The joint venture’s 1200MW Mayflower Wind Mayflower Wind (1200MW) Offshoreoff Martha's Vineyard, Massachusetts, USA, North America Click to see full details project is due to be commissioned in 2025 and would receive $73.87/MWh plus $3.89 per renewable energy certificate (REC), a letter from the Massachusetts department of energy resources stated.
“The 20-year average cost of contracts’ is $77.76/MWh in levelised nominal dollar terms. This is equivalent to a levelised net present value price in 2019 dollars of $58.47/MWh," a footnote in the letter said.
This levelised price of $58.47/MWh is below the contracts for $64.97/MWh (2017 dollars, or $67.76 in 2019 dollars, according to CPI Inflation Calculator), secured by Copenhagen Infrastructure Partners and Avangrid's 800MW Vineyard Wind project.
Mayflower Wind was chosen as the preferred bidder in Massachusetts’ second offshore wind procurement round in October 2019.
Its developers have since signed 20-year power purchase agreements (PPA) with six utilities operating in Massachusetts: Fitchburg Gas and Electric Light Company, Massachusetts Electric Company, Nantucket Electric Company, National Grid, NSTAR Electric Company, and Eversource Energy.
The utilities have now filed the contracts for approval by the state’s department of public utilities.
In its letter recommending the wind farm’s approval, the department of energy resources noted Mayflower Wind’s contracted price is below the $84/MWh projected costs of wholesale energy and RECs in the market over the 20-year term of the contracts.
The contracts are expected to reduce consumers’ energy bills by between 0.1% and 1.8%, it added.
North America wind power research analyst at Wood Mackenzie Power and Renewables (WMPR) Anthony Logan advised that the price agreed by Mayflower Wind developers could be reduced “if the project can snag 18% ITC (investment tax credit) from the latest tax bill”.
Massachusetts department of energy resources wrote: “The negotiated contracts require Mayflower to maximize the federal investment tax credit for which it qualifies and if they successfully qualify for an ITC in excess of 12%, the contracted price will be reduced.”
Developers of offshore wind and other energy projects, including solar PV, are eligible to claim the federal ITC. Despite a gradual phase-out of the ITC, developers are eligible to claim 18% of a project’s total capital expenditure if they begin construction by the end of this year.