Power from new offshore wind contracts may not be cheaper, officials say
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Massachusetts is relying on offshore wind power generation to be a major contributor to its decarbonization goals over the next three decades.
Contracts for the state's next two offshore wind projects were filed Wednesday and while both projects legally comply with the state's offshore wind price cap, officials said the price of power might not actually be cheaper than the last project.
In December, utility executives working with assistance from the Baker administration selected Avangrid Renewables' roughly 1,200 megawatt Commonwealth Wind proposal and a 400 MW project offered by Mayflower Wind to continue the state's pursuit of cleaner offshore wind power.
Energy and Environmental Affairs Secretary Beth Card said Commonwealth Wind's power will cost 7.2 cents per kilowatt hour and power from Mayflower's 400 MW project will cost 7.7 cents per Kwh based on contracts filed with the Department of Public Utilities on Wednesday. Boston area households paid an average of 26.8 cents per kWh of electricity in April 2022, according to the U.S. Bureau of Labor Statistics.
While the contracts for both projects came in cheaper than the last Mayflower Wind project did (7.8 cents per kWh) in accordance with the state's requirement that each new wind project generates power at a better price than the one that came before it, Mayflower Wind said last year that it would reduce the cost of power from that project to about 7 cents per kWh as long as the project is eligible for a higher investment tax credit. That would mean the state's third and fourth wind farms would generate power for a higher price than the state's second project.
"Right now, it has not been established that they're eligible for that tax credit," Department of Energy Resources Commissioner Patrick Woodcock said Wednesday in explaining why the price cap was set using the original higher price. A spending bill passed by Congress in 2020 made offshore wind projects that begin construction between 2017 and 2025 eligible for a 30 percent investment tax credit, as opposed to the 12 percent credit for projects that began in 2019 or the 18 percent credit for projects that got underway in 2020.
Both developers are already working on roughly 800 MW projects for Massachusetts. Vineyard Wind I, projected as the first utility-scale offshore wind farm in the nation, is in the early stages of construction and is due to come online by the end of next year. Avangrid Renewables owns half of that project. Mayflower Wind's initial 804 MW project has begun its federal review process and is expected to be up and running in 2025.
The latest projects, Card said Wednesday, would offset about 2.7 million metric tons of greenhouse gas emissions each year and represent the equivalent emissions savings of taking more than 586,000 cars off the road.
"These contracts will provide benefits to customers' monthly bills as compared to a future in which the [electric distribution companies] do not acquire offshore wind energy in the solicitation by reducing bills by approximately 0.1 percent to 0.8 percent," the secretary said.
Now that the contracts have been filed with DPU, that agency will schedule a public hearing on them and begin the review and approval process, Card said.
Woodcock said that the utilities also filed an amendment Wednesday to the contract for the first Mayflower Wind project. That project was originally planned to connect into the regional power grid on Cape Cod but the contract amendment would now have both of Mayflower's projects use an interconnection point at Brayton Point in Somerset, he said.
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