Massachusetts Clarifies Offshore Wind Contract Terms Amid Tax Credit Phase Out

Massachusetts Governor Charlie Baker, a Republican, signed a measure on Aug. 1 requiring the levelized price of offshore wind contracts resulting from subsequent solicitations to be lower than the initial procurement if the price is adjusted for federal tax credits, inflation, and incentives.

The legislation takes into account the decline of federal tax credits in approving a long-term contract resulting from the current offshore wind procurement. The measure, which applies to long-term contracts procured this year, also specifies that the levelized price should exclude mitigation efforts designed to support employment and economic development in Massachusetts.

The state’s Department of Energy Resources is scheduled to receive bids on Aug. 9 for the procurement of up to 800 megawatts of offshore wind power, with the goal of executing a final contract by the end of 2019. This is the second request for proposals as part of a staggered procurement schedule developed by the distribution companies following legislation enacted in 2016 that requires competitive solicitations to secure long-term contracts for 1,600 megawatts of offshore wind by June 30, 2027. Unitil Corp., National Grid plc, and Eversource Energy are seeking to procure at least 400 megawatts, but will allow proposals from 200 megawatts up to about 800 megawatts.

The first round resulted in the selection of Vineyard Wind LLC’s 800-megawatt project, which marks the first large-scale offshore wind farm in the U.S. The company expects to start construction this year and begin operations by 2021. Vineyard Wind is co-owned by Copenhagen Infrastructure Partners and Avangrid Renewables. Avangrid is owned by Iberdrola SA.