Category Archives: Announcements

Three New Wind Energy Leases Offshore Massachusetts: Review of BOEM Auction Results and Competitive Implications

Over the last two days BOEM auctioned three leases offshore Massachusetts to Vineyard Wind, Mayflower Wind, and Equinor Wind. Vineyard Wind is a joint venture of Avangrid Renewables and Copenhagen Infrastructure Partners, with an existing Massachusetts lease and a contract for an 800 MW project with the Massachusetts electric distribution companies (EDCs). Mayflower Wind Energy LLC is an affiliate of Royal Dutch Shell Plc. and EDP Renewables; it is the first position in the US OSW market for both companies.[1] Equinor is a Norwegian energy developer that holds the rights to the only existing BOEM lease offshore New York. This sale attracted historic attention from 19 qualified parties and 11 bidders. At the end of 32 rounds the total acquisition fee was $405.1 million ($135.1 million Vineyard Wind and $135 million for the other two winning parties).

Competitive Implications of ATLW-4A

Overall this should be a positive development for the competitiveness of the New England and broader Northeast OSW market. It introduces two new competitors to the region and strengthens Vineyard Wind’s position as an incumbent developer. Equinor represents a new competitor to the Southern New England OSW market. Equinor wouldn’t have been able to compete effectively in the Southern New England OSW market from its New York lease given the distance of this lease from New England and the associated incremental cost of transmission and the marginally worse wind resource in its New York WEA. While the primary opportunity will be for long-term contracts with the Southern New England EDCs, the projects from these lease areas should be able to compete in future New York procurements (which has a target of 2,400 MW by 2030) and possibly New Jersey (3,500 MW by 2030).

The interest of Equinor and Shell indicates the similarities of offshore wind and oil/gas development, both require significant engineering capability and careful management of project logistics, with significant capital requirements over an extended period of time before production begins.

The pricing relative to previous lease sales is a strong indication of market interest and the promise offered by the Northeastern OSW market. Adding two new competitors to the Southern New England market will enhance the competitiveness of solicitations. However, with one element of the evaluation criteria in the various OSW RFPs the project’s underlying maturity it may take a while for consumers to see the benefits of this increased competition.

Comparison to Atlantic Wind Lease Sales

Prior to ATLW-4A there have been 7 lease sales for 11 areas from North Carolina to Massachusetts. The average acquisition fee was $6.7 million. One of the first Massachusetts lease areas was acquired by OffshoreMW LLC (now Vineyard Wind) for as little as $150,197. The next highest sale after today’s results is the New York lease sale of OCS-A 0512 to Equinor in 2016 for a total acquisition fee of $42.5 million from 33 rounds of bidding by 6 total participants. Even in comparison to the New York sale the result of ATLW-4A is more than seven times greater.

Power Advisory_ATLW4A BOEM MA Lease Sale_2018-12-14

[1] Shell did qualify for the North Carolina lease sale (ATLW-7) in 2017 but did participate in the auction.

Competitive Implications of Ørsted’s Acquisition of Deepwater Wind

Yesterday, Ørsted A/S (Ørsted) announced that it agreed to acquire Deepwater Wind (Deepwater) from D.E. Shaw & Co. LP for $510 million. With this acquisition Ørsted, who was unsuccessful in the various New England competitive procurement processes, will get access to Deepwater’s 5 PPAs and 810 MW contracted project development portfolio. The transaction is subject to review by US competition authorities, the US Department of Justice (DOJ) and the Federal Trade Commission (FTC). Given the nascent state of the US OSW industry the acquisition of one of the US industry leaders by the world’s largest OSW project developer may raise some competitive concerns, particularly when the lease holdings of the combined company are considered in several relevant geographic markets.

Specifically, Ørsted will have ownership interests in two of the three existing BOEM leases in the Rhode Island/Massachusetts Wind Energy Areas (WEAs) through its Bay State Wind partnership with Eversource Energy and its acquisition of Deepwater. In addition, Ørsted will have development rights to two of the three existing leases off the coast of New Jersey as result of its Ocean Wind project and with the acquisition of Deepwater’s 50% interest in the Garden State Offshore Energy project, a joint venture with Public Service Electric & Gas that holds the rights to a BOEM lease off the coast of Delaware and New Jersey. (See Figure 1 below.)
A critical issue with respect to the assessment of the competitive implications of mergers is defining the market, which considers the relevant products and geographic definition of the market. The geographic definition of the market considers the ability of competitors to compete effectively with the merged entity recognizing that there is a cost to accessing a more distant market (e.g., for OSW the cost of undersea transmission cables or transmission service).

