Massachusetts, Rhode Island, and Connecticut on Tuesday signed a memorandum of understanding to coordinate offshore wind procurement — the first such agreement in the U.S.
The memorandum establishes guidelines for multi-state offshore wind ventures, along with an agreement between each state and its utilities to consider the “participation of and coordination with” the other states when they issue solicitations.
“The three states request that offshore wind developers submit multi-state offshore wind project proposals for consideration by the soliciting parties through their respective offshore wind procurements for selection in 2024,” said a Wednesday release from Massachusetts Gov. Maura Healey, D. “Combined, the states’ [upcoming] solicitations are for up to 6,000 MW of offshore wind.”
Either all three states, or a combination of two states within the group, can agree to select a multi-state proposal “up to each states’ procurement authority, and split the anticipated megawatts and renewable energy certificates from a single project,” Healey’s office said.
The states aim to select projects that will capture cost reductions, and said that project selections will depend on the states’ assessments of a proposal’s cost/benefit calculus for ratepayers along with other established criteria.
The partnership comes as offshore wind projects all over the globe, and particularly in the nascent U.S. market, face economic headwinds from factors like lingering supply chain challenges and high interest rates.
Massachusetts, Connecticut and Rhode Island have all seen recent efforts from offshore wind developers and utilities to renegotiate or exit power purchase agreements.
State utility Rhode Island Energy announced in July that it would not be moving forward with a long-term PPA with Ørsted and Eversource for their joint offshore wind project, the 884-MW Revolution Wind 2, as it was “too expensive.”
In Massachusetts, utilities Eversource Energy, National Grid and Unitil reached an agreement with developer Avangrid to terminate PPAs for the company’s 1,223-MW proposed offshore wind farm Commonwealth Wind after it said economic pressures have become too great.
Avangrid’s subsidiary Commonwealth Wind said that it will wait for the state’s next solicitation, then bid into that “and offer Massachusetts a project with cost-effective pricing, a superior timeline for completion, and exceptional economic development opportunities.” Bids for Massachusetts’ next solicitation, which seeks 3,600 MW of offshore wind, are due Jan. 31.
On Monday, Avangrid also filed settlements with Connecticut electric distributors Eversource Energy and United Illuminating to cancel power purchase agreements for the 804-MW offshore Park City Wind project. The project has been unable to secure financing and can’t move forward under the existing contracts, Avangrid said, but the company plans to rebid if released.
This new memorandum among the three New England states “opens up the potential for us to procure clean energy from offshore wind together at more competitive and affordable rates, for the benefit of the residents and businesses in our respective states,” Connecticut Governor Ned Lamont, D, said in the release.