NEW BEDFORD, Mass. (AP) — This is the year when offshore wind in Massachusetts goes from a lobby to a full-blown industry, and New Bedford is ready to play a key role.
By the end of June, three companies — two based in Denmark and one in Rhode Island — are expected to get their hands on bid requirements for the state’s first ocean wind farm. A landmark state law requires it.
Signed last summer, the law makes the nation’s biggest state commitment to offshore wind to date, requiring electricity distribution companies — Eversource, National Grid, and Unitil — to buy long-term contracts for at least 1,600 megawatts of offshore wind power in the next decade, enough to power hundreds of thousands of homes. The companies have to solicit bids jointly by June 30 for the first project, which must provide at least 400 megawatts of power.
The mandate to buy wind power represents a victory for the three suppliers that have already won federal lease auctions for separate wind development areas starting about 14 miles south of Martha’s Vineyard: Deepwater Wind of Rhode Island, DONG Energy of Denmark, and Vineyard Wind, which has been acquired by Copenhagen Infrastructure Partners, also of Denmark.
Shortly after Gov. Charlie Baker signed the law, they closed their lobbying group, Offshore Wind: Massachusetts. They had lobbied lawmakers to the tune of $198,000 in 2015 and $169,000 in 2016.
Their goal achieved, the three went their separate ways and started getting into competitive mode, according to Erich Stephens, chief executive officer of Vineyard Wind, who said, “We all sort of returned to our corners, I guess you could say.”
After surveying the sea floor, taking borings, and measuring winds, they are getting ready to write their bids. The process will require a yeoman’s effort in engineering and financing.
This is when the competition starts to ripen, New Bedford Mayor Jon Mitchell said in February.
Not until June will interested parties get a glimpse of a timeline for the bidding process. That schedule should be included in the electric companies’ request for proposals, according to Kevin O’Shea, a spokesman for the Massachusetts Department of Energy Resources.
As the law gives birth to the state’s offshore wind industry, New Bedford is poised to be its nerve center. And that’s not just a parochial view of people in the city.
“New Bedford is critical because of the investment in the Marine Commerce Terminal,” said Bill White, senior director of offshore wind for the publicly funded Massachusetts Clean Energy Center, which manages the terminal.
The $113 million state-funded terminal spans 26 acres of waterfront property at 16 Blackmer St., just inside the hurricane barrier.
White said he expects the winning bidder will lease the terminal as a staging and launching point for the installation of turbines. That’s a safe bet, because all three offshore wind companies signed an agreement to that effect with Baker’s administration in September.
Although New Bedford could be the center of an emerging industry, things will take time, White said.
“We’re talking about a multibillion-dollar heavy industry,” he said.
In January, New York Gov. Andrew Cuomo proposed that his state commit to building 2,400 megawatts of offshore wind power by 2030, enough to power 1.25 million homes.
As more states pursue offshore wind, suppliers will gain confidence that Massachusetts’ first project will not be a one-off deal, and the industry should grow over the next decade, White said. What’s more, once it reaches critical mass, the economics could tip the scales toward manufacturing certain components in the U.S. rather than overseas, he said.
The Department of Energy Resources, in concert with the state Attorney General’s Office and the electric companies, asked interested parties to submit suggestions by March 13 for what the RFP might include. They were asked how much time they would need to develop proposals, how many megawatts of capacity the initial solicitation should require, what documentation of cost bidders should have to provide, and more.
The three offshore wind companies bring varied experience.
More than 15 years after Cape Wind — still billed in Google search results as “America’s First Offshore Wind Farm” — began to spark major opposition in 2001, Deepwater Wind opened the actual first-in-the-nation commercial offshore wind farm, off Block Island. It has five turbines and began operating in December.
Headquartered in Providence, Deepwater opened a New Bedford office Feb. 10, led by Matthew Morrissey, who founded and managed the now-shuttered Offshore Wind lobbying group backed by all three companies.
Deepwater’s chief executive officer, Jeffrey Grybowski, a lawyer, worked as chief of staff in the 2000s to then-governor of Rhode Island Donald Carcieri. Chris Van Beek, the company president, is an engineer and former executive with Heerema Marine Contractors, an offshore oil and gas construction company in the Netherlands. Deepwater’s primary owner is D.E. Shaw, an international investment company.
