Lawmakers Eye Raising Offshore Wind Target to Achieve Climate Goals

NatGrid Concerned About More Procurement Amid Commonwealth Wind Upheaval

Sam Drysdale5/18/23 5:33 PM

STATE HOUSE, BOSTON, MAY 18, 2023.....With the ball starting to roll on offshore wind development, lawmakers are looking this session to accelerate additional renewable energy capacity and environmental advocates warn they'll need to pick up the pace to meet the state's ambitious climate goals.

A handful of bills before the Joint Committee on Telecommunications, Utilities and Energy would allow the state to increase its capacity to bring thousands of megawatts of offshore wind energy onto the grid, coming at a time when Gov. Maura Healey has shown an appetite for significant new development.

The Healey administration announced earlier this month that they want to add up to 3,600 more megawatts to the collection of in-development or under-contract offshore wind projects in the pipeline. That maximum amount would be more than twice as large as the 1,600 megawatts selected in the last procurement round two years ago, according to the Healey administration, on its own would meet about a quarter of the state's annual electricity demand. However, the upcoming round might backfill some prior wind capacity if some previously approved projects fall through now that developers are warning about changing economic conditions.

The state's Clean Energy and Climate Plan for 2050 calls for 23 gigawatts -- or 23,000 megawatts -- of offshore wind capacity by the century's halfway mark.

"If all goes according to plan with our current set of procurement commitments, which is an open question, Massachusetts will have 3.2 gigawatts of offshore wind capacity by around 2030. That means we will have around 20 years to develop and bring online 19.8 gigawatts of offshore wind power," said Kyle Murray, senior advocate and Massachusetts program director at environmental nonprofit Acadia Center, during a Joint Committee on Telecommunications, Utilities and Energy public hearing on Thursday.

Since the state began procuring contracts for offshore wind installations in 2018, it has developed at a pace of around 267 megawatts per year of offshore wind, Murray told lawmakers on Thursday. To meet its climate requirements, he said, Massachusetts will need to start developing around 1,000 megawatts per year starting in 2030.

"Therefore, it is crucial for our commonwealth to display a commitment to large and long-term clean energy requirements to continue to send a signal to developers that Massachusetts will be a leader in offshore wind," Murray said.

A Rep. Dylan Fernandes of Falmouth bill (H 3161) seeks to expand a capacity target under the state's clean energy law, which requires it to hit 5,600 MW by 2027. Fernandes' bill would double the mandated capacity to 11,200 MW, but give the state until June 2035 to reach the goal.

Through the first three procurement rounds, Massachusetts has approved projects totaling 3,200 MW of capacity.

Fernandes' bill would also extend the timeline for procurement, allowing the Executive Office of Energy and Environmental Affairs to build out five-year plans for procuring offshore wind contracts. State law only allows the EEA to plan two years in advance. The five-year procurement timeline aims to create more certainty in the marketplace and signal to offshore wind companies that there is a steady industry in Massachusetts.

In a similar vein, the bill also seeks to create a dashboard for lawmakers, EEA officials, wind developers and the public to track contracts during the long permitting and construction process.

Joe O'Brien, political and legislative director for the North Atlantic States Regional Council of Carpenters, spoke during his testimony about an area of Fernandes' bill that would codify labor standards for the industry.

The legislation seeks to ensure wages are fair, and it calls for offshore wind companies to look first to "impacted communities" that are "adjacent to construction" when recruiting workers. For now, that could mean looking to offer jobs to those from Cape and South Coast communities, and eventually on the North Shore if wind farms begin to be built north of Boston.

"These are important steps that will create jobs in the offshore wind industry, and will ensure they pay family-sustaining wages and ensure the highest levels of workforce safety," O'Brien said. He also recommended adding requirements for companies to draw from state-certified apprenticeship programs, as Maine and New York have done.

