Evaluation Criteria for Offshore Wind (OSW) Competitive Procurements

October 21, 2021
John Dalton

Massachusetts is having a policy debate on the appropriate evaluation criteria for offshore wind (OSW) competitive procurements. Specifically, should the state depart from past policy of focusing primarily on the price of the OSW energy and give more weight to economic development benefits, which are typically in the form of commitments from OSW component suppliers to site their operations locally. New York and New Jersey have had considerable success in securing such commitments and this has caught the attention of Mass policymakers. Increasing the respective weight assigned to economic development benefits relative to price is likely to result in higher prices for contracted OSW energy. This raises the question of whether the increased economic development benefits are likely to warrant the increase in price. Answering this question is difficult given the challenges posed by weighing these disparate benefits. Nonetheless, it is helpful to understand what will be considered by supply chain participants when making decisions where to site their facilities.  One important consideration is the magnitude of the state or regional OSW procurement commitment (e.g, an incremental 4,000 MW by 2035). Suppliers must amortize their investments in local facilities over a number of OSW projects. Multiple procurements provide greater certainty of a future market for components. An additional consideration is the supply chain commitments that have been made to date. OSW suppliers have already committed to fabricate towers, transition pieces, foundations as well as other critical OSW project components in New York and New Jersey. Will the facilities built by these suppliers be sufficient to supply the East Coast OSW market or is additional production capability likely to be necessary? Other considerations that need to be weighed are the local business environment, labor force availability, proximity to OSW project sites given the logistics of transporting components, availability of necessary infrastructure, and proximity to key suppliers.