The Rhode Island/Massachusetts WEAs offer more attractive wind regimes than the New York (NY) or New Jersey (NJ) WEAs, suggesting that it may be difficult for leaseholders in NY or NU WEAs (e.g., Equinor) to compete effectively with the RI/MA leaseholders. The competitiveness of the New England OSW market will be enhanced when BOEM issues the two additional MA leases that are scheduled for auction in early 2019. However, the ability of these new leaseholders to compete in the forthcoming Massachusetts 83C OSW RFP may be constrained by the relative immaturity of the corresponding projects and the fact that Massachusetts OSW RFPs typically considered the development status of projects in the evaluation and project scoring.

Figure 1: Ørsted US Offshore Wind Portfolio

A PDF version of this memo is available here.

Potential Asset Sale: Canadian Utilities Limited’s Generation Portfolio

On September 13, Canadian Utilities Limited (CU), a subsidiary of ATCO, announced that it would be exploring strategic alternatives for its Canadian electricity generation business. Canadian Utilities Limited is engaged in electricity (generation, distribution, and transmission), pipelines and liquids (natural gas transmission, distribution and infrastructure development), energy storage and industrial water solutions, and retail energy (electricity and natural gas retail sales). The company has 5,200 employees and assets of $21 billion.

CU owns and operates 2,391 MW across six Canadian jurisdictions, with the majority located in Alberta. The geographic composition of these generation assets and their fuel type are indicated in the pie charts below.  An overview of the individual generation assets is provided in the table below.

Power Advisory would welcome the opportunity to assist clients in understanding the opportunities presented by Canadian Utilities Limited’s announcement and other potential generation acquisitions across North America. 

A PDF version of this note is available here

John Dalton, President, Carson Robers Consultant, Robie Webster Jr., Researcher, Power Advisory

Review of Massachusetts Compromise Bill ‘An Act to Promote a Clean Energy Future’

On July 30, 2018, the conference committee appointed to reconcile the Senate and House clean energy bills finalized a compromise bill, H.4857. The bill’s contents more closely align with the House of Representatives bills passed last week (H. 4756 and H. 4739) than the omnibus Senate bill (S. 2545) (see Power Advisory’s report on the differences between the initially proposed bills). The House and Senate voted in favor of the bill on July 31, the last day of the legislative session.

Renewable Portfolio Standard

The compromise bill will increase the state’s Class I Renewable Portfolio Standard (RPS) at the rate proposed by H.4756. Between 2020 and the end of 2029, the rate would increase to 2% per year. After 2030, it would return to the current growth rate of 1%. The rate will ensure that the state procures 35% of Class I renewables (new resources) by 2030.

Offshore Wind

The bill directs the Department of Energy Resources (DOER) to conduct a cost benefit analysis for the procurement of an additional 1,600 MW of offshore wind by the end of 2035 and “may require said additional solicitations and procurements.”  This suggests that DOER doesn’t require additional legislative authority to mandate the distribution companies to solicit and procure this additional 1,600 MW of offshore wind.  The DOER can also require distribution companies to hold competitive procurements for offshore wind transmission to deliver energy from designated wind energy areas as long as it can serve more than one project. The transmission service cannot exceed 3,200 MW of total capacity. The procurement of offshore wind transmission must be the most cost-effective means to deliver offshore wind.

Interestingly, in the filing letter that it submitted to the Massachusetts Department of Public Utilities (DPU), DOER expressed strong support for the 800 MW Vineyard Wind Project and asserted that the “Project is highly cost-effective [and] significantly aligns with the Commonwealth’s goals of creating a clean, affordable, and resilient energy future for the Commonwealth.”  This clearly suggests that DOER has a favorable view of offshore increasing the likelihood of DOER mandating the procurement of an additional 1,600 MW of offshore wind.

Clean Peak Standard

The bill also provides for the creation of a Clean Peak Standard (CPS) for all retail electricity suppliers, which was detailed in H. 4756. The CPS will be in place starting January 1, 2019 and will require each retail electric supplier to meet a baseline percentage of sales with clean peak certificates. The clean peak certificate would be a credit received for each MWh of energy or energy reserves provided during a seasonal peak period. After 2019, every retail electricity supplier must provide a minimum of at least an additional 0.25% per year of sales met with clean peak certificates.  The legislation defines seasonal peak periods as the times when net electricity demand is the highest. The periods must be more than one hour but less than four hours in any season. A clean peak resource according could be any qualified RPS resource, an energy storage system, or a demand response resource that delivers energy to the distribution system during seasonal peak periods or can reduce load on the system. The DOER will need to establish the procurement mechanism of the certificates, the percentage of kilowatt-hour sales from clean peak resources, the seasonal peak periods, and an alternative compliance mechanism.

