June 11, 2015

Offshore Wind Targets: the Missing Carrot?

By Val Stori

Offshore wind advocates and industry were dealt a discouraging setback when news of Cape Wind’s terminated utility contracts hit the press. What was widely considered to be the nation’s first and iconic offshore wind project is now, once again, facing legal hurdles and an uncertain future. While Massachusetts is a leader in offshore wind power policy and infrastructure, there is still more the state can do to attract developers and the investors they need to be successful.

An offtake mechanism that provides long-term market certainty would be especially useful. Representative Patricia Haddad has introduced legislation, which, in addition to calling for increased hydro, requires utilities to jointly solicit proposals from offshore wind developers and enter into contracts for 8,500,000 MWh per year in the aggregate by 2030. The contracts are to be “commercially reasonable” and be in effect for 15-25 years. Similarly, in efforts to promote the development of local wind, Representative Timothy Madden has introduced legislation that would allow local government entities to enter into long-term power purchase contracts. In his vision, a community such as Martha’s Vineyard could direct its municipal utility to purchase offshore wind power (or any renewable energy of the community’s choice).

Haddad’s bill, which identifies an offshore wind target of 2000MW, is the carrot that has been missing from other offshore wind bills and legislation. Maryland, another leader in the US offshore wind game, has set a target and mechanism for developing 500MW of offshore wind capacity. Together, the two targets approach what we have heard is the minimum amount it would take for a manufacturer to invest in infrastructure in the United States—3000MW.

Acting as a region—either in setting regional targets or in procuring energy (or both)—would help lure developers, attract investors, grow a domestic supply chain, and lower costs. Collaboration would help all states, including smaller ones, spread the costs of a capital-intensive industry among more ratepayers, thereby lowering costs. Strong individual state policies are the backbone to developing the offshore wind industry; regional policies could be a key link to the industry’s long-term success on the Atlantic coast.

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