‘Taking it in’: Vineyard Wind wins offshore wind contract with Massachusetts

Vineyard Wind has been selected for Massachusetts’ first offshore wind contract, and Deepwater Wind will receive a contract from Rhode Island based on its Massachusetts bid, state officials announced Wednesday.

Together, their projects total 1,200 megawatts and establish a new industry in the region.

Vineyard Wind was awarded an 800-megawatt wind farm — up to 100 turbines — in federal waters about 14 miles south of Martha’s Vineyard. Deepwater’s project, called Revolution Wind, will be half the size, located south of Little Compton, Rhode Island, and Westport, Massachusetts.

“I’m still at the point of … taking it in,” said Erich Stephens, chief development officer for Vineyard Wind, minutes after the public announcement just after 1:30 p.m. Wednesday.

The two companies were competing with a third bidder, Bay State Wind, in a Massachusetts procurement process, mandated by state law, to provide power to the state’s electric companies. The electric companies selected the winners in concert with the state.

Massachusetts’ choice to award 800 megawatts to a single bidder, rather than split the work into two, came as a surprise to many and somewhat of a disappointment to New Bedford Mayor Jon Mitchell.

“Overall, I’m pleased we’ve arrived at this day,” he said in an interview. He said the day marks an important milestone, but he would have liked to see two projects receive Massachusetts contracts in the first round.

“There would be a greater level of competition for investment commitments in the port,” he said. In addition, having two projects underway at once would be a hedge against one project’s delay holding up in the industry, he said.

Mitchell did not endorse a project. The city will work with any of the developers, he said.

Both of the companies that were not selected in Massachusetts had made specific financial commitments to local colleges, contingent upon winning a contract. Bay State Wind pledged $1 million to Bristol Community College to endow a faculty position in wind energy. Deepwater Wind committed $1 million for a research project called the Blue Economy Initiative at the University of Massachusetts, to be led by the UMass Dartmouth School for Marine Science and Technology, which is in New Bedford.

Each of the three companies presented a package of enticements, some rolled out over time. For example, Bay State Wind offered $17.5 million for energy assistance and weatherization for low-income families.

Vineyard Wind’s enticements totaled $15 million: $10 million for a fund to develop the wind business supply chain in Massachusetts; $3 million to develop technologies to protect marine mammals from the effects of offshore wind construction; and $2 million to recruit, mentor and train in-state workers.

The mayor said the Massachusetts decision shows Gov. Charlie Baker’s administration chose mainly on price. Details of the pricing have not been made public. However, officials in the Baker administration did agree Wednesday that pricing was the most significant element, but not the only one.

Officials from the Executive Office of Energy and Environmental Affairs and the Department of Energy Resources, who asked not to be named because the administration issued its official comments in writing, said a rigorous analysis of the bids gave Vineyard Wind the overall highest score in both qualitative and quantitative benefits — that is, price and other advantages.

Non-price factors included the effect on the economy and environment, the experience of the backers, and the construction schedule, they said. In addition, Vineyard Wind’s early timeline allows it to take advantage of a tax credit that would not be as generous later, they said.

The officials said they plan to work on new initiatives to address the concerns of fishermen, who have said the turbines could negatively affect the natural habitat.

Significant work lies ahead to reconcile differences with the fishing industry, Mayor Mitchell said.

Tony Sapienza, president of the New Bedford Economic Development Council, said he was excited for the winners and “a little bit surprised” that Massachusetts didn’t go with two bidders. But he believes all three companies will be generating electricity in the region before the state finishes procuring the full 1,600 megawatts required by law.

“I think that’s a given,” he said.

All three bidders have room in their federal lease areas for more turbines in the future.

Derek Santos, the council’s executive director, said the city could still stage the installation of both projects from the New Bedford Marine Commerce Terminal. All three companies committed to use the terminal for Massachusetts projects, but no such commitment applies to Rhode Island.

Deepwater Wind CEO Jeffrey Grybowski said “the overwhelming majority” of his project’s work will take place in Rhode Island.

Although New Bedford is not completely out of the picture, “clearly our principal commitment is to Rhode Island,” he said.

Still, Santos considers the award a positive development, and the council will continue to work to maximize the benefits to the port, he said.

Baker said in a news release that the announcement makes the state a hub for an emerging industry and brings it one step closer to “creating a clean, reliable and cost-effective energy future for Massachusetts residents, and significantly reducing greenhouse gas emissions to combat climate change.”

In the Vineyard Wind office on Wednesday, employees fielded phone calls and planned to make a dinner reservation to celebrate, Stephens said.

“New Bedford’s going to be a busy place real soon,” he said.

For him as for others, getting a full 800 megawatts, instead of sharing the award, came as a surprise.

“I was hopeful we might get something,” he said.

Stephens said the company is excited to continue pursuing permits, surveying the ocean floor, and talking to potential suppliers. Construction could begin by the end of 2019.

Vineyard Wind is owned jointly by the Danish investment company Copenhagen Infrastructure Partners and Avangrid Renewables, a division of Connecticut-based energy company Avangrid, which is owned by Iberdrola of Spain.

Bay State Wind, which did not win a contract, issued a statement attributed to two people from its parent companies: Thomas Brostrøm, president of Ørsted North America, and Lee Olivier, an executive vice president at Eversource.

“We’re disappointed by today’s decision by the Massachusetts evaluation team,” they said in the statement. “We made a compelling offer to help the commonwealth meet its ambitious clean energy goals while maintaining strong financial discipline. Further, our proposal to interconnect our project into the former Brayton Point facility in Somerset, Massachusetts, would ensure clean energy delivery into one of the strongest connections on New England’s electrical grid.”

“We remain fully committed to our Bay State Wind partnership, as together we pursue future solicitations in New England and New York,” they said.

The award to Vineyard Wind is conditional upon the successful negotiation of a contract, and the deal must be approved by the Massachusetts Department of Public Utilities. The schedule calls for contracts to be negotiated by July 2 and submitted for approval by July 31.

A 2016 state law requires electric companies doing business in Massachusetts — Eversource, National Grid, and Unitil — to buy 1,600 megawatts of offshore wind power in the next decade, enough to power hundreds of thousands of homes.