This article comes from law firm Pierce Atwood LLP and is authored by James Avery, Jared S. des Rosiers, and Liam Paskvan
The Massachusetts investor-owned electric distribution companies (Distribution Companies), in coordination with the Massachusetts Department of Energy Resources (DOER) (together, Soliciting Parties), recently issued a joint request for proposals (RFP) for 400 MW of Offshore Wind Energy Generation and associated transmission to enter into long-term contracts of 15 – 20 years. The RFP also allows for procurement of up to approximately 800 MW in limited circumstances, as summarized below. The deadline for submissions is December 20, 2017.
Under the Climate Protection and Green Economy Act, Massachusetts is required to “establish goals and meet targets for the reduction of greenhouse gas (GHG) emissions by 2020, 2030, 2040, and 2050.” The Act requires a reduction in GHG emissions of 25 percent below 1990 levels by 2020, and 80 percent below 1990 levels by 2050. Consistent with these requirements, Section 83C of the Green Communities Act, as amended in 2016, requires the Distribution Companies to enter into cost-effective, long-term contracts for offshore renewable generation in the amount of 1,600 MW of aggregate nameplate capacity by no later than June 30, 2027. The RFP is the first of several, statutorily-required solicitations in which the Commonwealth will seek to procure offshore generation to help meet that requirement.
The current RFP seeks proposals for “Offshore Wind Energy Generation” or RECs, or both as well as associated transmission necessary to deliver such generation to the ISO-New England, Inc.’s (ISO-NE) onshore Pool Transmission Facilities (PTF). The RFP defines “Offshore Wind Energy Generation” as:
[O]ffshore electric generating resources derived from wind that: (1) are Class I renewable energy generating sources, as defined in Section 11F of Chapter 25A of the General Laws; (2) have a commercial operations date on or after January 1, 2018, that has been verified by the Department of Energy Resources; and (3) operate in a designated wind energy area for which an initial federal lease was issued on a competitive basis after January 1, 2012.
The Soliciting Parties seek to procure a total of 400 MW of Offshore Wind Energy Generation, but will consider proposals for up to approximately 800 MW, and may contract for an amount in excess of 400 MW if a “larger-scaled proposal is both superior to other proposals . . . and is likely to produce significantly more net economic benefits to ratepayers …”
Each bidder must submit at least one bid for a 400 MW generation project, and may also submit alternative bids for projects ranging from 200 MW to 800 MW. All projects must have a scheduled commercial operation date before January 1, 2027. Bidders must propose a price for Offshore Wind Energy Generation and/or associated RECs on a fixed $/MWh and/or $/REC basis. All payments under a long-term contract will be calculated based on actual production following delivery to the ISO-NE onshore transmission system. The RFP prohibits lump sum payments or prepayments to a selected generator.
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