One of the world's largest offshore wind developers, DONG Energy, is partnering with New England utility Eversource Energy to develop DONG's proposed Bay State Offshore Wind project off of Massachusetts that Eversource has a 50% stake in.
In announcing on Dec. 14 the partnership between Eversource and Denmark's largest energy company to construct the offshore wind project, the companies disclosed that Eversource acquired a 50% ownership interest in the Bay State project. It will be in federal waters 15 to 25 miles south of Martha's Vineyard in an area that has the potential to host at least 2,000 MW of offshore wind projects. The project's size is yet to be determined, but it has previously been reported as 1,000 MW.
The announcement also comes as Massachusetts electric distribution companies gear up to meet a new state mandate aimed at cutting greenhouse gas emissions by soliciting in June 2017 for proposals for up to 1,600 MW from offshore wind resources. Contracts running 15 to 20 years will be awarded. Eligible projects are required to be at least 400 MW in size.
"New England is setting the pace for a national clean energy future with its proven track record in energy efficiency and bold clean energy goals," Eversource Energy President and CEO Jim Judge said. "Our partnership with DONG Energy on Bay State Wind represents a significant opportunity to help make those goals a reality and we look forward to delivering this renewable and reliable source of power to customers."
Thomas Brostrøm, general manager for DONG Energy Wind Power U.S. Inc., said in an interview that New England's coasts offer "world class" physical conditions with water depths and wind speeds similar to those in Europe, where DONG established itself early on as a leader in offshore wind development. "We also see an energy landscape [in New England] where we feel offshore wind certainly with time will be a very competitive force here as part of a diverse mix," he said.
Brostrøm said the 50-50 partnership "takes the best of both worlds" by making use of DONG's market-leading expertise in the offshore wind industry and Eversource's transmission experience in New England. While DONG will take a leading role in developing and building the project's offshore generation and transmission assets, Eversource will build its onshore transmission system. Brostrøm said the project's timeline depends on permitting, but construction is expected to begin in the early 2020s.
Lee Olivier, Eversource's executive vice president of strategy and business development, pointed out in an interview that grid operator ISO New England Inc. is projecting 30% of the region's current generation to retire within the next five to 10 years. "If we are going to rebuild that generation fleet, we should do that with renewables that look a lot like baseload generation, and offshore wind does because it's got ... [a] 50% capacity factor, it's got a declining cost curve and it's close to the load," Olivier said.
The new partnership the follows on the heels of Deepwater Wind's 30-MW Block Island Offshore Wind project off of Rhode Island becoming the first commercial offshore wind farm in the U.S. to begin supplying electricity to the grid and the Dec. 7 approval of a regional blueprint for offshore wind development by President Barack Obama's Northeast Regional Planning Body.
In early September, DONG, Deepwater Wind and Copenhagen Infrastructure Partners K/S' wholly owned subsidiary Offshore MW signed a two-year lease of the New Bedford marine cargo terminal for an estimated $11.4 million. The three offshore wind developers, which also hold leases in the federally identified offshore wind energy development area off of Martha's Vineyard, are to use the 26-acre terminal as a staging and development point for future wind projects. DONG Energy has also partnered with Vineyard Power Cooperative to build Offshore MW's project of an undisclosed size.
A Sept. 2 economic study by ISO New England estimated that 2,000 MW of offshore wind capacity could generate revenues ranging from $160 million a year under the least favorable conditions to $732 million under the most favorable conditions while saving consumers between $128 million and $491 million a year through the six states of New England.
Deepwater Wind is a subsidiary of D.E. Shaw & Co. Holdings LP.