Energy Storage

Massachusetts’ current energy storage target is 200 MWh by 2020. The compromise bill increases this target to 1,000 MWh by December 31, 2025. Neither the House nor Senate bills included this specific target. Similar to H. 4739, the comprise bill will require electric distribution companies (EDCs) to file an annual distribution system resilience report that would highlight areas of the distribution system where non-wires alternatives could serve as system resiliency measures. EDCs can hold competitive solicitations for such non-wires alternatives. The legislation provided guidance on which monetary and non-monetary factors to be considered in a solicitation, which include: 1) resiliency improvements, 2) reduce greenhouse gas emissions, 3) reducing peak demand, 4) reducing congestion in constrained areas, and 5) benefits to low-income areas.

Power Advisory would welcome the opportunity to assist clients in understanding the opportunities created by these changes to the Commonwealth of Massachusetts’ clean energy policies.

A PDF version of the report is available here.

Review of Massachusetts House of Representatives Energy Bills Relative to the Senate’s ‘An Act to Promote a Clean Energy Future’

The Massachusetts House of Representatives passed two major energy bills on July 12, 2018. The bills address a subset of the legislation that was approved by the Massachusetts Senate omnibus clean energy bill (S. 2545) in June. The House bills are now in conference committee with the Senate and are expected to be reconciled ahead of the close of the legislative session on July 31.

Renewable Portfolio Standard

H.4756 would increase the state’s Renewable Portfolio Standard (RPS) to promote an accelerated procurement of renewable energy. Currently, the minimum percentage of Class I renewable energy that Massachusetts’ retail electricity suppliers must provide customers increases 1% per year through 2050. In the legislation, this rate would increase to 2% each year starting in 2021 through 2030. After 2030, it would return to the current growth rate of 1%. The increased rate would raise the RPS from the current target of 25% by 2030 to 35% by 2030. This goal is less aggressive than the Senate’s bill, which called for a 3% annual increase and an ultimate target of 100% renewable energy in the state by 2047.

Offshore Wind

H.4756 would also increase the state’s offshore wind procurement target to 3,200 MW by 2035, doubling the current procurement target of 1,600 MW by 2030. While this target is a significant increase to current levels, it is far less than the goal of 5,000 MW of OSW capacity by 2035 put forward by the Senate in S. 2545. With either target, Massachusetts is signaling that it is interested in making further commitments to the emerging US OSW industry. An increased procurement target will provide additional opportunities for the three existing wind energy lease holders and increase the value of the two remaining MA lease areas being auctioned by BOEM through ATLW-4A this fall.

Clean Peak Standard

H.4756 also includes a provision for the establishment of a Clean Peak Standard (CPS) for all retail electricity suppliers. Such a standard would ensure that Renewable Portfolio Standard (RPS) and greenhouse gas emissions reductions are met by having clean energy generation in peak load hours instead of fossil fuels. According to the bill text, the CPS could be similar to the state’s existing RPS, but the methodology would be established at a later date. If similar to the RPS, each retail electricity supplier would need to meet a certain percentage of their total sales with clean peak certificates, similar to renewable energy certificates (RECs) under the RPS. The clean peak certificate would be a credit received for each MWh of energy or energy reserves provided during a seasonal peak period. The legislation defines seasonal peak periods as the times when net electricity demand is the highest. The periods must be more than one hour but less than four hours in any season. A clean peak resource according to the legislation could be any resource that qualifies under the RPS, an energy storage system, or a demand response resource that delivers energy to the distribution system during seasonal peak periods.

Also, similar to the procurement of RECs, regulations could include a process through which clean peak certificates are competitively procured and electric distribution companies would enter into long-term contracts ultimately approved by the Department of Public Utilities. Seasonal peak periods would need to be established as well as an alternative compliance mechanism.

By the end of this year, the Department of Energy Resources (DOER) will determine the current kilowatt-hour sales from existing clean peak resources during seasonal peak load hours. This will be used to establish a baseline percentage of sales that must be met with clean peak certificates beginning on January 1, 2019. After 2019, every retail electricity supplier must provide a minimum of at least an additional 0.25% of sales that must be met with clean peak certificates. The procurement of clean peak certificates will not apply to municipal light plants.

