The federal government last week awarded Offshore MW and its local partner Vineyard Power Cooperative the exclusive right to begin development of offshore wind power on a 166,886-acre tract in ocean waters about 12 miles south of Martha’s Vineyard.
The partnership’s winning bid in the Jan. 29 auction was $1 per acre. They now have a green light to explore the feasibility of wind power, and then to submit plans for a project. In addition to the winning auction bid, the companies will pay $3 per acre, or $500,658 annually, in rent for the federal site.
Vineyard Power is a local renewable energy cooperative, whose stated mission is to produce local renewable energy in ways that benefit Martha’s Vineyard. Offshore MW is the New Jersey–based sister company to Wind MW, a German firm that recently completed construction of a 288-megawatt offshore wind farm in the North Sea.
The developer has one year to submit a site assessment plan, outlining how the company plans to measure and evaluate the feasibility of wind power generation, to the U.S. Department of the Interior’s Bureau of Ocean Energy Management. If the site assessment plan is approved by federal regulators, the developer has up to 4.5 years to submit a construction and operations plan for review.
Vineyard Power Cooperative president Richard Andre said if all goes well, the permitting process could be complete and construction underway in about three years.
Before the auction, the two companies crafted a community-benefits agreement. Under the federal process, that agreement entitled Offshore MW to a 10 percent discount on the winning bid.
Mr. Andre said the agreement is the first of its kind in the wind industry.
“The community-benefit agreement is a collaborative effort to develop utility-scale offshore wind with the intention of delivering value to the local community of Martha’s Vineyard through local job creation, infrastructure investment, and community participation in the project,” the two companies wrote in a news release.
“When that wind farm is operating, there are going to be vessels that are going out there every day, with mechanics, electricians, engineers, ship’s captains; they will be going out doing the normal maintenance,” Mr. Andre said in a phone interview Friday. “You can imagine a ship or two, you can imagine a workshop, a half-dozen technical employees. The idea is to look at putting that in Vineyard Haven.”
Mr. Andre also said Vineyard Power Cooperative will explore purchasing up to 100 megawatts of power from the project. That would provide more than enough electricity to power the entire Island.
Bargain bids
RES America Developments submitted the high bid for a second tract of 187,523 acres in the same offshore area. RES America Developments submitted a winning bid of $1.50 per acre for the tract. The winning bidders were the only two companies participating in the auction. Two other tracts, both further from shore and in deeper water, received no bids.
The winning bids appear to be bargains when compared with other recent federal auctions.
The federal government awarded U.S. Wind two lease areas totaling 79,707 acres off the Maryland coast in August 2014 for a total of $1.6 million, or $109 per acre. In September 2013, Dominion resources paid $1.6 million, or about $14 per acre, for 112,799 acres off the coast of Virginia. In July of 2013, Deepwater Wind bought the right to develop 164,749 acres in a region between Martha’s Vineyard and Block Island, very near the area auctioned last week, for $3.8 million, or about $23 per acre.
Federal officials acknowledge the lower bids reflect the increased cost of developing wind power in deeper water. Ocean depths in the tracts sold last week range from 118 to 207 feet.
“The Massachusetts Wind Energy area is located in deeper water than some of our other wind-energy areas in other states,” said Abby Hopper, director of the Bureau of Ocean Energy Management. “We knew that developing an offshore wind facility in these areas is going to be more expensive. And as a result of that, we set a minimum price for the bids lower than in the other states.”
Ms. Hopper said she did not believe the recent financial challenges facing Cape Wind, a private wind-power project planned for Nantucket Sound, had any bearing on the relatively low winning bids.
Both supporters and foes of the Cape Wind project say the decision by Massachusetts’ two largest public utilities to withdraw contracts to purchase power from the wind farm call into question the viability of the project.
