Dive Brief:
- Massachusetts, Connecticut and Rhode Island jointly deploying 9 GW of offshore wind by 2030 could save New England ratepayers $630 million a year on average, according to a report published Tuesday by Synapse Energy Economics on behalf of the Sierra Club.
- Net savings could surpass $1.3 billion in some years “under a mid-case natural gas price,” the report said. The report estimates that the additional offshore wind generation would reduce New England electricity customers’ bills by approximately $2.79 per month to $4.61/month.
- “The waters off southern New England are among the most advantageous in the world for offshore wind,” said Ørsted’s Head of Public Affairs U.S. Maddy Urbish. “As the Northeast’s leading developer, Ørsted looks forward to helping states meet their clean energy goals with this tremendous resource off their coast.”
Dive Insight:
Connecticut, Massachusetts and Rhode Island have been pursuing joint offshore wind procurement since signing a memorandum of understanding last October, creating the first such agreement in the U.S. The three states have varying goals for offshore wind deployment, but their recent joint solicitation sought a total of 6 GW.
“The results of our modeling indicate that adding 9,000 MW of offshore wind by 2030 will substantially shift the electricity market supply curve,” Synapse Energy Economics said in its report. “After factoring in the costs of offshore wind contracts, our modeling results show net annual electricity cost savings for the region averaging $630 million, with net savings in some years surpassing $1.3 billion under a mid-case natural gas price.”
“If natural gas prices increase,” the report adds, “the savings would also increase. In addition, we observe net benefits in 19 of the 23 weather years modeled, suggesting that offshore wind can provide bill savings in every four out of five years, on average.”
When using a high natural gas price forecast for 2030, the report authors said they “[estimated] that the average annual savings to electricity customers would exceed $1 billion, with savings in some years exceeding $1.7 billion.”
ISO New England spokesperson Matt Kakley said he has not reviewed the report in detail and can’t comment on its conclusions, but “there’s no doubt that offshore wind will play an important role in New England’s energy future.”
“Continuing the momentum of the initial wave of grid-scale projects, namely [Avangrid and Vineyard Offshore’s] Vineyard Wind I and [Ørsted and Eversource’s] Revolution Wind, will be vital to the success of the region’s clean energy transition, particularly as decarbonization policies aimed at heating and transportation sectors lead to increased consumer demand for electricity in the coming decades,” Kakley said.
The waters off the coast of New England are currently a hotspot for offshore wind development, though the area has also seen impacts from the macroeconomic headwinds the industry has recently faced in the U.S., resulting in project cancellations and power purchase agreement renegotiations.
Those issues have “raised questions about the benefits of offshore wind to New England, and prompted consideration of further increasing the region’s reliance on natural gas for power generation,” the report said.
But Synapse Energy Economics said they found “offshore wind’s ability to lower electricity costs for New Englanders will continue, even accounting for recent increases in offshore wind development costs.”
The group said this remained true in its forecasting even when its modeling used a “conservative” estimate that “the cost of additional offshore wind procurements will reflect the more recent, higher contract costs of $150.15 per MWh, even though industry experts expect that offshore wind costs will decline in the future.”
