One of the biggest priorities for Massachusetts Fiscal Alliance in the coming months and years ahead, is to advocate for cheap and reliable energy sources for Massachusetts and New England.
Without cheap and reliable energy, our ratepayers cannot afford to live here and our businesses cannot afford to compete with their competition from parts of the country that benefit from cheap energy policies. Massachusetts politicians have moved away from prioritizing the ratepayer in favor of preferred interest groups and crony capitalism. You will hear more on this topic from us over the months and years ahead.
In recent years, there has been a lot of capital put behind the reliance on an energy source that has never actually been put into practical use at this scale and scope—offshore wind.
Offshore wind is President Joe Biden’s number one domestic policy agenda and off the waters of Massachusetts are where the first turbines are set to be constructed. Offshore wind has been touted as playing a vital role in our transition away from fossil fuels to renewable energy sources, specifically to hit our “net-zero” carbon emissions by 2050 mandate set by Governor Charlie Baker and the legislature. It has been stated that it could provide around 50% of the state’s power by 2050. However, it seems as though continuous concerns that accompany offshore wind that have been overlooked or ignored are finally starting to catch people’s attention.
Currently, Massachusetts is the leader in offshore wind procurements having contracted over 3,000 MW of offshore wind within four projects, with Vineyard Wind slated to become the first in the nation large-scale project off the coasts of Martha’s Vineyard and Nantucket. Last summer, the legislature passed and Gov. Baker signed a bill that codifies a goal of procuring 5,600 MW of offshore wind no later than June 30, 2027. As we pointed out in a letter to legislators before this vote, this is happening all before a single turbine has been built, or any real assessment of the consequences this new industry may pose. Importantly, the Act also removes the “price cap” that was previously put in place to protect ratepayers during the bidding process.
This past fall, the developer for a major offshore wind project asked state regulators to pause review of the contract for a month in order to renegotiate the Power Purchase Agreement (PPA), claiming that global price hikes, inflation, and supply chain shortages were throwing a wrench into their plan. They stated the Commonwealth Wind project, which was set to supply 1,200 MW of offshore wind power “is no longer viable and would not be able to move forward” under the terms of the contract. Mayflower Wind has also parroted the same sentiment, and cost concerns have also been playing out in other projects along the Atlantic coast.
The rising cost concerns comes as the Biden administration aggressively ramps up its offshore wind industry. The Biden administration has set a target for permitting 30 gigawatts of offshore wind by 2030, fast-tracking the permitting process. The Bureau of Ocean Energy Management (BOEM) has held 10 lease sales and issued 27 active commercial wind leases in the Atlantic Ocean from Massachusetts to South Carolina.
The Inflation Reduction Act passed earlier this year included a federal tax provision that provides a 30% tax credit for offshore wind projects that start construction before Jan. 1, 2026. However, even with this credit, the pricing doesn’t seem to work out and obtaining financing may be impossible. According to a paper from the Caesar Rodney Institute, that could be the case for most of the projects with state price approval along the Atlantic coast.
Also stated in the paper, was the fact that the turbines used at least in the near future are produced in Europe. Siemens Gamesa, a lead turbine producer lost $1 billion in the 4th quarter, 2022, stating the loss came from higher-than-expected warranty repair costs from failed turbine parts. Vestas, another wind turbine producer, raised turbine prices 22% after losing $151 million in the 3rd quarter, 2022. General Electric, the producer of the massive Haliade-X turbine once set to be used in the Vineyard Wind project, did not receive a single order for offshore turbines in the 4th quarter of 2022. They recently lost a U.S. patent lawsuit, which has hurt U.S. sales and led to $2.2 billion in losses for 2022.
It’s starting to look more and more like we are supporting a boondoggle for these foreign offshore wind companies and the volatility in market pricing and attempts by these companies to back out of contracts are cause for concern.
On top of this, other concerns have been popping up, most recently visible off the coast of New Jersey where whales and dolphins, both of which navigate using sound, have been washing ashore in tandem with offshore wind sonar site mapping. Some theorize that this noise disorients certain aquatic life, leading to more run-ins with boats and navigation complications. Although a direct link has not yet been proven (because there is no pause to study this connection by BOEM), it has been a significant enough concern to get several Members of Congress and dozens of local mayors to take public action. There have also been sponsors from New Jersey, New York, Maryland, Pennsylvania, and Georgia on a bill in Congress calling for more investigation into the matter.
This goes to say that other seemingly obvious concerns that offshore wind may pose have been scarcely discussed in the public forum, or only recently gaining attention, such as the impact on our state’s commercial fishing industry. The port in New Bedford has been awarded the country’s most lucrative fishing port for decades by NOAA Fisheries, and known as the scallop capital of the world. New Bedford’s Mayor has stated, “Commercial fishing and the businesses that support it make the Port of New Bedford the economic engine of Southeastern Massachusetts, and a leading food source for America.” This shows the scope and importance this industry has on our state, and the potential scale of disruption. A recent ProPublica article also dives into the major repercussions that this will have on our state's fisherman.
Massachusetts Fiscal Alliance is not opposed to more power generation for New England, in fact we desperately need cheap and reliable energy production. However, all power generation comes with a cost, and the industrialization of our ocean for offshore wind clearly has potential of having a high economic and environmental cost, which often gets ignored. Wind and solar power are low density energy sources, which rely on a tremendous amount of development. You will hear MassFiscal talk more about why Massachusetts has high energy costs, even though energy demand has decreased. Stay tuned…