A study carried out by the Department of Energy Resources in Massachusetts has recommended that the state acquires another 1.6 GW of offshore wind energy in the form of two more 800 MW procurements.
The study follows legislation signed by Governor Charlie Baker, ‘An Act to Advance Clean Energy, Chapter 227 of the Acts of 2018,’ which required the Department of Energy Resources (DOER) to study the necessity, benefits and costs of requiring electric distribution companies to conduct additional solicitations and procurements of additional offshore wind.
The legislation also directed the DOER to evaluate the previous 1.6 GW solicitation under Section 83C, the associated procurement process and make recommendations for any improvements.
Published on 31 May 2019, the Offshore Wind Study is the result of both extensive stakeholder outreach and energy sector modelling.
The DOER found that, “based on the analyses in the study, an additional solicitation of 1.6 GW will provide benefits for Massachusetts ratepayers in excess of the anticipated costs of the contracts as long as offshore wind pricing remains similar to the first 83C solicitation or continues to decline.”
The DOER therefore recommended – and will require – Massachusetts electric distribution companies to proceed with an additional 1.6 GW of offshore wind generation solicitations.
The study recommended the new solicitations take place in 2022 and 2024 to strike a balance between capturing cost effectiveness offered by later procurements while providing a steady pipeline of solicitations to spur and maintain economic development opportunities.
It also recommended the DOER consider the benefits of an energy storage solicitation and continues to allow paired storage in the additional offshore wind solicitation. The DOER will continue to evaluate ways to cost-effectively finance clean energy, reduce risk to ratepayers and improve the procurement process.
It also noted that, “while procurements should continue to encourage developers to maximise economic development opportunities, there is a limit to the economic development that can be financed through the contracts if the pricing of any additional offshore wind procurements continues at or declines below current levels.
“As more economic development is included in procurements, there is a risk that it could increase the cost of electricity contracts, which could have detrimental impact on economic development for other energy-intensive industries,” the study said.
“Massachusetts procurements should continue to encourage developers to maximise economic development opportunities and we should continue to include it as evaluation criterion…” but “consideration should be given to the balance of having economic development costs in the procurement contracts which affects electricity rates compared to other economic development mechanisms outside the contracts.”
The report said it was worth continuing to look at economic development outside the procurements to enable an ‘industry cluster’ to develop in the Commonwealth.
In May 2019, the electricity distribution companies and DOER issued a request for proposals for up to 800 MW of offshore wind for the state, this being the second solicitation they had issued. As highlighted here, the state’s first request for proposals in May 2018 saw the 800-MW Vineyard Wind win out.