New England wind farms poised to lead the way in utilities converting from fossil fuel to wind generation.

The race is on to build the first utility-scale offshore wind farm in the United States (US) on the federal Outer Continental Shelf. In December, three companies — Bay State Wind, Deepwater Wind, and Vineyard Wind — submitted bids in response to the Request for Proposal (RFP) issued by the Massachusetts Electric Distribution Companies (Distribution Companies), in coordination with the Massachusetts Department of Energy Resources, to enter into long-term contracts for offshore wind energy generation off of the coast of Massachusetts. The RFP was issued pursuant to Section 83C of Massachusetts’ Act to Promote Energy Diversity. Under the RFP, the Distribution Companies required developers to submit projects of at least 400 megawatts (MW) of offshore wind power generation, while also considering projects generating up to 800 MW. This initial solicitation is part of a staggered procurement plan, in accordance with Section 83C, to acquire approximately 1,600 MW of aggregate offshore wind nameplate capacity by June 30, 2027.

Each of the submitting wind farm ventures holds a federal lease from the Bureau of Ocean and Energy Management (BOEM) for areas in federal waters 15 to 25 miles offshore. All three bids propose wind farms south of the island of Martha’s Vineyard that would provide 400 MW of power, though some bids include alternate proposals on smaller or larger scales. Each bid also includes storage and transmission proposals, as the RFP required.

Overview of RFP Submissions

Bay State Wind Proposal

Bay State Wind is a 50-50 joint venture between Ørsted North America, LLC (formerly DONG Energy), a leader in global offshore wind development, and Eversource Investment, LLC, a transmission company headquartered in Boston. Bay State Wind proposes a 400 to 800 MW project, coupled with the largest transmission line of the three bids with sufficient capacity to receive 1,600 MW of offshore wind generation. Bay State Wind makes the case that a material price advantage from economies of scale is associated with its proposal.

Highlights:

  • 400 to 800 MW capacity
  • Battery storage system; battery supplier identified; however, the final selection would be made post-award
  • Undersea transmission cable with a capacity of 1,600 MW
  • Estimated savings to Massachusetts ratepayers of US$158 million per year
  • Development, construction, and operation of the project self-financed exclusively with capital from its owners
  • Developed, financed, and constructed by 2022

Deepwater Wind Proposal

Deepwater Wind, the only company currently operating a wind farm in the US — the 30 MW Block Island wind farm located in state waters off the coast of Rhode Island — proposes a project configuration of either 200 or 400 MW. Deepwater Wind submits that a smaller project and an incremental development approach would position Massachusetts to benefit from declining offshore wind development costs, which are projected to fall 30% by 2030.

Highlights:

  • 200 to 400 MW capacity, initially
  • Submarine HVAC cables with 200 to 800 MW transmission capacity initially, with a planned build out to 1,600 MW; partnering with GridAmerica; however, acceptance of Deepwater Wind’s project is not contingent on acceptance of this transmission proposal.
  • Optional pairing of generation and transmission system with grid-scale pumped hydro storage system through partnership with FirstLight Storage
  • Estimated US$75 million in savings for Massachusetts ratepayers initially
  • Construction would begin in 2022, operation by 2023

Vineyard Wind Proposal

Vineyard Wind is a venture of Copenhagen Infrastructure Partners — which specializes in energy infrastructure investment and is currently developing offshore wind projects in seven countries — and Avangrid Renewables, one of the largest onshore wind developers in the US. Vineyard Wind has already submitted two key permit applications, a Construction and Operations Plan (COP) with BOEM and another permit with the state Energy and Facilities Siting Board. The state has commenced environmental review of the undersea transmission cables, which would carry Vineyard Wind power to the mainland. Other state agencies, including the Massachusetts Secretary of Energy and Environmental Affairs and the local governments of impacted towns, will also conduct regulatory reviews of project features within their jurisdiction.

Highlights:

  • 400 or 800 MW capacity
  • 800 MW transmission via undersea cables with an additional 800 MW to follow
  • Distributed battery storage system
  • Estimated US$230 million in savings to Massachusetts ratepayers
  • Construction could begin in 2019, the first part of the project (400 MW of wind energy and 800 MW of storage) in operation by 2021

Next Steps

As the next stage in this initial procurement, the Distribution Companies will select projects for contract negotiations by April 23, 2018. The Distribution Companies intend to execute the long-term contracts by July 2, 2018, which the Massachusetts Department of Public Utilities will submit for approval by the end of July 2018. Offshore wind development in Massachusetts is expected to provide capacity during winter demand peaks to reduce winter electricity price spikes in New England and, with up to 8,300 MW of oil and coal generation at risk of retirement by 2020, offshore wind could be critical in addressing future energy needs in the region.

Latham & Watkins LLP is closely following the development of offshore wind throughout the US, and will continue to provide updates on this blog.

The information included in this post is drawn from publicly available sources. Latham & Watkins LLP expresses no opinion herein regarding the substance of the three bids described in this post or their merits.

This post was prepared with the assistance of Kimberly Castle in the New York office of Latham & Watkins LLP.