Massachusetts has the largest offshore wind (OSW) potential of any state in the contiguous United States. While many states are sparring for a piece of the OSW pie, it can be argued that Massachusetts is furthest along. Currently, three offshore wind developers have lease agreements to build projects in the federal waters south of
Martha’s Vineyard, and a decision on the first development is expected to be awarded by the Massachusetts Department of Energy Resources on April 23. With developers promising a construction start in 2021, the Massachusetts lease area will likely host the first large-scale offshore wind farm in the nation.
There are many factors driving development stateside: the presence of vast amounts of wind energy located relatively close to shore, in shallow water, and with significant population density close to these areas; the desire to diversify the country’s energy portfolio; environmental benefits of clean renewable energy; developers and manufacturers looking to open new markets; and the potential job and economic impacts for states. While each of these factors is a crucial element in the industry’s development, the primary catalyst driving OSW’s emigration from across the Atlantic are commitments by individual states to require power purchase agreements specifically for OSW. (Click here to learn more about state actions). As a result, the United States now has an OSW project pipeline worthy of European developers’ attention, especially knowing that these targets represent only a fraction of the total energy resources available off our Atlantic shores.
In the Bay State, the 2016 Act to Promote Energy Diversity directed Massachusetts electricity distribution companies to procure 1,600 megawatts (MW) of offshore wind by 2027. Other states, including Connecticut, Maryland, New Jersey, New York, and Rhode Island, have also set targets for OSW procurement. As of March 2018, the total amount of offshore wind set to be procured in the United States was between 4,595 MW and 4,745 MW of nameplate capacity, depending on capacity factors. Without these mandatory power purchase agreements, it is unlikely that interest in U.S.-based OSW would be developing at such an exponential rate, particularly since the U.S. does not offer energy subsidies that spurred much of the OSW development in Europe. Without the subsidies, OSW energy prices in the U.S. are still much higher than traditional fuels such as oil, gas, and hydro power.
However, offshore wind is becoming increasingly less expensive to produce. Costs have fallen more than 30 percent in the 15 years since the first wind farm opened. The Levelized Cost of Electricity (LCOE) from offshore wind, which averaged about $240 (U.S.) per megawatt-hour (MWh) in 2001, fell to approximately $170/MWh by the end of 2015.”1 Recently, the price has dropped even further, bringing the LCOE down to $126/MWh in the second half of 2016. This is down 22 percent from the first half of 2016, and 28 percent from the second half of 2015. Subsidy-free wind farms are now being built in Germany and The Netherlands, with the auction results suggesting LCOEs in the range of $60/MWh to $100/MWh by 2020.2
Technological improvements and improved logistics will remain a key ingredient in lowering energy costs. The cost of financing will also decline as more projects enter the pipeline and investors perceive less risk in financing future projects. A larger pipeline will also spur supply chain efficiencies and lead to a more experienced workforce for subsequent projects, which become more efficient as workers learn by doing.3 State investments in infrastructure and workforce development may also help to reduce costs.
Thus, the question about price parity going forward is not if, but when. Admittedly, unless you have a flux capacitor and an old DeLorean, predicting the future is difficult. These are exciting times for the industry, and concrete answers to how quickly the industry will move and what it will look like in 10 years remain to be seen. But if the present is a predictor, it seems that U.S. OSW development advances more quickly than expected compared to even a month before (albeit much too slow for some). Just today, Bay State Wind (a joint venture between Ørsted and power company Eversource) announced that it signed a deal with a European manufacturer to build wind turbine components in Massachusetts (see: http://www.southcoasttoday.com/news/20180402/turbine-parts-to-be-made-in-ma-bay-state-wind-says). Importantly, if we want prices in the U.S. to quickly catch up to those overseas, we need to work quickly to continue to build the supply chain and logistics capacity here in the states.
Even though the task of building this industry in the U.S. while simultaneously working to drive down costs may seem daunting, the award is a win-win-win for many of the Commonwealth’s economic development, environmental, and energy goals. Clean renewable energy at the same or lower cost than fossil fuels, the promise of new jobs that run the gamut from blue collar trade workers to white collar scientists, and a new and expanding supply chain that supports both traditional manufacturing and the innovation economy? Game on!
 International Renewable Energy Agency. (2016). Innovation Outlook: Offshore Wind. Abu Dhabi.
 International Renewable Energy Agency. (2016). Renewable Power Generation Costs in 2017. Abu Dhabi.
 Kempton, Willett; Stephanie McClellan and Deniz Ozkan. (2016). Massachusetts Offshore Wind Future Cost Study. University of Delaware Special Initiative on Offshore Wind: Newark, DE.