The Baker administration is on board with pursuing additional renewable energy procurements that would double the amount of possible offshore wind power in Massachusetts, enough to provide roughly a third of the state’s electricity demand.
The Department of Energy Resources on Friday released its report on “the necessity, benefits and costs” of pursuing an additional 1,600 megawatts of offshore wind power, which the Legislature last year authorized but did not mandate, and concluded that it would be a good bet for ratepayers, the environment and the economy.
The state agency is expected to seek the additional 1,600 megawatts of energy generation in chunks of up to 800 megawatts, starting in 2022.
“Based on the analyses in our study, an additional solicitation of 1,600 MW will likely provide benefits for Massachusetts ratepayers in excess of the anticipated costs of the contracts,” DOER Commissioner Judith Judson wrote in a letter to lawmakers. She added, “Based on these findings, the DOER recommends and will require the Massachusetts electric distribution companies to proceed with an additional 1,600 MW of offshore wind generation solicitations.”
A 2016 law authorized 1,600 megawatts of offshore wind power, and the state and utility companies approved 800 megawatts from the Vineyard Wind project and are currently seeking proposals for the second 800 megawatts of the first authorization. Last July, the Legislature and Gov. Charlie Baker agreed to a law that authorized, but did not mandate, a second 1,600 megawatt procurement and directed the DOER to first study the idea.
The DOER study projected that an additional procurement for 1,600 megawatts of offshore wind could save Massachusetts ratepayers between $670 million and $1.27 billion over the 20-year life of a contract, versus purchasing the same amount of clean energy in the markets.
Executive Office of Energy and Environmental Affairs spokesman Peter Lorenz said the study “recognizes the economic and environmental benefits associated with soliciting another 1,600 megawatts offshore wind and the administration looks forward to using this information to further reduce energy costs and strengthen the state’s clean energy economy through the continued development of offshore wind energy.”
A state energy official said that the additional 1,600 megawatt procurement would remain cost-effective, based on the state’s analysis and modeling, so long as the price does not rise any more than about 10 percent from its current mark. The 2016 law included a provision requiring that each subsequent procurement be cheaper than the last, and DOER said it is recommending that the state retain that price cap.
The DOER report said the pricing for offshore wind projects is expected to continue to decline over time — at a projected rate of 3 percent per year from 2020 through 2030 — though costs may rise slightly when the federal investment tax credit often used in these projects expires later this year.
The additional offshore wind power “can provide significant contributions towards achieving [Global Warming Solutions Act] targets and is particularly valuable in winter months,” the report said. Under that 2008 state law, Massachusetts is required to reduce its emissions to 25 percent below 1990 levels by 2020 and 80 percent below 1990 levels by 2050.
In its report, DOER recommends that it no longer solicit clean energy generation and the transmission of that energy as a single package. Instead, the agency suggests that it move forward in 2020 with a solicitation for a main transmission system that future generation projects would be required to tie into.
Having one primary transmission system “has the potential benefit of minimizing impacts on fisheries, optimizing the transmission grid, and reducing costs,” the report concluded.
As it moves ahead with the next 1,600 megawatt procurement, the DOER said it plans to do so on a staggered basis, in order to take advantage of rapid technological changes in the industry that help drive costs down. DOER suggested a schedule that would involve a procurement for transmission in 2020, the solicitation for the first 800 megawatt chunk of the new procurement in 2022, solicitation for the second chunk of the new procurement in 2024 and a solicitation in 2026 if the first two do not procure the full 1,600 megawatts.
“The proposed schedule strikes a balance between capturing cost effectiveness offered by later procurements with a steady pipeline of solicitations to spur and maintain economic development opportunities,” the report said. “A defined schedule provides market visibility for supply chain development, increasing opportunities for economic development and benefits for the Commonwealth. Visibility on the schedule will also increase opportunity to coordinate with other states and other solicitations.”
While Massachusetts pursues its own offshore wind generation, states up and down the East Coast are doing the same. Rhode Island has one small offshore wind farm and is pursuing more, Connecticut lawmakers have authorized the state to procure 3 percent of the state’s energy load from offshore wind, New Jersey has authorized a procurement of up to 3,500 megawatts by 2035, and New York has authorized up to 2,400 megawatts by 2030, according to the DOER report.
The offshore wind industry along the Massachusetts coast has the potential to be a more significant sector than “anybody ever imagined or appreciated,” Gov. Charlie Baker said earlier this year, especially once energy-storage technology is further developed and deployed in tandem with clean energy from wind turbines.