Leveling the Playing Field for Offshore Wind
Over the last decade, technological advances, policy changes and consumer demand have substantially advanced the amount of renewable generation in New England. Yet, despite this progress, the electric grid operator ISO-NE (New England Independent System Operator) continues to shut out renewable energy from full participation in regional electricity markets. This exclusion hurts both renewable generators and customers. It keeps prices artificially high while perpetuating financial advantages to conventional generators.
The latest example of this unequal treatment is directed at the offshore wind industry, an industry poised to bring much needed jobs and economic opportunity as well as substantial amounts of carbon-free power to the region.
Every year, ISO-NE conducts a capacity auction to ensure adequate resources to satisfy the region’s future electricity needs. As we reported last year, historically renewable energy resources have not competed in these auctions due to ISO-NE constraints. ISO-NE administratively sets the lowest competitive price that each type of electricity resource can bid into the market. ISO-NE is proposing a floor price for offshore wind that fails to reflect recent cost declines. In fact, ISO-NE‘s cost assumptions are closer to that of the failed Cape Wind project than today’s contracted offshore projects, despite the fact that offshore wind development is estimated to cost 50% less. And its reliance on outdated information hinders offshore wind’s full participation in markets, prolongs the use of dirtier power and, most importantly, locks in higher prices that consumers will have to shoulder for decades.
Using outdated cost assumptions might be understandable if there were no other data available, but that is not the case. Earlier this summer, the State of New York issued a whitepaper that detailed offshore wind costs consistent with actual regional offshore wind contract prices. ISO-NE simply needs to adopt these accurate New York numbers, and offshore wind will be able to fairly compete in and bring down the overall cost of the capacity market—thereby lowering the cost of power for customers.
This matter will be discussed at the upcoming NEPOOL Markets Committee Meeting on November 9th and 10th. PowerOptions is working with other groups, like RENEW Northeast, to urge ISO-NE to follow its own rules and administratively set offshore wind’s competitive price at a level consistent with the reality demonstrated in the New York study. Then the real, lower costs of offshore wind can be fully realized. Doing so will result in:
- Lowering electricity prices for consumers while preserving reliability – a more competitive market drives prices down for end users with no impact on reliability because the market will still procure all capacity the grid operator has determined to be necessary;
- Building a strong new clean energy economy– access to all ISO-NE markets ensures that offshore wind can create jobs, supply chain businesses and economic benefits; and
- Addressing critical carbon reduction goals – offshore wind offers the most impactful source of climate friendly power our region has available.
For more details on the issue and proposed solutions, Renew Northeast has some relevant information. And to make your voice be heard, sign onto a letter to the Governor demanding adoption of the New York baseline cost assumptions.