Bruce Mohl May 31, 2019
THE BAKER ADMINISTRATION is pushing ahead with plans to double the procurement of offshore wind power over the next several years, a move that will increase wind’s share of the state’s energy portfolio to 30 percent while locking Massachusetts into long-term contracts for nearly two thirds of its electricity.
The announcement was another sign of just how bullish the state is on offshore wind, but it also highlighted some of the risks involved in negotiating 20-year contracts directly with electricity suppliers instead of relying on the region’s competitive wholesale electricity market. Right now offshore wind appears to be a great fit in terms of price and environmental benefits. But if new technologies emerge in the near future driving down the price of solar or other emerging renewables, ratepayers could be stuck paying above-market prices for their power.
Legislation approved on Beacon Hill in 2016 authorized the state’s utilities, acting on behalf of their ratepayers, to negotiate contracts for 1,600 megawatts of electricity. The first contract for 800 megawatts was awarded to Vineyard Wind last year and another 800 megawatt procurement is expected to be awarded by the end of this year. Under legislation approved last year, the state Department of Energy Resources was required to analyze the market for offshore wind and decide whether it made sense to double-down and procure another 1,600 megawatts.
The report released on Friday concludes it makes sense to do procurements for the additional 1,600 megawatts in 2022, 2024, and again in 2026 if necessary. The report also recommends conducting a solicitation in 2020 to see if it would make sense to construct an independently built transmission line that would serve all of the new wind farms. Until now, wind farm operators have preferred to build their own individual transmission lines to shore, but state officials think there may be environmental benefits from minimizing the number of transmission lines as the industry expands.
The state report portrays offshore wind as a very good deal for the state, providing renewable power at an attractive price point. The report said offshore wind farms, on an annual basis, operate at 50 percent of their capacity (meaning they generate half the electricity they are capable of generating because the wind isn’t always blowing ) and tend to reliably generate power during the winter months when natural gas for power plants can sometimes be in short supply.
A chart in the report noted the Vineyard Wind contract price was 6.5 cents per kilowatt hour in 2017 dollars, slightly higher than the price of Quebec hydro-electricity being purchased in a separate procurement and double the price of electricity produced with natural gas. The offshore wind price was half the price of the state’s least-subsidized solar power option. The report estimated the contracts for an additional 1,600 megawatts of electricity will save the state’s ratepayers between $670 million and $1.27 billion over the life of the 20-year contracts.
Patrick Woodcock, the deputy secretary of energy, said it’s unclear whether the energy savings would continue if more than 3,200 megawatts of offshore wind electricity were procured. He said the analysis by the Department of Energy Resources indicated savings from offshore wind would begin to diminish at some point.
The report also raised concerns about the state’s growing reliance on long-term contracts for renewable energy. The operator of the region’s power grid currently runs two energy markets (one day to day and the other longer-term) that in broad terms pit power generators against each other, with business flowing to those able to deliver electricity at the lowest price. The markets have had difficulty accommodating offshore wind farms because the wind farms have significant upfront construction costs that are difficult to recoup in the regional energy markets.
With Massachusetts in need of clean energy to meet its emissions targets, the state has increasingly negotiated long-term deals outside of the regional power markets to get offshore wind farms and other renewable projects built. According to the state report, the state’s three utilities currently have 62 long-term contracts with renewable energy suppliers for a total commitment of $22 billion. With the extra 1,600 megawatts, 60 percent of the state’s electricity load will come from long-term contracts, the report said.
The long-term contracts change the regional market dynamic considerably. With the regional power markets, generators vie for sales and have to absorb any financial losses if their power plants are unable to compete for business. With the long-term contracts granted to renewable energy suppliers, the risk for any financial losses shifts back to ratepayers.
“The high amount of energy tied up in long-term contracts may impact wholesale markets and may shift risk to ratepayers as energy markets change,” the state report said.
Woodcock said the offshore wind market itself illustrates how quickly the market can change. He said Vineyard Wind originally planned to populate its wind farm with 6.5 megawatt turbines, but turbine technology has changed so much over the last 1 ½ years that the company is moving to a 9.5 megawatt turbine. “That just signals how much change is happening,” he said.
The report recommended the Legislature give the Department of Energy Resources the option of including other renewable resources in future solicitations to increase competition for long-term contracts and to take advantage of technological changes as they arise.
Another concern raised by the report is that competition is increasing from other states for the onshore economic development associated with offshore wind farms. Many on the South Coast have been worried that the focus on price in the state contracting process has hurt efforts to convince companies to build more production facilities in Massachusetts.
Other states are pursuing the industry aggressively. The report said New Jersey has a $100 million offshore wind tax credit program, New York is spending $200 million on port infrastructure, and Connecticut is investing $35.5 million in the New London port.
Continue reading here:
The state has approved a $147.5 million industrial wind-to-energy facility proposed for Hancock County after a four-year delay caused by concerns about the project’s impact on area bats and birds.
The Maine Department of Environmental Protection announced its awarding of a site permit to Longroad Energy’s 22-turbine Weaver Wind project in Eastbrook and Osborn on Friday. Opponents have 30 days to appeal to the Maine Board of Environmental Protection, spokesman Mark Bergeron said.
Attempts to contact Longroad were not immediately successful on Friday.
First proposed in December 2014 by developers First Wind and then by SunEdison, which withdrew its DEP application in 2015, the project survived opposition from the Department of Inland Fisheries and Wildlife over concerns that it would kill birds and bats and disrupt nesting grounds.
But state officials “and the applicant have worked closely in consultation with us to work out those issues,” Bergeron said Friday.
Each of the 22 turbines would be nearly 600 feet tall from ground to the highest tip of each blade, and would be rated for 3.3 megawatts of generating capacity for a total power capacity of nearly 73 megawatts. Fourteen would be in Osborn and eight would be in Eastbrook, Longroad has said.
To allay state concerns, Longroad agreed to set aside 5,791 acres for bird habitation in Hancock north of the Downeast Sunrise Trail and in Whiting near Holmes Bay. Longhorn will work with naturalists to create a land management plan to help the birds and bats survive, according to the permit approval.
To help protect bats, Longhorn will curtail turbine operations nightly from April 15 to Sept. 30 for at least 30 minutes before sunset and after sunrise when ambient temperatures are above 32 degrees Fahrenheit, depending on certain wind conditions. Turbines will only operate at wind speeds exceeding 6.0 meters per second from April 15 to July 15 and Sept. 16-30 and at speeds exceeding 6.5 meters per second from July 16 to Sept. 15. Turbines will be feathered during the curtailment and turn at no more than one revolution per minute to minimize risks of bat mortality, the approval states.
As part of the project, Longroad will build an operations center near Route 9 in Aurora and would connect to the grid at an Emera substation near the 34.5 megawatt Bull Hill wind farm in Township 16, which was developed by First Wind but now is owned and operated by TerraForm Power.
Longroad would likely wait until the appeal period lapses before beginning construction, Bergeron said.
Fair Use Notice: This website may reproduce or have links to copyrighted material the use of which has not been expressly authorized by the copyright owner. We make such material available, without profit, as part of our efforts to advance understanding of environmental, economic, scientific, and related issues. It is our understanding that this constitutes a "fair use" of any such copyrighted material as provided by law. If you wish to use copyrighted material from this site for purposes that go beyond "fair use," you must obtain permission from the copyright owner.