Vineyard Wind, the developer owned jointly by utility group Avangrid and fund manager Copenhagen Infrastructure Partners, emerged as the winner in Massachusetts’ landmark first offshore wind tender, with 800MW of capacity.

Also on Wednesday, the state of Rhode Island selected developer Deepwater Wind to build a 400MW offshore wind farm, bringing the total US offshore tally for the day to 1.2GW – a breakthrough for the market, which has just 30MW installed at present.

While a number of factors were weighed by Massachusetts’ electric distribution companies in making the decision, including the potential for job creation, the largest factor by far was cost.

“Presumably we had the most competitive price,” Erich Stephens, Vineyard’s chief development officer, tells Recharge. Vineyard also spent years engaging with affected communities, has committed $10m to an accelerator fund designed to attract supply-chain investments to the Bay State, and is further along in the permitting process than rival bidders, Stephens says.

The decision in Massachusetts means Vineyard can begin negotiating exclusively with the state's utilities to finalise its power-purchase agreement, which will then need sign-off from the Department of Public Utilities. Given those ongoing discussions, the winning bid price remains confidential for now.

The two other bidders in the so-called 83C clean-energy tender were Deepwater Wind and a group comprising Denmark's Orsted and New England utility Eversource Energy.

Deepwater came away a big winner in its own right thanks to Rhode Island, and Orsted, the world's leading offshore wind developer, says it remains steadfast in its commitment to the US market.

Massachusetts' next offshore wind solicitation is expected to be issued in mid-2019. In the meantime, the US Interior Department is expected to auction off two more development zones facing the state later this year.

“We submitted what we considered a very competitive, but value-creating bid," Martin Neubert, executive Vice President and CEO of wind power at Orsted, said in a statement. "While we’re of course disappointed by the outcome of the 83C solicitation, the US remains a key market to us."

Orsted has another project facing New Jersey, where it recently opened an office, and is involved in demonstration project off Virginia.

Turbine selection

In addition to its PPA negotiations, Vineyard will now roll ahead with its remaining permitting hurdles, and intensify its discussions with turbine manufacturers and other component suppliers. “Those discussions have already started, but the pace will be picking up quite a bit,” Stephens says.

Vineyard has kept its options open when it comes to turbines. If a single OEM were to win the 800MW order, it would represent an enormous leap forward in a key emerging market – and a very sizeable order even by the standards of the far more mature European market.

“We’re talking with everybody,” Stephens says of the turbine suppliers.

GE installed the five turbines spinning in US waters at Deepwater’s 30MW Block Island project, thanks to its acquisition of Alstom’s wind business. Siemens Gamesa is targeting a 50% share in the US offshore market, which it expects to hit 10GW by 2030, and MHI Vestas will test its latest offshore turbine in South Carolina.

Vineyard plans to build its 800MW project in two phases, entering construction in 2019 and reaching completion by 2022, Stephens says. The project will begin 15 miles (24km) south of Martha's Vineyard, an island off Massachusetts' Cape Cod, and deliver enough power to meet 6% of the state's load.

Vineyard will stage construction out of the offshore wind-tailored Marine Commerce Terminal in New Bedford, Massachusetts, the city in which the developer is based. It plans to handle future O&M work out of a new facility on Martha's Vineyard.

New Bedford: the new home of US offshore wind power?

Vineyard Wind, known initially as OffshoreMW, won the development rights to its Massachusetts zone in 2015, paying just $150,000 in what was one of the least-competitive US offshore wind auctions to date. By comparison, Statoil paid $42.5m for its zone off New York the following year, when the prospects for US offshore wind had brightened considerably.

OffshoreMW was acquired in 2016 by Copenhagen Infrastructure Partners, and a year ago Avangrid, the US utility group controlled by Spain’s Iberdrola, bought a 50% stake. Avangrid, whose renewables arm is one of the largest owners of US onshore wind, has lately placed a heavy emphasis on the emerging offshore market – and won the country’s last competitive lease tender, paying $9.1m for a zone off North Carolina.

Massachusetts' 2016 energy bill established a 1.6GW statewide offshore wind target for 2027, the first such target in the country. The bill has had a catalysing effect on the US offshore wind market, with other states, including New York and New Jersey, following with big commitments of their own – in large part out of recognition of the potential for new jobs.

Stephens acknowledges there could be supply-chain constraints as 1.2GW of capacity moves into construction off Massachusetts and Rhode Island in the early 2020s, although the projects are operating on slightly different timelines.

Critically, he says, having two big projects underway "signals this is the start of an industry".

"You never know how one project is going to play out," he says. "But with two, that gives local companies thinking about entering this industry a lot more confidence about making that decision."