Dive Brief:

• Massachusetts on Wednesday announced its first offshore wind project, proposed by Vineyard Wind to generate 800 MW. Vineyard Wind aims to begin construction in 2019 and bring the project online by 2021.

• The state received three project proposals from wind developers in December responding to a request for 400 MW of offshore wind capacity. A 2016 Massachusetts law requires the state’s power companies to acquire 1,600 MW of offshore wind capacity in the next decade.

• Deepwater Wind, which also submitted a proposal for Massachusetts, was selected on Wednesday to construct a 400 MW wind farm off the coast of Rhode Island.

Dive Insight:

The U.S. has only 30 MW of offshore wind generation, off New Shoreham, R.I. The Block Island Wind Farm, also built by Deepwater Wind, was commissioned at the end of 2016. 

The new projects announced on Wednesday would deliver a combined 1.2 GW of power to Massachusetts and Rhode Island. That's a small fraction of the 15.7 GW of offshore wind energy connected to the grid in Europe by 2017. But with multi-gigawatt commitments from several states and falling prices, it's poised for significant growth in U.S. waters.

"Offshore wind costs will continue to drop to a price point that will make it competitive with other forms of electricity generation very quickly," Liz Burdock, executive director of the Business Network for Offshore Wind, said in a statement. "Studies are showing that the market value of electricity from offshore wind is beginning to exceed its cost in several New England states."

The lowest official price to date for U.S. offshore wind is $132/MWh — the locked-in price for two projects yet to be built in Maryland. That is not competitive with prices from onshore wind's Lazard-reported $60/MWh levelized cost of energy (LCOE) or natural gas generation's $78/MWh LCOE.

But researchers and advocates in the U.S. say there are changes within reach that can bring offshore wind costs down. Wind builders are perfecting methods of identifying where the best winds are. The needed domestic supply chain will respond to the right market signals. And where the market goes, the money will eventually follow, they say.

For its selection, Masssachusetts chose among proposals from Bay Wind, Deepwater Wind and Vineyard Wind. Deepwater Wind’s project was selected by Rhode Island officials in collaboration with Massachusetts.

Rhode Island Gov. Gina Raimondo announced Deepwater Wind’s Revolution Wind project as part of her commitment to increase the state’s clean energy resources portfolio to 1,000 MW by 2020.

In addition to pursuing offshore wind construction, Massachusetts built a specialized dock in 2015 in New Bedford, Mass., to support the shipment of large materials required for offshore wind turbines.

Several other states, particularly on the East Coast, are looking at adding offshore wind power into their portfolios, while some companies still don’t view it as an economical option. During this year’s first quarter earnings call, NextEra CEO Jim Robo called offshore wind "terrible energy policy."

Meanwhile, Virginia Gov. Ralph Northam on May 22, said the Department of Mines, Minerals and Energy is seeking a contractor to help implement strategies that will make the state’s coast more attractive for offshore wind power. Dominion Energy proposed a large wind farm in Virginia and is currently developing two offshore turbines as part of a pilot program.