The House’s bill is a response to Governor Baker’s legislation entitled “An Act Promoting Climate Change Adaptation, Environmental and Natural Resource Protection, and Investment in Recreational Assets and Opportunity.” This legislation called for a Clean Peak Standard. The Senate bill did not include language pertaining to a Clean Peak Standard.

Energy Storage

Massachusetts’ current energy storage target is 200 MWh by 2020. The Senate bill aimed to increase this target to 2,000 MW by 2025. While not increasing the energy storage procurement target, H. 4739 addresses the need for additional integration of storage into the transmission and distribution grids.

The bill would require electric distribution companies (EDC) to file an annual distribution system resilience report which will include maps that show the most congested areas of the distribution system as well as areas most vulnerable to power outages. These maps could serve as a basis for identifying areas that would require system upgrades that could be deferred or replaced by non-wires alternatives. Each EDC could then hold a competitive solicitation for now-wires alternatives (such as energy storage) from third-party developers that would serve a resiliency need of the grid. The Senate bill did not mention non-wires alternatives or a resilience report.

Greenhouse Gas Emissions

One topic that was not addressed in the House bills was greenhouse gas emission reductions. The Senate bill established additional interim GHG reductions goals of 35-45% below 1990 levels by 2030 and 55-65% below 1990 levels by 2040, beyond the existing goal of a 25% reduction by 2020. These new interim goals could help the Commonwealth stay on track to meet its economy-wide mandate for an 80% reduction in GHG emissions below 1990 levels by 2050 established in the Global Warming Solutions Act of 2008. Furthermore, S. 2545 directs that a market-based system to reduce emissions from the transportation sector be implemented by 2021, for the commercial and industrial building sectors by 2022, and for the residential building sector by 2023.

Power Advisory would welcome the opportunity to assist clients in understanding the opportunities created by potential changes to the Commonwealth of Massachusetts’ clean energy policies.

A PDF version of the report is available here.

BOEM Atlantic Wind Lease Sale 4A (ATLW-4A) Proposed Sale Notice Published in the Federal Register

Earlier today, the Bureau of Ocean Energy Management (BOEM) released a Proposed Sale Notice (PSN) for the previously unleased commercial lease areas, OCS-A 0502 and OCS-A 0503, offshore Massachusetts. These lease areas represent the most immediate leasing opportunity for those who are interested in entering the Northeast offshore wind market, where states have already made commitments to procure almost 5,000 MW.

Today’s PSN outlines the proposed ATLW-4A sale, initiates a 60-day comment period, and will be followed by a public seminar (date to-be-announced, expected in the coming month). To participate in the lease sale your organization must be qualified as an eligible bidder by BOEM. All bidder qualification materials must be postmarked no later than the end of the public comment period – June 11, 2018.

Opportunities for Long-Term Contracts

 As established in the 2016 An Act to Promote Energy Diversity and under Section 83C, the Commonwealth of Massachusetts has a mandate to procure 1,600 MW of offshore wind by June 30, 2027. The state issued the first offshore wind RFP for 20-year Power Purchase Agreements in July 2017. The winner of Tranche 1, a project in the range of 200-800 MW, will be announced at the end of April or early May. The parties that acquire OCS-A 0502 and OCS-A 0503 are expected to be able to participate in subsequent tranches of Massachusetts’ OSW procurement.

Three factors,1) the capabilities of existing offshore transmission technologies, 2) relative proximity of these lease areas to other states, and 3) allowance of delivery to an adjacent control area that has been included in clean energy procurements to date, suggest that the opportunity for a long-term PPA extends beyond Massachusetts’ procurements to the rest of the Northeast and Mid-Atlantic. In fact, Connecticut has already sought proposals from the incumbent Massachusetts OSW area lease holders and NYSERDA has been clear in its intention for those lease holders to participate in their upcoming procurements.

Figure 1 below illustrates the existing and proposed federal lease areas and labels the known state procurement targets by 2030 (Massachusetts, New York, Connecticut, and New Jersey). Rhode Island has announced a goal of 1,000 MW of clean energy of which 400 MW are expected to be procured this year. Offshore wind is included in this goal, but there is not a clear procurement target in the style of Massachusetts 83C.

