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Four US states’ offshore wind ambitions advance

21 December 2021 Keiron Greenhalgh

US offshore wind generation ambitions edged a couple of steps forward in recent days as two states awarded backing for projects and the aspirations of two further states with robust goals in the sector won an environmental thumbs up from a federal agency.

Maryland and Massachusetts announced winning tender bids 17 December, with the former unveiling pricing that analysts said illuminates the path forward for future tenders. The tenders are the first step on a path to construction that includes discussions with in-state utilities and federal permitting applications.

At least one of those upcoming tenders will be in waters off the most densely populated part of the Atlantic Seaboard, after the US Bureau of Ocean Energy Management (BOEM) gave development of offshore wind generation in the New York Bight—a stretch of the Atlantic Ocean that encompasses waters off New York and New Jersey—the environmental nod 16 December.

The latest tender results provide more faith in the nascent US industry's prospects, IHS Markit Senior Research Analyst Samantha Bobo said, sending a price signal and offering other projects more information for their planning.

The New York Bight decision, meanwhile, is a signal to developers that the state is "free and clear" to hold auctions, said Bobo. The first of those auctions will be held by the end of the first half of 2022, she said. "Things have started gaining speed" in New York, she added.

Maryland offers lowest prices yet for US offshore wind

The Maryland Public Service Commission (PSC) on 17 December awarded offshore wind renewable energy credits (ORECs) to two developers proposing more than 1.6 GW of capacity in waters off the state's coast. Maryland has now permitted just over 2 GW of capacity.

In the state's second round of offshore wind solicitations, US Wind and Skipjack Offshore Energy won PSC backing for 20-year power purchase agreements with prices that Bobo said were substantially below the current average of around $90/MWh. Both developers are already involved in building 368 MW of offshore wind capacity in the state. Those ORECs were approved by the PSC in 2017.

In the Round 2 application period, which closed in June, US Wind submitted three alternative bids, and Skipjack submitted two bids. US Wind's 808.5-MW "Bid 2" was awarded ORECs at a levelized price of $54.17/MWh. Skipjack's 846-MW "Phase 2.1" was awarded ORECs at a levelized price of $71.61/MWh. The projects are expected to be operational before the end of 2026, the PSC said, but have still to be reviewed by BOEM.

Higher prices in prior bidding activity have been offered because offshore wind is new technology for the US and subject to high startup costs, Bobo said, so higher bids offers developers a cushion.

Bobo said she expected tender prices to fall in the US as construction starts, although it is too early to say when that price decline will slow because there are so many variables in play. Prices need to be low enough that offshore wind is competitive, especially in the northeastern US, she added.

Skipjack plans to site its turbines 20 miles off the Maryland coast; US Wind's closest turbines would be 15 miles offshore. During the application proceeding, Ocean City—a major tourist destination on the state's Atlantic coastline—requested all turbines be located at least 30 miles from shore. The PSC turned down Ocean City's request, arguing the sites are in federal waters and in BOEM's domain rather than that of the state. Ocean City officials did not respond to requests for comment 20 December.

The PSC said approval of ORECs for these projects will not leave any room for additional projects in the second round of applications and has canceled the anticipated next two application periods.

The Clean Energy Jobs Act of 2019 increased Maryland's Renewable Energy Portfolio Standard goals to 50% by 2030 and expanded capacity for offshore wind energy under the program to at least 1.2 GW.

"The effects of climate change are real and, with its more than 3,000 miles of tidal shoreline, Marylanders are especially vulnerable," said Jason Stanek, PSC chairman. "That's why it is important for the [PSC] to take this action that will put our state on a path of deeper decarbonization and help Maryland achieve its aggressive clean energy goals—the residents of our state and region deserve no less."

Skipjack Wind 2 is Danish renewables giant Ørsted's second offshore wind energy project in Maryland. It will be located adjacent to the company's 120-MW Skipjack Wind 1 project. Ørsted will build Skipjack Wind 1 and 2 as one project, with operations expected to begin in 2026, the company said. Ørsted is building an operations and maintenance facility plus a steel fabrication center in Maryland to support its offshore wind projects.

US Wind's 808.5-MW Momentum Wind facility will be a two-phase project, with 411.6 MW due online in 2026 and 396.9 MW in 2027, the company said on its website. It was not available for comment 20 December on how this tied in with the state's ambitions for turbines to be turning by 2026. The company's 270-MW MarWin facility is expected to be online in 2024.

The tender and the related infrastructure found particularly fond support from one trade group. Liz Burdock, CEO of the Business Network for Offshore Wind, said in a statement: "The Business Network formed nearly a decade ago as a collection of Maryland small businesses who envisioned the state becoming hub for offshore wind activity. Today, that dream becomes more of a reality."

