Posted on September 25, 2024
Massachusetts residents already pay some of the highest electricity prices in the country and the state is going to need a lot more power as it tries to make a big shift away from fossil fuels. So how much will it cost to generate cleaner electricity with offshore wind?
The pricing details for the state’s latest slate of offshore wind projects won’t be available until contracts are put on file this winter and it is clearly a sensitive topic for the industry and its boosters in state government. The projects chosen this month are widely expected to cost ratepayers more than previous projects, and the Healey administration would only say that they will be cost effective when compared to the cost of building other power generation projects in the future.
Boston area electricity prices were 64 percent above the national average last month, federal data show, and Massachusetts abandoned its attempt at forcing a declining cap on offshore wind power prices in 2022 when it eliminated the legal requirement that each new project selected charge a lower price than the previous one.
Sen. Mark Montigny, a New Bedford Democrat who hailed the “generational economic development” his city and others are seeing from the offshore wind industry, also made clear this month that he was uncomfortable with the way offshore wind pricing has been handled. He said in a statement that Massachusetts “must carefully examine the impacts these deals will have upon ratepayers who simply cannot afford unsustainable energy costs.”
“More scrutiny and proper oversight from government is essential if we are to avoid another embarrassing situation such as when companies were allowed to walk away from legally enforceable contracts following foreseeable inflationary pressures in the market or when a blade failure exposed a complete failure in preparation and public communications,” he said. “Shielding project costs and the impact upon ratepayers from this procurement until winter is not an acceptable start. Our residents deserve less cheerleading from regulators and other government officials and more aggressive scrutiny that’s totally transparent to the public.”
Healey’s office said price information will be made public when contracts are filed for Department of Public Utilities approval. Contract filing has been scheduled for Dec. 18, but state officials say that is merely a target and instead referenced “winter” multiple times. The bidding documents give the state-led evaluation team “the right to revise the schedule as necessary.”
While we wait for specifics from the most recent procurement and to have a measuring stick ready, here are the prices associated with past Massachusetts projects:
•Cape Wind – 18.7 cents per kilowatt-hour (kWh), approved in 2010 and ceased development in 2017
•Vineyard Wind 1 – 8.4 cents per kWh, approved in 2019 (total price in nominal dollars)
•Mayflower Wind (804 MW) – 7.8 cents per kWh, approved in 2020 and canceled in 2023 (total levelized price in nominal dollars)
•Mayflower/SouthCoast Wind (405 MW) – 7.7 cents per kWh, approved in 2022 and canceled in 2023 (total levelized price in nominal dollars)
•Commonwealth Wind – 7.2 cents per kWh, approved in 2022 and canceled in 2023 (total levelized price in nominal dollars)
•Boston area household average electricity price in August 2024: 30.5 cents per kWh
•Nationwide household average electricity price in August 2024: 17.7 cents per kWh