Fernandes' wide-ranging offshore wind bill would also invest $200 million for port infrastructure improvements, aimed at creating a network of infrastructure to improve the offshore wind supply chain.

Massachusetts does not have a single large port to convene and assemble the massive turbines needed for wind farms, unlike places such as Denmark, which has a thriving offshore wind industry. The bill seeks to invest in port infrastructure and require the Massachusetts Clean Energy Center to come up with a plan to use all the state's ports strategically to ensure a steady supply chain.

Supply chain issues have already troubled the nascent industry in Massachusetts.

Avangrid, the developer of the 1,200-megawatt Commonwealth Wind project chosen in 2021, is seeking to terminate its contracts for an offshore wind installation, and re-bid in the next round at a higher price. Company officials believe the project "cannot be financed and built" under the originally agreed-upon terms, saying that increases in commodity prices, rising interest rates and supply shortages put it out of reach.

The other bid picked in 2021, now known as SouthCoast Wind, has also said shifting economic conditions created new difficulties, but so far its leaders have not deemed the project no longer viable nor sought to cancel contracts. SouthCoast Wind won a 2021 bid with a 400-megawatt project as well as a 2019 bid with an 800-megawatt project.

Kevin O'Shea, director of government affairs at National Grid, said while the company supports expanding offshore wind procurement, they are concerned about doing so while there continue to be issues with projects already in motion.

National Grid was among the three utility companies that had agreed to contracts with the Commonwealth Wind project that declared the proposed offshore wind farm cannot be financed and built.

"We have concerns over raising the procurement threshold without taking into consideration the supply chain issues that are currently being experienced in the industry and the paucity of available federal leasing area in the New England waters at the moment that may have a detrimental effect on those issues," O'Shea said on Thursday.

O'Shea also expressed concern with a provision in Fernandes' bill that would add a fee to natural gas consumers to go toward an offshore wind industry trust fund. The bill calls for a 14.65 mill per therm charge on all natural gas consumers in the state.

"We oppose fees being implemented on gas customers during historically high times to support offshore wind. We also urge the committee to reject any surcharges to fund any other additional mitigation funds outside of the procurement contracts," O'Shea said.

The offshore wind bill would also remove remuneration to utility companies such as National Grid, which receive up to 2.25 percent of an offshore wind project bid. The payments are intended to offset the risk that utility companies take working with a nascent industry.

"Offshore wind is no longer a far-off proposition here in Massachusetts. Our first wind farm should be operational by the end of this year. Offshore wind will be a large reality in our energy mix going forward," Murray said. "Therefore, the utilities no longer need this incentive, which is around $168 million for the Vineyard Wind project, simply to bring these contracts onto the books."

Fernandes, who serves coastal communities where the offshore wind industry is starting to take off, said the bill is intended to keep the state as a national leader in what will become a profitable and environmentally important industry.

"Our path to a liveable future that hits our climate goals flows through offshore wind and this bill doubles our procurement goals, invests in port infrastructure, secures good jobs for local communities, and ensures that the offshore wind energy revolution is made in Massachusetts," he said

Several lawmakers put forward bills to adjust and expand the state's wind capacity goals.

One Sen. Marc Pacheco bill (S 2169) before the energy committee would set new long-term offshore wind procurement requirements of at least 12 gigawatts by 2030 and at least 15 gigawatts by 2035.

The Pacheco bill would also allow the administration to ramp up procurement without hitting a baked-in limit set by the Legislature when it approves new mandated megawatt targets.

To increase offshore wind capacity mandates and set higher goals, lawmakers would need to update a 2016 clean energy law, and the target was most recently revised last year.

Though the mandate they set serves as a minimum of how much energy the administration should solicit through project proposals, it can also act as a cap, limiting the administration to go beyond those numbers.

The Pacheco bill looks to remove that cap for the governor to solicit wind energy above and beyond the level in the law, without taking power away from the Legislature to raise the mandated megawatt capacity each session.

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05/18/2023

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