Figure 1: US Atlantic Offshore Wind Projects, Lease Areas, and Current Procurement Targets

       Source: BOEM, Power Advisory LLC

*National Grid has a transmission right-of-way for the operating Block Island Wind Farm. The inclusion of this ROW on the map does not indicate that National Grid is an OSW lease holder.

While a portion of these targets are anticipated to be committed before the ATLW-4A auction takes place and a winning bidder for OCS-A 0502 or OCS-A 0503 is in a position to submit a bid, opportunities for long-term contracts will remain under these targets. Furthermore, given the regional interest in OSW development, the region’s aggressive decarbonization goals, and anticipated cost reductions for OSW that are likely to allow it to compete directly with other clean energy resources additional opportunities for long-term contracts are anticipated.

Power Advisory would welcome the opportunity to help clients assess the opportunity presented by upcoming BOEM lease sales and to support North American offshore wind development activities.

Review of 83D Selection: Northern Pass Transmission, Hydro

Today, the Massachusetts investor-owned electric distribution companies in coordination with the Department of Energy Resources (DOER) announced the completion of the evaluation of responses to the Massachusetts Clean Energy Generation RFP (83D RFP). Northern Pass Transmission, Hydro was selected as the sole winning bid; representing a purchase of 9.45 TWh per year. Eversource Energy and Hydro-Québec Production (HQ) are the proponents of Northern Pass Transmission (NPT), which will deliver 1,090 MW of hydropower to the region.

Overview of Northern Pass Transmission

The NPT project is a 320 kV 192-mile transmission line from the Quebec border to Deerfield, New Hampshire where it will connect to the rest of the New England grid.  With a capacity rating of 1,090 MW, the project will have a capacity factor of +98%. The line will be developed in two segments – a 158 mile HVDC partially overhead and partially buried section from Stewartstown, NH to Franklin, NH and a 34 mile HVAC overhead line from a new substation in Franklin, NH to the southern terminus. Up to 80% of this construction will take place within existing right of way. Having made considerable progress on the development of the transmission and with the HQ hydroelectric facilities already constructed or under construction, the project has been touted by the developers as “shovel-ready”, with a 2020 in-service date.

One challenge that remains for NPT is receiving final permitting and regulatory approvals from:

  • the New Hampshire Siting Evaluation Committee (NH SEC);
  • Army Corps of Engineers (Section 404 permit);
  • and the Federal Energy Regulatory Commission (rate authority and firm transmission capacity agreement approval).

This is especially the case for the NH SEC, given the delays in receiving a permit from the Committee and the substantial public opposition NPT has faced in Northern New Hampshire. A twelve-day period of public deliberations will begin on January 30th for the NH SEC, leading to an oral decision by February 23, 2018. The project has already received a Presidential Permit from the U.S. Department of Energy and key Canadian permits.

Hydro Québec’s Position in New England

 Overall HQ participated in six of the forty-six submissions to the 83D RFP, including three of the proposed transmission projects with offers of hydro with and without 300 MW of Quebec wind. Already HQ supplies about 10% of New England’s annual energy requirements and with the addition of this project will be providing upwards of 17%.

A PDF version of this update is available here.

Review of Massachusetts Offshore Wind Energy RFP (83C) Proposals

To: Clients and Colleagues
From: John Dalton, President; Margaret Blagbrough, Consultant; Michael Ernst, Executive Advisor; Power Advisory LLC

On December 20, 2017, the Massachusetts investor-owned electric distribution companies (Distribution Companies) in coordination with the Massachusetts Department of Energy Resources (DOER) received three proposals for offshore wind energy generation projects, in response to the RFP they issued for 400 MW (and up to 800 MW) of wind energy under long-term contracts. This procurement is the first in a series of competitive solicitations under the state’s 2016 Act to Promote Energy Diversity mandate for 1,600 MW of offshore wind (OSW) by June 30, 2027. Winners of this first procurement will be announced on April 23, 2018. The bidders who submitted proposals are those that hold existing Bureau of Ocean Energy Management (BOEM) Massachusetts or Massachusetts/Rhode Island offshore leases: Deepwater Wind, Bay State Wind (Ørsted and Eversource Energy), and Vineyard Wind (Avangrid Renewables and Copenhagen Infrastructure Partners). The figure below shows the locations of each of the proponents’ lease areas.

Proposals are required for the target capacity of 400 MW, but additional proposals between 200 MW and 800 MW are allowed and were submitted. Any chosen proposal over 400 MW must be superior and provide significantly more economic benefits to Massachusetts ratepayers. Each proponent must include a proposal for a generator lead line to deliver offshore wind to the corresponding onshore ISO-New England (ISO-NE) Pool Transmission Facilities (PTF). Additionally, proponents must submit a proposal for an expandable transmission network providing nondiscriminatory access for all offshore wind facilities.

