Wind Contracts Below Price Cap, But Maybe Not Cheaper - The Salem News

Wind Contracts Below Price Cap, But Maybe Not Cheaper – The Salem News

Contracts for the state’s two next offshore wind power projects were submitted Wednesday, and while both projects are legally compliant with the state’s offshore wind price cap, officials said the price of the power may not actually be cheaper than the last project.

In December, utility managers working with the assistance of the Baker administration selected Avangrid Renewables’ proposal of about 1,200 MW from Commonwealth Wind and a 400 MW project provided by Mayflower Wind to continue the state’s quest for clean offshore wind power.

Commonwealth wind power will cost 7.2 cents per kilowatt-hour, and energy from the Mayflower 400 megawatt project will cost 7.7 cents per kilowatt-hour based on contracts submitted with the Public Utilities Department on Wednesday, Minister for Energy and Environment Beth Card said. Boston-area households paid an average of 26.8 cents per kilowatt-hour of electricity in April 2022, according to the US Bureau of Labor Statistics.

While contracts for both projects came out cheaper than the last Mayflower Wind project (7.8 cents per kilowatt-hour) under state requirements that each new wind project generate power at a better price than the one that came before, Mayflower Wind said last year it would reduce the energy cost of this project to About 7 cents per kilowatt-hour as long as the project qualifies for a higher investment tax credit. This means that the state’s third and fourth wind farms will generate power at a higher price than the state’s second project.

“Currently, it has not been confirmed that they qualify for this tax credit,” Energy Resources Administration Commissioner Patrick Woodcock said Wednesday, explaining why the rate cap was set using the original higher rate. 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, versus a 12 percent credit for projects that started in 2019 or an 18 percent credit in cent for projects that have been awarded in progress in 2020.

Both developers are already working on approximately 800 megawatts of projects for Massachusetts. Vineyard Wind I, which is expected to be the nation’s first large-scale offshore wind farm, is still in the early stages of construction and scheduled to be operational by the end of next year. Avangrid Renewables owns half of this project. The initial 804MW Mayflower Wind project has begun the federal review process and is expected to become operational in 2025.

Card said Wednesday that the latest projects will offset about 2.7 million metric tons of greenhouse gas emissions each year and represent emissions savings equivalent to taking more than 586,000 cars off the road.

“These contracts will provide benefits to customers’ monthly bills compared to the future in which (electricity distribution companies) do not get offshore wind power in solicitation by reducing bills by about 0.1 percent to 0.8 percent,” the minister said.

Now that contracts have been submitted to the DPU, Card said, that agency will set a public hearing on them and begin the review and approval process.

Woodcock said the utilities also submitted a contract amendment Wednesday to the first Mayflower Wind project. This project was originally scheduled to connect to Cape Cod’s regional power grid, but a contract modification will now include both Mayflower projects using an anchor point at Brighton Point in Somerset, he said.

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