By Mitchell Young
BOSTON, MA, PROVIDENCE, RI, ORANGE: United Illuminating parent company Avangrid [NYSE AGR] based in Orange has been selected along with its Danish partner Copenhagen Infrastructure Partners by the Commonwealth of Massachusetts to build their Vineyard Wind, an 800-megawatt offshore wind power plant 15 miles south of Martha's Vineyard, featuring as many as 100 turbines.
Avangrid is a publicly traded subsidiary of the Spanish energy giant Iberdola which owns approximately 80% of the company. Avantgrid’s Avantgrid Renewals, subsidiary based in Portland Oregon, bought a 50% interest in the offshore project, one year ago.
Avangrid is itself a diversified energy and utility company, with more than $31 billion in assets and operations in 27 states with regulated utilities and electricity generation through two primary lines of business. Avangrid Networks is comprised of eight electric and natural gas utilities, serving approximately 3.2 million customers in New York and New England.
Avangrid Renewables operates 6.5 gigawatts of electricity capacity, primarily through wind power, in 22 states across the United States. Avangrid won leasing rights for 122,405 acres in early 2017 North Carolina near Kitty Hawk for $9.1 million. Avantgrid renewables has a 200 Megawatt on shore wind power plant. the electricity is primarily sold to Amazon for their NC facilities.
Construction of Vineyard Wind's is expected to begin in 2019 and for the turbines to begin producing electricity by 2021.
Vineyard Wind was selected over proposals from Deepwater Wind of Providence the developers of the first offshore wind plant in New England off Block Island and Bay State Wind, which is a partnership between the Danish firm Ørsted [formerly Dong Energy] and Boston based Eversource [NYSE: ES].
It was still a good week for Deep Wind however, Rhode Island officials chose Deepwater Wind to develop a separate 400 megawatt offshore wind farm for the state of Rhode Island. Deep Wind is primarily owned by the D.E. Shaw Group a $47 billion global investment fund based in NY.
In 2016, the Baystate’s Republican Governor, Charlie Baker, rejected his party’s long standing opposition to offshore wind energy power off the Cape when he signed a bill requiring Massachusetts to purchase 1,600 megawatts of offshore wind power.
An earlier proposed development Cape Wind Associates, battled Cape Cod business groups, Republican lawmakers, and even former Senator Ted Kennedy for more than a decade over the project.
In spite of receiving all necessary state and federal approvals, the project stalled over financing. Electricity rates procured from Cape Wind were expected to be nearly twice the cost of other electricity generation in the market. The financing problem produced the opportunity for Massachusetts utilities’ National Grid [NYSE: NGG], based in Warwick, UK and Eversource, to disavow the power purchase agreements, essentially killing the project.
Avantgrid has not released an expected cost for the project, however, Eversource which had a bid for its own project off Martha’s Vineyard of similar size said its cost would be approximately $1 billion.
Massachusetts’ proposed purchase decisions leaves 800 Megawatts of offshore wind still on the table to be selected.
Danish companies are partners in both the Avantgrid and Eversource projects.
Denmark has two important energy distinctions; it has the highest concentration of wind power generation in the world [40% of the country’s consumption] and the highest electricity rates in the world of any advanced country, more than 40 cents per kilowatt. Wind power advocates say costs for new projects in Europe can now compete more directly with other generation.
With the selection of these two massive offshore wind projects, the reality of the potential industry is becoming more clear.
In June Connecticut is expected to select from two offshore bids for an energy purchase agreement.
In April, Eversource and Orsted, proposed Connecticut’s first offshore wind farm, a 200 megawatt (MW) Constitution Wind project. Constitution Wind would be a built approximately 65 miles off the coast of New London. The project would sit within the same Federal lease area of their proposed Bay State Wind project.
According to Eversource, Constitution Wind would generate enough electricity to provide 100,000 local homes. The companies claiming that in addition to “clean energy” the project would lower energy costs. The partnership “promised” their selection would result in $80 million in savings per year in lower winter power costs.
Deep Wind has also submitted a proposal to Connecticut for 200 Megawatts from its proposal off Massachusetts, which was not selected in the first round of projects.
New York officials have said they want 2,400 megawatts of offshore windpower by 2030, and New Jersey is seeking as much as 3500 megawatts by the end of the next decade as well.