Offshore Wind Auction Yields Large Project for New London, as Feds Promise Tax Credits

Block Island Wind Farm (Credit: CT Examiner)


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New England’s offshore wind sector got a big boost from a federal tax ruling and the first multistate auction in the country, with Connecticut, Massachusetts and Rhode Island taking part. One of the bids proposes the largest offshore wind project to be built out of New London’s State Pier.

Four companies — Avangrid, SouthCoast Wind, Ørsted and Vineyard Offshore — submitted bids on Wednesday for offshore wind projects that would generate 5,455 megawatts of power for the region. But only Ørsted offered plans to assemble turbines in New London, while the other developers opted for Massachusetts ports.

Ørsted’s project, called Starboard Wind, promises to create hundreds of jobs, although only some at New London’s State Pier. The company estimated it would add 800 full-time-equivalent positions in Connecticut if the state chose the project, but that number would drop if Rhode Island also selected the bid, basing operation and maintenance jobs there instead. Power generation could be split between the two states. The project would generate 1,184 megawatts of power, enough to supply 600,000 homes, according to Ørsted, if completed.

The bidding for the new project suggests an improved outlook for Ørsted, which last year canceled contracts to sell offshore wind power to New York, New Jersey and Maryland. The industry as a whole suffered setbacks in 2023, with projects canceled or delayed despite federal support and incentives from the Inflation Reduction Act. Development companies have said the headwinds were caused by inflation, rising interest rates and higher costs from supply chain disruptions. The tri-state auction sought to improve the attractiveness of projects by offsetting costs with added scale.

“There definitely have been some challenging times, but one of the things I am most proud of is that the states have kind of adopted lessons learned from the past to make these procurements more adaptable due to that change and more resilient,” said Nicole Verdi, head of New England Government Affairs and Policy at Ørsted Americas. “So I got to give the states credit. I think the fact that they are working together is one of the things that has been kind of a lesson learned in the past.”

Last October, the three states signed a memorandum of understanding to hold a joint offshore wind energy auction. Connecticut set a limit of 2,000 megawatts, while Massachusetts would seek 3,600 megawatts and Rhode Island 1,200 megawatts. The deadline for submitting proposals, which expired on Wednesday, had been postponed from an initial deadline of Jan. 31 while companies awaited clarification on federal subsidies.

The projects got a boost from U.S. Treasury Department last Friday when the the federal agency ruled that the offshore wind projects were eligible for tax credits under the Inflation Reduction Act. Because ports such as New London fall under the classification of energy communities, offshore wind projects developed there will be eligible for the bonus, resulting in reduced costs.

The states will analyze and select the proposals in the coming months. The selected projects are expected to be announced in August and then power purchase agreement negotiations will begin.

The Connecticut Department of Energy and Environmental Protection said in a written statement that a review of the multistate proposals will be conducted in coordination with Massachusetts and Rhode Island.

DEEP can purchase up to 2,000 megawatts, in addition to the power it has already agreed to buy from the Revolution Wind project, the first offshore wind initiative to supply power to Connecticut. Revolution Wind is being built jointly by Ørsted and Eversource and is expected to go online in 2025, supplying 304 megawatts to Connecticut and 400 megawatts to Rhode Island. Ørsted also built South Fork Wind, the first commercial-scale offshore wind farm currently in production in the country, and plans to develop Sunrise Wind, with 924 megawatts of capacity, both to supply clean electricity to New York. All these Ørsted offshore wind projects would be assembled at the New London State Pier.

Avangrid submitted the highest bid with two proposals in Wednesday’s auction: one for 791 megawatts from its New England Wind 1 project and another that adds 1,080 megawatts from New England Wind 2. Both are rebids of projects previously withdrawn by the company.

New England Wind 1, formerly known as Park City Wind, would be built in Massachusetts, but operation and maintenance positions would be based in Bridgeport. The company did not say how many positions it would create in Connecticut, but they would be hired once the project begins production in 2029, according to Avangrid. New England Wind 2 — Commonwealth Wind in its first version — would be entirely based in Massachusetts. Connecticut is eligible to buy power from either project.

“With this bold multistate procurement, Massachusetts, Connecticut, and Rhode Island have sent a clear message that now is the time to move forward with purpose on offshore wind,” Avangrid Senior Vice President of Public and Regulatory Affairs Kimberly Harriman. “We believe New England Wind is the right project at the right time, with the ability to help the region address its pressing energy and climate challenges.”

Vineyard Offshore submitted a bid for 1,200 megawatts through its Vineyard Wind 2 project, which would be assembled and have its operations and maintenance base in Massachusetts, although it would source secondary components from Rhode Island. Only the grid connection would be created in Montville, Connecticut.

SouthCoast Wind, owned by Ocean Winds, submitted a bid to build 1,200 megawatts, according to Rhode Island Current. The project would be based in New Bedford, Massachusetts.