Proponents will be evaluated in three stages. In the first stage, proposals will be evaluated to see if they meet eligibility and threshold criteria. Proposals that meet the basic requirements of stage one will be evaluated based on the costs and benefits of the project in stage two. Quantitative evaluation criteria in this stage include direct costs and benefits and other costs and benefits to retail customers. Qualitative evaluation criteria will include: (1) the siting, permitting and project schedule; (2) reliability benefits; (3) benefits, costs, and contract risk; (4) environmental impacts from siting; and (5) economic benefits to the Commonwealth. In the third stage, the Evaluation Team will further evaluate proposals to ensure that they are the most cost-effective solutions for ratepayers and that they will provide reliable renewable energy for the long-term.

Confidential information including pricing has been redacted from the public versions of bids we have reviewed and summarized below.

Bay State Wind

Bay State Wind, the partnership between Ørsted and Eversource, proposed either a 400 MW or 800 MW wind farm 25 miles off of New Bedford, MA. The 400 MW project would be paired with a 30 MW/ 60 MWh battery storage facility, while the 800 MW project would be paired with a 55 MW/110 MWh battery storage facility. Ørsted, formerly DONG Energy, is the world’s largest offshore wind developer. Ørsted has constructed 3.8 GW of offshore wind capacity over the past 25 years and has another 5 GW under construction. Eversource is New England’s largest energy provider and is slated to develop and construct the project’s onshore transmission system.

The project would use New Bedford as the construction area and the base of its operations and maintenance throughout the project’s lifetime. Brayton Point in Somerset, MA will be the grid connection location for the project and the home of the battery storage facility.  The project would result in the development of the first Jones Act compliant installation and transportation vessels.

In their proposal, the company stated that they are the furthest along in the ISO-NE interconnection queue process compared to the other two eligible bidders. Their completed Feasibility Study shows that either of the two projects can interconnect into Brayton Point without any system upgrades. The timeline of the project was not publicly released.

Bay State Wind asserts that the scale of its proposed projects will better allow Massachusetts to become “the hub of the offshore wind industry in Massachusetts” and that Ørsted’s “develop, build, own, and operate” model ensures that it is vested in the long-term success of its wind farms, compared to other developers.

Deepwater Wind

Deepwater Wind proposed either a 200 MW or 400 MW wind farm, called Revolution Wind, with a commercial operation date (COD) in 2023.  Deepwater Wind also appears to have submitted an expandable offer, the details of which were redacted.  It proposed an initial 144 MW phase of the project in response to Massachusetts’ 83D solicitation for 9.45 TWh of clean energy. The state will announce the winners of that RFP on January 25, 2018.

In contrast to Bay State Wind and Vineyard Wind, Deepwater Wind’s value proposition is focused on the economies offered by the gradual and sequenced development of the offshore wind industry from smaller to larger wind farms.  This strategy leverages off existing its existing OSW project and contract to develop another OSW project. Deepwater Wind built the 30 MW Block Island Wind Farm in 2015 and 2016 and has a contract with Long Island Power Authority to build the 90 MW South Fork Wind Farm foundations in 2021 and install the turbines in 2022.  Deepwater Wind proposes to build the Revolution Wind foundations in 2022 and install the turbines in 2023.  We believe that its redacted expandable proposal provides for subsequent phases of the Revolution Wind project to further develop the OSW supply chain.  Deepwater Wind asserts that its approach avoids a “boom-bust cycle.” Presumably, the pricing for the expandable offer reflects projected economies that will be realized from the development of the OSW supply chain.

The proposal includes an agreement with the Northfield Mountain Generating Station, a pumped-storage hydroelectric plant in Northfield, MA.  If the Distribution Companies select this Storage Feature, the facility would store energy generated by the wind farm during off-peak hours and deliver energy to electric utilities during on-peak hours.

Deepwater Wind also partnered with GridAmerica Holdings Inc. (a National Grid subsidiary) to develop the Project interconnection and an offshore transmission network. The network could support up to 1,600 MW of wind energy for Revolution Wind and future wind farms. Revolution Wind would connect to the Brayton Point substation in Somerset, MA (1,000 MW) and to Davisville substation in North Kingstown, RI (600 MW), and will be operated and maintained in New Bedford, MA. The project is set to begin construction in 2022 if approved, and commence operations in 2023. Deepwater Wind is the developer of the Block Island Wind Farm off the coast of Rhode Island, which is the United States’ first commercial offshore wind farm and another GridAmerica affiliate constructed the Block Island Transmission System for the interconnection into Rhode Island.

