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Mass. bill would force utilities to buy offshore wind power

The energy bill may be introduced as early as this month and is expected to require utilities to purchase power from offshore wind farms, according to Rep. Thomas Golden, one of the Democrats who control the state legislature. Still to be determined is how much power utilities would be forced to buy under the bill and, crucially, whether the state’s Republican governor -- who has already opposed one offshore project -- will sign it.

Lawmakers in Massachusetts are drafting a bill to try to jump-start the offshore wind industry in the United States, adding momentum to a $10-billion building spree off the Atlantic coast.

The energy bill may be introduced as early as this month and is expected to require utilities to purchase power from offshore wind farms, according to Rep. Thomas Golden, one of the Democrats who control the state legislature.

Still to be determined is how much power utilities would be forced to buy under the bill and, crucially, whether the state’s Republican governor -- who has already opposed one offshore project -- will sign it.

Wind-power developers want legislators to mandate the purchase of 2,000 megawatts over a decade, enough to power roughly 1.6 million households. Building the infrastructure to deliver that capacity would cost about $10 billion, said Tom Harries, an analyst at Bloomberg New Energy Finance. It also would give developers thei first chance to build the farms on a massive scale outside Europe and Asia, in a region where powerful ocean winds and high energy prices would provide a key proving ground.

"This bill would be the last piece of the puzzle to get the industry going," said Thomas Brostrom, general manager of North America for Dong Energy A/S, the world’s largest offshore wind developer.

First project

Three companies -- Dong, Deepwater Wind LLC and Offshore MW LLC -- have leases from the federal government to build in the waters south of Martha’s Vineyard.

Deepwater, a Providence-based company, last year began building the nation’s first offshore wind farm in waters off Rhode Island. The five-turbine Block Island Wind Farm is set to be completed over the next six months and would go into operation in the fall.

That project was made possible only after the Rhode Island General Assembly passed a broad renewable-energy law that included a clause directing National Grid, the state’s largest electric utility, to negotiate a long-term contract with Deepwater to buy electricity from the 30-megawatt wind farm.

Deepwater is now looking to build a project of up to 200 turbines in federal waters in Rhode Island Sound but has not yet found a buyer for the power from what could be a 1,000-megawatt array.

Dong, meanwhile, has opened an office in Boston anticipating the Massachusetts legislation, and is hunting for further sites along the East Coast. 

Massachusetts Sen. Marc R. Pacheco said the prospect of Dong and other companies anchoring their U.S. operations in the state may trigger an economic boom. "We have the opportunity to create an industry," Pacheco, a Democrat, said in an interview. "We have the opportunity to create thousands of jobs and create a whole supply chain." Globally, offshore wind energy has boomed over the last decade as developers have installed turbines with more than 11,000 megawatts of capacity, primarily in the U.K., Germany and Denmark, according to Bloomberg New Energy Finance. They’re forecast to install another 12,000 megawatts in those areas by 2019.

Expensive power

At the same time, U.S. projects have languished as cheap natural gas and plentiful land for ground-based wind and solar farms have elbowed offshore turbines to the bottom of the clean-energy agenda. While the cost of offshore wind energy is falling, it remains one of the most expensive sources of electricity, scaring off utilities as potential customers.

By allowing the facilities to be clustered near one another off the Massachusetts coast, developers are hoping to reduce costs so they can provide power at more competitive rates.

"Without those contracts, those power purchase agreements with the utilities, none of the developers can finance their projects," said Erich Stephens, executive vice president executive vice president of Offshore MW.

Building new power sources is critical in New England. The region is scheduled to lose more than 8,000 megawatts in the next four years as oil, coal and nuclear power plants close.

Massachusetts Gov. Charlie Baker has pushed to replace closing plants with hydroelectricity, introducing a bill last year that would require utilities to seek long-term contracts with hydro companies that could draw as many as 2,400 megawatts from Canada.

Cape Wind

The governor has been less enthusiastic about offshore wind. During a first, unsuccessful gubernatorial run in 2010, he railed against Cape Wind, a now-stalled attempt to build a 468-megawatt project off Cape Cod. It was maligned as a potential eyesore and criticized by Baker as a sweetheart deal for the developer.

The new crop of developers plan to build further out to sea, where the turbines wouldn’t be visible from land. Baker, who declined to be interviewed, has indicated he may be receptive.

In March, the governor’s energy secretary, Matthew A. Beaton, said during a speech in Boston that any decision to support offshore projects would hinge on cost. A forthcoming study on cost projections for Massachusetts offshore wind projects would play an important role, he said.

"If advances in offshore wind technology bring a competitive price to the market -- then we should embrace this resource," he said.

Supply chain

The study, by the University of Delaware, was published two weeks later. It concluded the cost of building wind farms off Massachusetts may decline as much as 55 percent by 2030, allowing developers to offer rates competitive with market prices. The key to lowering costs, the study found, was building a series of projects large enough to develop transmission and construction infrastructure, manufacturing facilities and other elements of a supply chain.

Golden, the Democratic state representative who heads the panel drafting the bill, said it hasn’t yet determined how many megawatts would be called for. The final legislation will probably include support for a broad mix of clean energy, he said.

'Appropriate balance'

"Offshore wind has piqued a lot of people’s interest, but at the same time so has hydro," Golden said. "We need to figure out the appropriate balance." The bill would "ignite" the offshore wind industry in the United States, and may prompt Denmark's Vestas Wind Systems A/S, the world’s biggest turbine maker, to expand its manufacturing operations here, company spokesman Stewart Mullin said.

"History has shown that a stable and secure order pipeline is a precursor to investment and that the early movers are traditionally the ones that reap the supply-chain benefits," Mullin said in an e-mail.

A spokeswoman for National Grid, Mary-Leah Assad, said the utility, which serves roughly 7 million customers in the Northeast, wants to incorporate more renewables into its operations but would oppose requirements to buy power from a specific source, regardless of price. "National Grid looks to policy makers to ensure that any new legislation includes a process that will allow all renewable resources to compete," Assad said in a statement.

The state’s two-year legislative session ends July 31. If the bill fails -- or omits support for offshore wind -- developers say they will turn to other sites on the East Coast.

But those proposed projects are years behind the ones in Massachusetts and Rhode Island. Time and momentum would be lost.

"This industry would certainly expand to Long Island and metropolitan New York and further down the New Jersey coast," Deepwater chief executive Jeff Grybowski said. "But we are not as far along there. Massachusetts is on the leading edge."


Source: http://www.providencejourna...

MAY 5 2016
http://www.windaction.org/posts/44982-mass-bill-would-force-utilities-to-buy-offshore-wind-power
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