Stable price for Vineyard Wind energy now in effect

Updated April 30.

Massachusetts residents should start to see the effects of a recently fully constructed offshore wind farm in their energy bills. But how that could look is not so simple. The difference might not be obvious to ratepayers, and be very dependent on demand and weather.

Gov. Maura Healey announced Monday that the stabilized price of energy from the Vineyard Wind 1 offshore wind farm, 15 miles south of the Island, is now active. Healey’s administration expects that the fixed price, negotiated almost a decade ago, should collectively save ratepayers $1.4 billion over the two-decade life of the contracts.

Activation of the contract guarantees stable and affordable energy prices, a press release from the governor’s office said. Previously, any energy from the offshore wind farm — between January 2024 and last week — was sold on the regional open energy market, and the price was subject to fluctuations in supply and demand, made particularly high this past winter due to bouts of extreme cold and severe weather.

Back in 2019, the state Department of Public Utilities approved the 20-year contracts for 800 megawatts of offshore wind from this project. The price in what are called power purchase agreements was negotiated between state utilities, National Grid USA, Eversource Energy, and Unitil Corp., and Vineyard Wind fixed at an average $69.50 per megawatt-hour. (One megawatt can serve about 750 to 1,000 homes in New England; a megawatt-hour can serve 1,000 homes for one hour.) The price is locked in through six power purchase agreements, each for 400 megawatts of the project, for the three companies and escalates over the 20-year contract term at a fixed and pre-determined rate of 2.5 percent.

This is a largely affordable price when compared with average day-ahead energy costs this past December, January, and February in Southeast Massachusetts, which were $135.18 per megawatt-hour, $180.76, and $127.13, respectively. The release from Healey’s office stated that through power from Vineyard Wind, Massachusetts ratepayers should save an average of 1.4 cents per kilowatt-hour, which is equal to 1,000 megawatt-hours.

But those high prices aren’t always the case. In fact, the average wholesale price for energy in 2025 was $65.88, which is lower than the contract price for Vineyard Wind. And on moderate April days, the wholesale price can be significantly lower.

In the open market, which is administered by the nonprofit ISO New England, power generators compete to sell energy through a bid process. The price reflects the cost to produce that power, which can change hour to hour, and depends on weather as people either vigorously heat or cool their homes. Weather especially impacts the output of renewable resources, such as solar and wind. And natural gas, as the main resource in the mix, often sets the wholesale price. The real-time wholesale price for Southeastern Massachusetts at 10 am on Wednesday was $33.55 per megawatt-hour. The hourly day-ahead energy price for Thursday, April 29, as of 10 am Wednesday, was $56.97 per megawatt-hour.

The grid is managed by ISO to match supply and demand, and every five minutes of the day, grid operators choose the least expensive resources to do so. More expensive resources are called upon until demand is met. Then, every resource is paid the same hourly price, set by the last, most expensive resource used.

That price is what Islanders see in the “supply” part of their energy bill, and recently, accounts for around 45 percent of the total for Massachusetts customers. The “delivery” part, which is the cost needed to get the power from a resource to homes and is managed by Eversource for the Island, constitutes the rest of the bill.

Utilities, like Eversource, sell the power from contracted resources, like Vineyard Wind, back to the wholesale market. And while the grid sets the supply price of a bill, the delivery charge includes other costs, such as a long-term renewable energy adjustment.

When the wholesale price in the energy market is less than the fixed price, customers experience an added charge in their bills to reconcile the difference. When the price in the contract is higher, customers get a credit.

That being said, Islanders should see a welcome difference in their bill when the wholesale price, especially when demand is high in the coldest and hottest months, is higher than $69.50 per megawatt-hour. Should the wholesale price be lower, they’ll incur the difference to get up to that nearly $70 per megawatt-hour.

“The activation of Vineyard Wind 1’s power purchase agreements marks an important milestone for Massachusetts electricity customers and the New England grid,” Craig Gilvarg, spokesperson for Vineyard Wind, said. “The project is delivering reliable energy at stable, affordable prices, and is projected to save ratepayers billions in the decades ahead. At a moment when the region needs it most, Vineyard Wind is adding significant new energy and strengthening the long-term security of the New England grid.”

It is not confirmed that every turbine is commissioned or that the project reached full “commercial operation,” which is when the technology is fully tested and actively generates revenue. As of Thursday, April 16, 55 out of the 62 turbines were able to generate power, an attorney for GE Vernova, a central contractor of the project which installs and commissions the project’s turbines, said. That was not all at full capacity, the attorney added.This commissioning threshold, which activated the contract price, came a day before GE Vernova had planned to walk out on the project over alleged withheld payments by the offshore wind developer worth more than $300 million. The matter was taken to court, and a judge granted officials at Vineyard Wind a preliminary injunction and temporary restraining order. This means GE Vernova can’t terminate, at least for now, a contract that guarantees the company provides service and maintenance to the project’s 62 turbines over the next five years.

Editor’s note: Updated to include more details about the contract price and how that works in the regional energy market.