In what’s being called a “milestone” event, First Wind announced Monday it had signed long-term power-purchase agreements to provide electricity generated at two of its wind farms under development in Maine to four Massachusetts utilities.
According to Matt Kearns, First Wind’s vice president of development in the Northeast, while these power-purchase agreements are not unique, the results are “pretty groundbreaking.”
On average, the electricity will cost the utilities less than 8 cents per kilowatt hour, said Kearns. That beats projected prices of about 10 cents for coal, 11 cents for nuclear and 14 cents for solar, according to a report in the Boston Globe. In 2010, the average cost of electricity for Maine residential customers was 12.8 cents per kilowatt hour, according to the U.S. Energy Information Administration.
“It’s a pretty big milestone for the wind industry in New England,” Kearns told the Bangor Daily News Monday. “It shows now that onshore wind power is no longer a boutique source of energy. It really is the least-cost source of renewable energy, and it’s actually saving consumers an enormous amount of money.”
Natural gas still comes in slightly less than wind, but generation from gas-fired plants is subject to volatile gas prices whereas wind development has fixed, consistent costs, Kearns said.
The 15-year, power-purchase agreements First Wind signed with the Massachusetts utilities are for electricity generated at its 147-megawatt Oakfield Wind project in Aroostook County, which received siting approval from the Maine Department of Environmental Protection in January 2012, and the 186-megawatt Bingham Wind project in Somerset County, which is in the advanced permitting stages with the DEP.
First Wind operates five additional wind farms in Maine.
The contracts, which the Massachusetts Department of Public Utilities must still approve, are a result of the 2012 Massachusetts energy bill, which required the state’s electric distribution companies to open up a competitive bid process among renewable energy developers for long-term contracts.
Kearns said the cost of wind energy has been driven down by more efficient technology and better site selection. In addition, long-term power-purchase agreements also allow First Wind to lower the financing costs needed to build the farms, which in turn help the company lower the price of electricity, he said.
“The industry continues to innovate, and we’re driving the price way down,” he said.
Tax incentives, such as the federal investment tax credits, have also played their part in wind developers’ ability to provide low-cost electricity, but Kearns said they are not the primary driver. He noted they are in fact decreasing in their influence, and First Wind has been “outspoken” about moving the wind industry away from subsidies.
“I think we’re always viewed as needing the extra help,” he said. “I think we’re starting to mature to the point where in several years that won’t be necessary.”
First Wind’s news comes on the heels of a Friday announcement from Gov. Dannel Malloy, D-Conn., that two of Connecticut’s utility companies have signed a long-term contract with EDP Renewables North America LLC, which has plans to develop a 250-megawatt wind farm in Aroostook County.
That 15-year contract, which is with Houston-based EDP Renewables North America, would also provide electricity for on average less than 8 cents per kilowatt hour.
EDP Renewables North America is majority owned by Portugal-based EDP Group. That contract is still subject to approval by Connecticut’s Public Utilities Regulatory Authority.