Governor Maura Healey was one of six East Coast governors to sign a letter to President Joe Biden last week, urging him to take three specific steps to make it easier for states like Massachusetts to move forward with offshore wind projects that are becoming more expensive for utility customers but are essential to meeting the climate goals the states and federal government have set.
The governors, whose states are all looking to bring cleaner energy generation sources like offshore wind onto the grid as parts of their strategies for meeting their own climate goals, specifically asked for updated guidance from the U.S. Treasury and Internal Revenue Service around tax credits for offshore wind projects, for the federal government to share some offshore wind lease area revenue with states, and for expedited and streamlined permitting processes for offshore wind projects.
Biden has set a national goal of building 30 gigawatts of offshore wind power by 2030, but the governors pointed out that “100% of the commitments to build offshore wind in the U.S. to date” have come about as a result of state procurements and that the projects are “secured by contracts backed by States’ ratepayers.”
“Unfortunately, inflationary pressures, Russia’s invasion of Ukraine, and the lingering supply chain disruptions resulting from the COVID-19 pandemic have created extraordinary economic challenges that threaten to reverse these offshore wind gains. Instead of continued price declines, offshore wind faces cost increases in orders of magnitude that threaten States’ ability to make purchasing decisions. These pressures are affecting not only procurements of new offshore wind but, critically, previously procured projects already in the pipeline,” Healey, Connecticut Governor Ned Lamont, Maryland Governor Wes Moore, New Jersey Governor Phil Murphy, New York Governor Kathy Hochul, and Rhode Island Governor Dan McKee wrote on Wednesday, September 13. “Absent intervention, these near-term projects are increasingly at risk of failing. Without federal action, offshore wind deployment in the U.S. is at serious risk of stalling because States’ ratepayers may be unable to absorb these significant new costs alone.”
Through the state’s first three procurement rounds, Massachusetts utilities chose and state officials approved offshore wind projects totaling 3,200 megawatts of capacity. But developers behind both wind projects selected in Massachusetts’s last round of offshore wind procurement said that shifting economic conditions made their projects no longer financially viable at the prices they previously negotiated and have either secured or are seeking approval to terminate the contracts they signed.
Developers Commonwealth Wind and SouthCoast Wind have both suggested they may rebid their projects with higher prices in the next procurement round. Massachusetts has also scrapped the price cap that previously required each subsequent offshore wind project deliver power at a price cheaper than the project before it.
The state’s first project, the 800-megawatt Vineyard Wind 1, is expected to begin generating some power next month and to be fully operational by next summer. It could be the only offshore wind project to deliver cleaner power to Massachusetts until 2028.
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