BOSTON – Rhode Island energy officials announced Wednesday that the Ocean State has joined New England’s first multistate offshore wind memorandum of understanding with Massachusetts and Connecticut.
The MOU is an agreement between the Mass. Department of Energy Resources, the Conn. Department of Energy & Environmental Protection and the R.I. Office of Energy Resources.
Christopher Kearns, acting commissioner of the R.I. Office of Energy Resources, said this agreement is the first multistate offshore wind procurement collaboration MOU in the United States that his office is aware of.
“We are excited about the possibility of the proposals that we could receive and the greater benefits and potential lower cost to ratepayers that they could provide,” Kearns said during a briefing with reporters. “By working regionally, we hope to secure competitive energy resources that will make our energy supply more affordable, reliable and clean.”
The MOU is meant to pave the way for a more coordinated selection of offshore wind as each state solicits offshore wind energy generation through their own procurements. The announcement comes after R.I. Gov. Daniel J. McKee announced Sept. 28 that Rhode Island Energy is expected to issue a request for proposals to bring 1,200 megawatts of new offshore wind energy later this month.
Connecticut’s DEEP is also expected to release its RFP in the coming weeks seeking offshore wind proposals for approximately 1,200 megawatts.
In August, DOER and Massachusetts electricity distribution companies issued a joint RFP for the state’s largest offshore wind solicitation so far, seeking up to 3,600 megawatts. For the first time, this solicitation also allows the commonwealth to coordinate with other states if the participation will benefit or have a neutral effect on Massachusetts ratepayers and if it would offer them other benefits.
“Offshore wind is an important resource in meeting our Act on Climate and renewable energy goals,” McKee said. “Regional collaboration through this [three-state] MOU will not only help in advancing offshore wind projects of large scale by securing cost-effective energy prices for ratepayers, but it also provides a significant opportunity for long-term economic development that the offshore wind industry will bring to the three states.”
This MOU will serve as an addendum to all three states’ individual RFPs, Kearns noted, and developers will need to submit their RFPs into the three states’ respective procurement processes.
Kearns added that this collaboration between the three states has been very “confidential in nature” and that there have been no discussions yet with developers.
The states’ combined solicitations are for up to 6,000 megawatts of offshore wind. Any two or three states may agree to select a multistate proposal up to their own procurement authority and split the anticipated megawatts and renewable energy certificates from a project, according to a news release.
Though it’s not clear yet what proposals will come in, priority is expected to go to multistate project proposals, Kearns said.
“We may eventually look at individual projects state by state, but at least out of the gate we want to see what developers submit for multistate proposals,” Kearns said.
In terms of pricing, the aim of the MOU is to leverage the economies of scale through the multistate proposals.
“If there is a developer that has 3,000 or 4,000-plus megawatts, we want to see the energy pricing for that project at that scale instead of getting a 1,200-megawatt project with one price, another 1,200 with a different price,” Kearns said.
Along with the potential for reducing costs, the MOU will also help boost regional economic development, create more higher-paying and in-demand jobs, as well as promote environmental justice and equity, according to the news release.
Though because each state may have its own economic development priorities, Kearns said it is possible some states may end up paying more in certain agreements. In those cases, Kearns said states will collaborate while assessing the individual proposals to determine how best to move forward.
“Ultimately, these projects are predominantly based on the energy price first and then the economic development matters are secondary,” Kearns said. “As the proposals come in, I think we’ll be in a good position between the three states to evaluate what came in and then make the determination in terms of how we’re going to proceed. Both on the energy price component – if the energy price is at an attractive rate that the states want to proceed with – and then the economic development aspects will be worked out.”
Transmission costs are reflected in the price per kilowatt that is included in developers’ proposals, though Kearns said there might be opportunities to reduce some of those costs as the three states are seeking federal funding from the U.S. Department of Energy for transmission-related upgrades.
Proposals are expected to come in early 2024. Kearns said the evaluation process is expected to take several months, but his office will likely have a more definitive timeline in the coming months.