By Jim Efstathiou Jr. (Bloomberg) — Massachusetts and Rhode Island selected developers to install 1,200 megawatts of wind turbines in the Atlantic Ocean, setting the stage for large-scale power generation projects off the U.S. coast.
Avangrid Inc. and Copenhagen Infrastructure Partners jointly won a Massachusetts auction to build an 800-megawatt wind farm south of Martha’s Vineyard and a transmission line to bring the power to shore, according to a statement Wednesday. Rhode Island chose Deepwater LLC for a 400-megawatt power plant. Costs for the projects weren’t disclosed.
As prices continue to fall, offshore wind is expected to grow by 16 percent annually through 2030, driven by installations in the U.K., Germany, Netherlands and China, according to Bloomberg New Energy Finance. The U.S. is a latecomer to the market, and early projects may cost 45 percent more than those in Europe. That’s in large part because developers will need to import components for the massive offshore structures, which can be as long as 600 feet (183 meters).
“It’s a big next step for offshore wind in the U.S.,” said Amy Grace, a New York-based analyst at Bloomberg New Energy Finance. “It will be really interesting to see what the pricing is, how they get around restrictions on non-U.S. installation vessels and how they come up with the financing.”
The companies will now begin talks with electric utilities over contracts to purchase the power — National Grid Plc and Eversource Energy in Massachusetts and National Grid in Rhode Island. Final acceptance of the Massachusetts bid is conditioned on a power purchase contract and regulatory approvals.
“It all needs to be kept in perspective until contracts are signed and those contracts reach financial close,” said Tom Harries, an industry analyst at Bloomberg New Energy Finance in London.
Avangrid shares climbed 2.8 percent Wednesday to $53.05. Eversource Energy, which submitted a joint bid with the Danish company Orsted A/S and didn’t win, slumped 2.2 percent to $56.54.
Construction on the Massachusetts wind farm, 15 miles (24 kilometers) south of Martha’s Vineyard, is expected to begin in 2019, with the project in operation by 2021, the developers said in a statement. It will reduce the state’s carbon emissions by more than 1.6 million tons per year, the equivalent of removing 325,000 cars from the road.
Massachusetts wants to install 1,600 megawatts of offshore wind, enough to power about 1 million homes, by 2027 to help reduce carbon emissions. It’s among states including New York, New Jersey and Maryland targeting a combined addition of almost 8 gigawatts by 2030.
The earliest Deepwater could begin construction is around 2020 with the project in operation by 2023, said Chief Executive Officer Jeff Grybowski. Deepwater built the first U.S. offshore farm in 2016, the 30-megawatt, $300 million Block Island wind farm off the Rhode Island coast.
The cost of Deepwater’s next project will be “dramatically lower,” Grybowski said. “People are going to be very pleasantly surprised.”
Deepwater also participated in the Massachusetts auction and didn’t win. Orsted said it will continue to pursue the proposed Bay State Wind project.
Stephanie McClellan, director of the University of Delaware Special Initiative on Offshore Wind, said the projects in Massachusetts and Rhode Island will deliver “the scale that’s needed to drive jobs and industrialization for offshore wind in this country.”
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