Massachusetts to work with familiar faces

Also on 17 December, Massachusetts said it had selected two offshore wind projects, Mayflower Wind and Vineyard Wind, to move forward to contract negotiations with state utilities on a combined total of 1.6 GW of capacity.

The projects are a 400-MW proposal from Mayflower Wind and a 1.2-GW proposal from Vineyard Wind. The winning bids were selected following a May 2021 request for proposals (RFP).

Massachusetts currently plans to build 5.6 GW of offshore wind energy. The state's first procurement led to the 800-MW Vineyard Wind 1 project. A second procurement saw the 804-MW Mayflower Wind Low-Cost Energy project win out. The combined energy output of the selected and contracted offshore wind projects represents about 25% of Massachusetts' annual electricity demand, the office of Governor Charlie Baker said.

Vineyard Wind is backed by Avangrid Renewables and its parent company, renewables giant Iberdrola, along with Denmark's Copenhagen Infrastructure Partners. Iberdrola CEO Ignacio Galán said the project, also known as Commonwealth Wind, will "be a key project in helping the US to achieve the 30 GW offshore wind target by 2030."

The Commonwealth Wind plan also includes initiatives to convert former coal-fired power plant sites in Massachusetts into a cable manufacturing facility and an offshore wind assembly and turbine staging port.

The same development partnership's Vineyard Wind 1 project is currently under construction. It received the green light from BOEM in May. The record of decision came shortly after BOEM began to prepare an environmental impact statement for a facility, the 880-MW Revolution Wind project that straddles waters off the coasts of Massachusetts and Rhode Island.

Mayflower Wind—backed a joint venture of Shell Renewables and Energy Solutions and Ocean Winds (a partnership between Engie and EDP Renewables)—won the chance to build 804-MW of offshore wind capacity in an earlier bidding round, meaning it will now provide more than 1.2 GW of power to the state.

With Massachusetts' and Maryland's announcements, the Business Network for Offshore Wind said total US state offshore wind procurement tops 17 GW, compared with 9.1 GW in January 2021 when the Biden administration entered office.

Burdock said that Biden entering the White House has "transformed US offshore wind into a national industry with developments on three coasts supported by an emerging supply chain that reaches deep into America's heartland."

BOEM said in May it plans to hold lease sales on the West Coast in 2022, and a month later revealed it was also eyeing offshore wind opportunities in the Gulf of Mexico. Before that though, will be a New York Bight lease sale.

However, Burdock said, excitement should be tempered because the global growth of the offshore wind industry continues at a "blistering pace," which she said will put further strain on supply chains. As a result, encouragement of US supply chain development must be a state and federal priority, she said.

New York Bight

New York plans to build 9 GW of offshore wind—the largest target for any state. New Jersey, meanwhile, wants to build 7.2 GW of offshore wind capacity by 2035. Both are looking to develop manufacturing related to the offshore wind industry and supply chain capabilities.

In August, BOEM completed its environmental review for Ørsted and Eversource's 130-MW South Fork wind farm in waters off New York and Rhode Island, and approved construction in November. South Fork was the second project to reach this point in its timeline after Vineyard Wind 1. Four other projects have also won State of New York backing so far: Empire Wind 1, Empire Wind 2, Sunrise Wind, and Beacon Wind.

Now, with environmental review of offshore wind leasing in the New York Bight, the upcoming lease sale will only heighten the anticipation about the prospects for those waters and pressure on the supply chain. The environmental assessment of nearly 800,000 acres of waters found no significant impact from the leasing.

While the environmental nod is positive and the supply chain ramps up, executives say there is also a lot of work to be done when it comes to the infrastructure to ship the power produced to New York load centers.

There are challenges on the points of interconnection, many of which have problems when comes it to landing cables, according to National Grid Ventures Director of Incubation Hilary Flynn. There's also the issues of cost and upgrading the existing onshore network, especially on Long Island, for transportation into New York City, she said during a 9 December discussion of the New York Bight's prospects. National Grid Ventures has offshore wind joint ventures with Ørsted and RWE.

The biggest part of this challenge is the limited right-of-way opportunities, especially on Long Island, where much of the network is 138 kV, and needs to be upgraded to 345-kV line to accommodate the amount of power likely to be shipped from the expected New York Bight offshore wind facilities, Hitachi Energy's Srinivas Pilltula told the same event.

Pilltula said he hopes the development of the New York Bight will move the debate forward on offshore grid networks that can mitigate the congestion many foresee with the construction of so much capacity in coastal waters. Such networks, often known as mesh systems, are an alternative to individual radial connections for each project.

Posted 21 December 2021 by Keiron Greenhalgh, Senior Editor

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