Lots of good news has been blowing in from the offshore wind area lately.
- The Bureau of Ocean Energy Management (BOEM) recently announced that the 1,160 square mile federal Wind Energy Area south of Martha’s Vineyard is moving to the environmental assessment stage.
- BOEM and the folks in Massachusetts’ Environmental and Energy Affairs office engaged impacted communities early in the process so that the proposed area incorporates the needs of environmental organizations, fishermen, shipping channel reps and others and, critically, has their support.
- Ten development companies are vying to build in this zone, which has the potential to produce 4,000 MW of energy – enough to power an estimate 1.7 million New England homes.
- Massachusetts Governor Patrick reaffirmed his ongoing commitment to offshore wind at a rousing speech last week.
But these are only the first steps toward making offshore wind a reliable, steady and cost-effective source of power in New England.
In order to avail ourselves of the power of wind as a clean cost-effective energy source, New England must address the tricky issue of long-term contracts to purchase the power produced by wind farms. As we’ve seen with Cape Wind, securing the funds to get “steel in the water” doesn’t happen unless there is a contract to buy the power. We need to adopt a mechanism that allows developers to sell their power more quickly and easily, while allowing utilities to mitigate the impact on the ratepayer.
Aggregated procurement, or pooling power demands, can streamline the process and improve the end result for developers and utilities alike. Currently, the negotiation of long-term contracts is a one-off process between a project developer and single utility with no consistent guidelines. There are varying standards around how to assess price that are in use at the same time, causing conflicting information and making it difficult to make reliable comparisons between projects.
Creating a middle party or mechanism that can act as a conduit between the purchasers and sellers will create consistent guidelines and a singular process. Different buyers with different needs – utilities, institutions, cities, federal agencies—can pool their demand resulting in greater negotiating power and lower prices. Developers gain the security of a steady revenue stream that enables them to secure financing and to invest in their businesses. Both sides gain from the reduced time and streamlining of the process. And New England gains locally-sourced, cost-effective clean energy.
That’s why the New England Clean Energy Foundation’s Segment Development program recently launched its Offshore Renewables Task Force to focus on the why’s and how’s of aggregated procurement. Comprised of developers, financiers, policy experts and industry, the Task Force will explore different models and mechanisms from a broad range of perspectives. Stay tuned for findings from the Task Force and it’s final recommendation next fall.
The crafting of a Wind Energy Area with broad support, while a huge step forward, is just one step of many. We need to keep pushing for smart, streamlined processes to ensure the development of offshore wind in our region.