Vineyard Wind

Vineyard Wind, a joint venture of Avangrid Renewables and Copenhagen Infrastructure Partners, submitted proposals for either a 400 MW or 800 MW wind farm. For the 400 MW project, the generation would be bundled with Vineyard Connector 1, which is an 800 MW expandable transmission project. Vineyard Wind Connector 2 is an optional phase two of the expandable transmission project, which would have another 800 MW of capacity. For their 800 MW project, Vineyard Wind is bundling Vineyard Wind 1 and Vineyard Wind 2, each a combined generation and transmission project with individual capacities of 400 MW. An optional phase would be Vineyard Wind Connector 2, an expandable transmission project, which would have another 800 MW of capacity. The lines would interconnect to Barnstable, MA, and West Barnstable, MA.  Vineyard Wind would use Vineyard Haven, MA as its site for the operations and maintenance port during the life of the project.

The 400 MW project would have a COD of December 2021, which Vineyard Wind claims to be the earliest possible project in Massachusetts given its position as the “most mature and most advanced” large scale wind project as evidenced by its recent December 2017 applications for a federal Construction and Operations Plan with BOEM and with the state Energy Facilities Siting Board. The second 400 MW would be commissioned in 2022.  Vineyard Wind has a Community Benefits Agreement and letters of support from local fishermen and all six towns on Martha’s Vineyard plus Nantucket.

Vineyard Wind would establish a $15 million Massachusetts Offshore Wind Accelerator Program to support upgrade of local ports for staging, support set-up costs for supply chain companies, training local workers and investing in new technologies to protect marine species.  Vineyard Wind would also establish a self-sustaining Resiliency and Affordability Fund that invests in local energy storage facilities.

Avangrid, Inc. owns regulated utilities and renewable energy assets throughout the United States. However, none of these regulated assets are Massachusetts utilities. * Avangrid Renewables, another one of Avangrid’s subsidiaries, recently won BOEM’s competitive lease auction for a wind lease area off the coast of North Carolina. Copenhagen Infrastructure Partners is a fund management company that has developed and invested in large offshore wind projects worldwide.

Power Advisory would welcome the opportunity to assist clients in assessing opportunities in the US offshore wind market, especially the upcoming BOEM Massachusetts and NY lease sale auctions, submission of comments on the 83C RFP, and participation in subsequent solicitations.

A PDF version of the report is available here.

*A previous version of this report incorrectly identified Until as part of Avangrid’s portfolio. Avangrid does not have an ownership stake in Until, nor any other Massachusetts electric utility.

Power Advisory Announces Additions to the Consulting Staffs in Our Toronto and Calgary Offices

TORONTO, ONTARIO (October 2, 2017) – Power Advisory LLC is pleased to announce valuable additions to the consulting staffs in our Toronto and Calgary offices with the additions of Sarah Simmons, Neil Freeman, and Christine Runge.

Sarah Simmons, Manager of Generation and Emerging Sectors, has nearly 10 years of experience in the electricity sector and has worked with large-scale and distributed generators, electricity distributors and transmitters, industrial load customers, and emerging technology providers.

Prior to joining Power Advisory LLC, Sarah was a member of the Energy and Environment Practice at Sussex Strategy Group where she provided expert advice related to policy, power system planning, carbon pricing, emerging technologies, permitting and approvals, procurement of generation and transmission, and contract negotiations.  Sarah was also Government Affairs Manager for SunEdison Canada helping to navigate policy, planning, and procurement of solar generation across Canada where she was responsible for regulatory affairs, government relations, market protection and expansion.  Sarah started her career at the Ontario Power Authority (OPA) where she was instrumental in the development and launch of the Feed-in Tariff Program.  In 2012, Sarah was recognized by the Canadian Solar Industries Association as a leader by receiving a GameChanger award for her contribution as Chair of the Ontario Solar Photovoltaic Caucus.

Neil Freeman, a Power Advisory Executive Advisor, has extensive business development, management, and policy experience in the electric sector.  Over his career, he has also worked in senior roles in business development and corporate relations at Horizon Utilities, power system planning at the OPA (now Independent Electricity System Operator), business development at Hydro One Networks, and strategic planning and wires strategy at Ontario Hydro.  In 2016, Neil was named the Canadian Electricity Association’s first ever Individual Sustainability Leadership award recipient.

