|
Renewable energy proponents are turning to New England to show the way for a domestic offshore wind industry after Massachusetts and Rhode Island officials picked two offshore wind projects for procurement to supply their electric utilities.
Vineyard Wind LLC, a joint offshore wind venture between Avangrid Renewables LLC and Copenhagen Infrastructure Partners K/S, had its 800-MW Vineyard Offshore Wind Project selected May 23 in a multi-utility solicitation by Massachusetts distribution utilities for offshore wind projects. Deepwater Wind, the developer behind the country's first offshore wind project, is also up to sign a contract for the output of its 400-MW Revolution Wind Offshore Project to be delivered to consumers in Rhode Island.
Contracts between the developers and utilities will become official after approval from their state utilities regulators.
Clean energy groups, government agencies and the private sector alike echoed a similar sentiment: that the two northeastern states are positioned to jump-start the emerging energy sector that currently only has 30 MW of capacity from one project, Deepwater's Block Island Offshore Wind Farm. Massachusetts Gov. Charlie Baker said Vineyard Wind's winning bid brings the state closer to achieving his administration's goals, which includes a clean energy mandate for utilities to procure 1,600 MW of offshore wind. National Wildlife Federation President and CEO Collin O'Mara said the Vineyard Wind and Deepwater Wind projects ensure "that New England becomes a hub for this transformational new clean energy industry."
"Massachusetts and Rhode Island are ready to pioneer large-scale offshore wind development that will light the way for our industry and nation," American Wind Energy Association CEO Tom Kiernan said in a statement. "With world-class wind resources, infrastructure and offshore energy expertise, the U.S. is primed to scale up this industry and lead it. Becoming a world leader for offshore wind will open tremendous new opportunities for U.S. workers, factories and ships throughout our coastal states."
Potential market upswing
For the winning developers, the projects could create an upside with their financials. In a March note from Moody's Investors Service, analysts said offshore wind is a credit-positive move for project developers because it gives them a first-mover advantage as the technology grows. Building the plants carries more risks than onshore wind, but once the projects are operational, developers and their offshore wind farms will reap in long-term cash flows from their contracts with highly rated utilities.
Macquarie Research said in May 24 note that if Avangrid Renewables' separate bid in the Connecticut offshore wind request for proposals goes through, it could generate an annualized net income of at least $180 million once the projects are operational. Wells Fargo Securities estimated that the project represents a $1.2 billion to $1.6 billion investment opportunity for parent company Avangrid Inc. The company could also add 10 cents to 15 cents to its annual earnings per share power once the project is completed.
"We have been impressed with management's execution over the last year including major project wins," Wells Fargo Securities analysts wrote in a May 24 note. "That being said, we would like to better understand the risk/return parameters of the offshore wind project."

