Massachusetts electricity users will save about $1.4-bn over 20 years from America’s first, large-scale, offshore wind project. That’s according to a letter released yesterday by the Massachusetts Department of Energy Resources. These savings arise because the $65 price is “materially below the levelized projected costs of buying the same amount of wholesale energy and RECs in the market“, also because the project will lower electricity prices on the market and will provide price certainty. Consider that average electricity prices in Massachusetts in 2017 were more than $160/MWh and the project value is self-evident.
The 800 megawatt (MW) development will be built in two phases of 400 MW each. The first is expected to start in 2021 and the second, the following year. Each would have a slightly different starting price which will inflate by 2.5% each year. On a present value basis, the price works out at $64.97/MWh according to the Department of Energy letter. The chart on the right shows the project layout off Martha’s Vineyard,
Consider that $65/MWh is less than half the amount the most recent offshore wind contract which was signed in Maryland, only last year, at a price of $132/MWh. Further, it is a stunning one quarter the amount of the $244/MWh cost of the Block Island wind farm located off the coast of Rhode Island and which was commissioned less than a year ago (December 2017).
This rapid downward progression in offshore prices is illustrated by this chart,
As noted by Bloomberg: “That’s pretty shocking for us ….. I think the wider industry expected much higher prices. The repercussions of this are it will probably awaken a lot of other coastal states to the value of offshore wind.”