Key Takeaways
Despite rapidly rising electricity prices in New England, the region is pushing ahead with offshore wind facilities– one of the most expensive generators of electricity.
Tax credits and other benefits, along with “renewable energy credits,” are making the financing of these facilities possible.
Vineyard Wind off the coast of Martha’s Vineyard has begun producing electricity and is adding more turbines to its facility–each about 3 times as high as the Statue of Liberty.
Some offshore wind projects have run into difficulties through soaring costs and supply chain issues and have been canceled with financial penalties.
Vineyard Wind–a wind farm under construction off the coast of Massachusetts–has begun generating electricity from five of its planned 62 wind turbines. It is the first large-scale offshore wind facility in the United States to begin initial operations, generating 68 megawatts of electricity. Another Massachusetts offshore wind project, Avangrid Inc.’s New England wind facility, moved closer to approval as federal regulators issued a final environmental impact statement on the project. In December, Danish wind energy developer Ørsted and the utility Eversource announced that their first turbine was generating electricity in New York. The South Fork Wind facility has installed 6 turbines out of 12 planned and is located 35 miles east of Montauk Point, New York. In 2016, Rhode Island’s Block Island had begun operation from 5 offshore wind turbines, but it is not considered a commercial-scale wind facility due to its limited size.
Massachusetts already has the 4th highest residential electricity prices in the nation and New York has the 9th highest. These offshore wind projects are likely to increase those prices as they are expensive to build and have lower capacity factors compared to coal, natural gas and nuclear generating plants.
Vineyard Wind
The 806-megawatt Vineyard Wind project is the first utility-scale wind power facility to be developed in federal waters at a cost of $4 billion. The Vineyard Wind project is located 15 miles off Martha’s Vineyard. The project has installed nine turbines and is in the process of installing a tenth turbine. Each turbine will start production once it completes the commissioning process. In January, the joint owners of the Vineyard Wind project, Avangrid and Copenhagen Infrastructure Partners, announced that a turbine had successfully delivered about 5 megawatts of power to the electric grid.
It has taken 7 years for the Vineyard Wind project to come to fruition as it had submitted state and federal project plans to build an offshore wind facility in 2017. In 2019, Federal regulators delayed Vineyard Wind by holding off on issuing an environmental impact statement because fishermen were worried about its impact on their livelihoods. In 2021, the Biden administration signed off on the project and construction began onshore in Barnstable, Massachusetts. Offshore construction began in late 2022 after massive tower sections were brought from Portugal to the Port of New Bedford to be assembled out on the water. Last fall the owners closed a $1.2 billion tax equity deal with J.P. Morgan Chase, Bank of America and Wells Fargo, which the developers called a first for a U.S. commercial-scale offshore wind project. Such agreements allow firms to fund projects in exchange for tax credits, renewable energy credits, and other tax benefits. The project is expected to be completed this year.
Vineyard Wind’s General Electric Haliade-X turbines each include a monopile anchoring it to the seafloor, topped by a transitional piece at the surface, then a tower topped by a nacelle and three blades. Each blade is 107 meters or almost the length of a football field including the end zones (109.7 meters). The height of each turbine is about the same as three Statues of Liberty stacked up, (about 850 feet) from blade tip to the water’s surface.
Avangrid’s New England Wind Facility
The 129-wind-turbine project is to be split into two phases, known as the Park City Wind Project and the Commonwealth Wind Project. They are expected to provide a combined generating capacity of 2.6 gigawatts. The New England Wind project will be located about 20 nautical miles south of Martha’s Vineyard, and about 24 nautical miles southwest of Nantucket. While power purchase agreements for the projects were terminated last year due to financial challenges, Massachusetts, Connecticut and Rhode Island are planning joint regional procurements for more offshore wind power. According to the Bureau of Ocean Energy Management, Park City Wind LLC, the Avangrid unit developing the project, “intends to submit one or more proposals in response to these solicitations.”
South Fork Wind Project
Danish Ørsted and Boston-based energy provider Eversource developed the 132-megawatt South Fork Wind project. The project achieved its 50 percent installation milestone on January 18, with six out of 12 SG 11-200 DD Siemens Gamesa turbines complete and online. Its final turbine set sail from State Pier in New London, Connecticut, in mid-February. South Fork Wind’s first offshore wind turbine foundation was installed at the end of June 2023, and its first US-built offshore substation was completed at the end of July. It delivered its first power to the grid on December 6. Its electricity is being delivered to the electric grid in East Hampton, Long Island via a single transmission line that was installed in March of last year. The electricity is being sold to the Long Island Power Authority under a 20-year agreement. It was built at a cost of $2 billion.
Conclusion
While a few offshore wind projects have gotten off the ground and have started producing electricity, others have been canceled, often with developers occurring fines. Developers have canceled several projects along the East Coast, saying they were no longer financially feasible. Offshore wind projects have struggled to surmount rising construction and material costs, as well as serious manufacturing problems. In recent months, rising materials costs, high interest rates, and supply chain delays have prompted project developers to cancel or try to renegotiate power contracts for commercial-scale offshore wind facilities in the United States with operating start dates between 2025 and 2028. Offshore wind facilities are among the most expensive utility scale power projects under construction in the United States and would not have gotten off the ground without massive support from state and federal governments and pre-approved power purchase agreements. With the cancellations that have occurred, President Biden’s goal of 30 gigawatts of offshore wind capacity by 2030 is expected to be half that amount.
