interpersonal drama raging backstage and five competitive races before voters in September preliminaries. (The Enterprise)
BUSINESS/ECONOMY
The Woods Hole, Martha’s Vineyard, and Nantucket Steamship Authority underestimated the cost to convert three offshore supply vessels into ferries by $16.8 million. (Cape Cod Times)
EDUCATION
More than 200 people rallied last night outside the Star Store in downtown New Bedford to protest the University of Massachusetts Dartmouth’s decision to abruptly move its College of Visual and Performing Arts out of the building, where it has served an important anchor of the city’s arts and culture renaissance. (New Bedford Light) Columnist Jack Spillane wonders what Star Store owner Paul Downey got for the $90,000 in lobbying fees he’s paid over the last two years. (New Bedford Light) CommonWealth wrote about the controversy when it broke earlier this month and then put it in the broader national context of place-based public investments, a trend the New Bedford exit cuts against.
The Brockton schools are reeling as the district is suddenly facing an additional $14 million deficit on top of an $18 million shortfall that had already been announced and its superintendent announced he’s taken an extended medical leave. (Boston Globe)
TRANSPORTATION
The MetroWest Regional Transit Authority is a “lifeline” for migrants staying in Framingham, with transit authorities making efforts to teach the asylum seekers how to navigate the system, reload transit passes, and request translation services. (MetroWest Daily News)
New Bedford’s city council has been reluctant to approve a loan order for $7.65 million to finance ongoing city repair work, with the measure failing to pass in two council meetings and imperiling “critically needed” road work. (Standard-Times)
CRIMINAL JUSTICE/COURTS
A former sergeant with the Massachusetts Bay Transportation Authority police was indicted on two counts of filing false reports, allegedly trying to impede investigation into another officer’s assault on a man in an MBTA station. (Worcester Telegram)
The Supreme Judicial Court upholds the disbarment of a former assistant attorney general Anne Kaczmarek for her conduct in connection with the state drug lab scandal. (WBUR)
A federal grand jury indicted a former Middlesex County sheriff’s deputy, accusing him of threatening to burn down the Plymouth County courthouse, kill court security officers and “get” Middlesex County sheriff’s officers. (MetroWest Daily News)