DONG Energy, which bills itself as “the global leader in offshore wind,” has installed 1,000 offshore wind turbines. It formed in 2006 from six Danish energy companies. It has an office in Boston, opened March 6.
The company’s North American general manager, Thomas Brostrom, moved to the U.S. over the summer of 2015. He told The Standard-Times the company is excited about the prospect of developing an industry up and down the Eastern Seaboard.
“We would never come over here to build one project,” he said. “We are here to build an industry.”
Over the last quarter-century, offshore wind turbines have advanced dramatically, he said. The company announced March 15 it was decommissioning the world’s first offshore wind farm, Vindeby, which began operating in 1991 with 11 turbines. Seven of today’s largest offshore turbines can generate as much electricity in a single year as Vindeby produced in its entire lifespan, Brostrom said.
The company’s Massachusetts project is called Bay State Wind. Last year, DONG Energy sold a 50 percent ownership stake in Bay State Wind to New England utility company Eversource.
The Danish government has a 50.1 percent ownership stake in DONG Energy, according to the company website. “DONG” is an acronym for the Danish words for “Danish oil and natural gas.”
The third company, Vineyard Wind (previously called OffshoreMW), is owned by Copenhagen Infrastructure Partners, a fund management company in which the managing partner is a former DONG Energy executive, according to the company website. Affiliated company Copenhagen Offshore Partners is building wind developments off Germany and Scotland, according to Erich Stephens, chief executive officer of Vineyard Wind.
Copenhagen Infrastructure Partners handles European pension investments, and about half of those investments are in offshore wind, he said.
Vineyard Wind recently opened an office in the Bank of America building in downtown New Bedford.
Vineyard Wind has been working in concert with Vineyard Power, a nonprofit group of about 5,000 Martha’s Vineyard residents, a partnership that allowed the company to get a discount on its development lease, according to Richard Andre, president of Vineyard Power. His organization signed an agreement with Vineyard Wind in 2010 that formalizes that relationship, he said.
Asked if he thinks the state might intend to spread the wealth across the three companies, Andre said the state wants transparent competition and the lowest price. Part of the controversy over Cape Wind stemmed from the lack of competition, he said.
Asked if he would like to see advantageous pricing for Vineyard residents, he said, “That would be an aspiration.”
Stephens said now that Vineyard Wind’s surveying work for the towers is done, the company plans to do additional surveying this summer to find the best route to lay cables to bring the power ashore. Cables would be buried about 2 meters beneath the ocean floor, he said.
Asked if the partnership with Vineyard Power gives his company an advantage, he said it does in the sense that they have been well received by the community. “It could help us avoid missteps,” he said.
As for the work that the industry could bring for local residents, much of it will initially be in trades, such as welding and electrical, to assemble and maintain the turbines. White, of the Massachusetts Clean Energy Center, said his European colleagues have told him not to over-promise on jobs.
Likewise, Morrissey said companies will begin making local investments with the overall growth in business volume. If turbine manufacturers like General Electric and Siemens have enough business in the area, doing more of the work here could make sense, but getting to that point would take years, he said.
“It’s not like we’re talking about a factory coming here,” he said.
For the first wind project, White said large turbine components would probably be shipped to the Marine Commerce Terminal, where they would be assembled and perhaps painted.
Blades would likely be affixed to the hub at sea, he said. Each turbine would have an elevator inside and would require a significant amount of electrical work, he said. Behind the hub of a wind turbine is the nacelle, which houses the generator and sometimes space for a worker to stay overnight.
When it comes to the finer details of installation, White said, “each developer may have their own secret sauce.”
Morrissey estimated that permitting and financing for the first project would last into 2019. Construction could start around 2021, and if the timeline goes as expected for future rounds to bring the state up to 1,600 megawatts, construction on the second project could start around 2024, he said.
Representatives from the electric companies and the Department of Energy Resources are expected to evaluate and rank the bids. The clean energy law, An Act to Promote Energy Diversity, calls for the department and the Attorney General’s Office to jointly select an independent evaluator to ensure a fair and transparent bid process, “not unduly influenced by an affiliated company,” a provision that may be particularly relevant now that Eversource has a 50 percent stake in Bay State Wind.
Information from: The (New Bedford, Mass.) Standard-Times, http://www.southcoasttoday.com
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