Christine Runge, Senior Consultant, joined Power Advisory LLC after working for the Alberta Utilities Commission (AUC) in the distribution rates department where she was involved in all aspects of the regulatory process.  Christine analyzed the financial performance of utilities during the first generation of Performance Based Regulation (PBR) to help assess the effectiveness of PBR plans, and took responsibility for the capital aspect of the second generation of PBR that resulted in the innovative K-bar mechanism.  Christine was also heavily involved in policy evaluation of the development of Alberta’s Capacity Market transition including delivery of a cost allocation and rate design model to assess cost impacts to electricity customers.  Prior to the AUC, Christine worked for the Alberta Electric System Operator in the competitive process department where she was involved in designing the competitive procurement process for the Fort McMurray West transmission project.

For further information on the entire Power Advisory LLC team, please visit http://www.poweradvisoryllc.com/power-advisory-staff/.

Power Advisory LLC is a leading North American management consulting firm that specializes in electricity market analysis, business strategy, power procurement, policy development, regulatory and litigation support, contract negotiations, market design, power system and integrated resource planning, project development, project due diligence and feasibility assessment.  Our consulting support offers clients strategic and tactical insights that provide competitive advantages based on an understanding of fundamental economic drivers as shaped by policies, market structures, market design, regulatory frameworks, and market behavior.  Our consulting services are provided by seasoned electricity sector professionals, offering a wide breadth and significant depth of industry knowledge.

 

Massachusetts 83C RFP For Long-Term Offshore Wind Energy Contracts Issued

John Dalton, President & Carson Robers, Consultant, Power Advisory LLC

With approval from the Department of Public Utilities earlier in the week through D.P.U Order 17-103, the Massachusetts electric distribution companies issued a Request for Proposals for Long-Term Contracts for Offshore Wind Energy Projects on June 29, 2017. This kicks off the first in a series of competitive solicitations under Section 83C of Chapter 169 of the Acts of 2008 for 1.6 GW of offshore wind (OSW) capacity by June 2027.

Three existing Bureau of Ocean Energy Management (BOEM) Massachusetts lease holders – Deepwater Wind, Bay State Wind LLC (DONG Energy and Eversource), and Vineyard Wind (Copenhagen Infrastructure Partners and Avangrid Renewables) – meet the definition of an eligible bidder and are expected to submit proposals by the December 20, 2017 deadline. Proposals are required for the target capacity of 400 MW, with both a project specific generator lead line and expandable transmission option. Additional proposals between 200 MW and 800 MW may also be submitted, but proposals with project capacities greater than 400 MW must be determined to be superior to other proposals, as well as to likely offer significantly more economic net benefits to Massachusetts ratepayers than procuring this capacity through subsequent solicitations.
TIMING OF SOLICITATION Although the DPU also reviewed the method for solicitation and execution, the timetable was the only component of the RFP where changes were directed. A one-month reduction in the evaluation period by and three-month reduction in the selection and contract negotiation periods by was directed by the DPU. This change reflects commenters (including Bay State Wind) and DPU contentions that acceleration will maximize ratepayer and environmental benefits.

The scheduled phaseout of the 2.3 ¢/kWh Production Tax Credit (PTC) primarily motivated this timing decision. Each year from now through 2019 the PTC is reduced by 20%, so that the amount for projects initiating construction in 2017 is 80%, 2018 60% and 2019 40% of the full amount, after which it is no longer available. Completing the solicitation in the middle of Q3 instead of Q4 2018 increases the chances that the successful proponent(s) will qualify for the PTC. Find the revised schedule below.

Overall the accelerated schedule is expected to result in lower development costs and increased project viability, with projects online sooner and offering more benefits than under the initially proposed RFP. The effect of the four-month schedule advancement is largely a greater likelihood of the successful proponent being able to capture the PTC available in 2018, but the change supports the development of US offshore wind industry. To realize cost reductions that have been achieved in Europe’s OSW industry, the supportive policy environment offered by policymakers and regulators in states like Massachusetts are essential.

Power Advisory would welcome the opportunit y to assist clie nts in assessing opportunities in the nascent US offsh ore wind market, especially the upcoming BOEM Massachusetts WEA lease sale auctions , participation in subsequent 83C solicitations, and submitting comments on this RFP.

A PDF version of this commentary is available here.