Offshore Wind Procurement: The Driver of Economy-Wide Decarbonization
White Paper, 2024
An increasing number of states have enacted mandates to reduce and eventually eliminate greenhouse gas (GHG) emissions from their economies. For many coastal states, there is no reasonably priced resource other than offshore wind to fill the next large block of power sector decarbonization; without it, their GHG emission reduction efforts will fail. However, a variety of factors have led to a slowdown in the development of offshore wind facilities. To accelerate economy-wide decarbonization at reasonable cost to consumers, it is crucial to ensure that solicitation and procurement mechanisms for offshore wind are efficient and cost effective.
Principal Paul J. Hibbard and Vice President Megan Accordino led a study commissioned by the offshore wind developer Vineyard Offshore to identify the structural elements and contracting terms best suited to facilitating efficient procurement of offshore wind while protecting consumers and balancing the risks associated with project development, construction, and operations. Their conclusions are summarized in an Analysis Group white paper.
In their report, Mr. Hibbard and Dr. Accordino provide a recommended blueprint for the design and administration of offshore wind procurements for policymakers to consider as they plan for future competitive procurements. Their findings translate recent experience with offshore wind solicitations into recommended best practices, including establishing transparent procurement schedules in advance of solicitation, increasing revenue certainty through use of a combined renewable energy certificate and energy product, and transitioning from electric distribution companies to state-based procurement. These ideas, the authors posit, will help ensure the future success of a vital economic strategy for decarbonization.