Massachusetts utilities propose second offshore wind procurement

Massachusetts investor-owned electric distribution companies have asked state utility regulators to approve the utilities' proposed process for procuring a second round of offshore wind energy contracts.

On March 27, electric distribution companies operating as Unitil, National Grid, and Eversource Energy filed a petition to the Massachusetts Department of Public Utilities under Section 83C of the Green Communities Act. That law requires the companies to jointly and competitively solicit proposals for offshore wind energy generation and -- if reasonable proposals are received -- to enter into cost effective long-term contracts for offshore wind energy generation equal to approximately 1,600 megawatts of aggregate nameplate capacity not later than June 30, 2027.

In 2017, the distribution companies issued their first Request for Proposals for Long-Term Contracts for Offshore Wind Energy Generation. That first round resulted in executed contracts with developer Vineyard Wind LLC for an aggregate of 800 megawatts of offshore wind energy generation, whose approval is pending before the state Department of Public Utilities.

Now, the companies have proposed the timetable and parameters for a second round of procurements. The utilities say their second RFP will seek at least 400 megawatts of offshore wind energy generation, but will consider proposals from 200 megawatts up to approximately 800 megawatts if a larger-scale proposal is both superior to other proposals and is likely to produce more economic net benefits to customers. The utilities' proposed timeline includes RFP issuance on May 17, 2019, with confidential proposals due by August 9, project selection by November 8, contract execution by December 13, 2019, and submission of contracts for regulatory approval by January 10, 2020.

While the Green Communities Act allows the utilities to use staggered procurement in this manner, it requires any long-term contracts resulting from the second solicitation to include a nominal levelized price per megawatt hour that is less than the levelized price per megawatt hour resulting from the previous solicitation. Vineyard Wind LLC's winning bid in the 2017 solicitation yielded a levelized price of $64.97 per megawatt-hour in 2017 real dollars. The utilities' proposed 2019 RFP requires nominal levelized pricing to be less than $84.23 per megawatt-hour, which they assert is equivalent to the Vineyard Wind price after applying a 6.99 percent discount rate.

The Massachusetts Department of Energy Resources has filed a letter of support for the proposal, requesting that the Department of Public Utilities approve the companies' timetable and method for solicitation of long-term contracts.

Meanwhile, in 2018, the Massachusetts legislature enacted a law doubling the offshore wind procurement mandate to 3,200 megawatts by 2035.