Early this afternoon, Governor Janet Mills signed into law LD 1895, legislation directing the state to procure up to 3 GW of offshore wind by 2040. The final version of the procurement bill emerged after several weeks of negotiations between the Governor, legislature, industry, fisheries interests, labor groups, and environmental advocates. Now that the bill is signed into law, Maine is the seventh U.S. state to pursue a competitive solicitation of offshore wind energy.
Governor Mills said in a press release announcing her approval of the legislation:
Offshore wind, done responsibly, offers Maine the opportunity to secure abundant clean energy, stable energy prices, good-paying jobs, and a healthier environment for future generations. I thank the legislators and stakeholders who, through collaboration and compromise, have positioned Maine to pursue offshore wind in a manner that puts all Maine workers and businesses on a level playing field, invites investments in critical port infrastructure, and importantly, respects those who rely on the ocean for their livelihoods. I am pleased with of the outcome of this legislation and proud to sign it into law.”
The legislation bodes well for the future auction for offshore wind lease sites in the Gulf of Maine, which the U.S. Bureau of Ocean Energy Management (BOEM) anticipates will occur in 2024. A clear procurement pathway provides offshore wind developers with a greater sense of confidence in emerging markets: in general terms, greater lease bid prices can be expected in the 2024 BOEM auction than if the procurement bill had not passed.
The legislation also marks an important milestone in the nearly two decade history of offshore wind in Maine. The state has long-sought energy, climate, and economic development benefits from the emerging offshore wind industry, beginning in 2008 when then-Governor John Baldacci established an Ocean Energy Task Force. In 2013, the University of Maine launched the first grid-connected offshore wind turbine in the Americas and has since continued to pursue a full-scale deployment of its floating offshore wind technology. Also in 2013, the state’s efforts to attract a then-nascent offshore wind industry stalled when Statoil (now Equinor) cancelled plans to deploy a pilot project off the state’s coast. More recently, under the leadership of Governor Mills, the state engaged in a substantive public engagement process and made strong efforts to pursue offshore wind development in balance with the state’s maritime industries and environment. Despite the long road to passage of this legislation, this state-sponsored procurement offers indisputable promise that Maine will soon welcome commercial-scale offshore wind development off its shores.
The legislation does not create a floating offshore wind technology-specific requirement, which means that Maine could procure offshore wind energy harnessed by either fixed-foundation or floating offshore wind technology. This departure from earlier versions of the procurement bill is notable given that the state has previously identified the potential to jumpstart a global floating offshore wind industry as a policy priority. The Gulf of Maine is home to significant water depths where innovative floating technology could prove more cost-effective than traditional fixed-foundation technology. However, the technology-agnostic approach in this bill aligns Maine with other jurisdictions that have established offshore wind procurement programs, likely increases the number of developers that would consider entering the Gulf of Maine offshore wind market, and strengthens the overall competitive nature of future offshore wind solicitations in the state.
The following are the major components of the final bill as signed into law today:
Offshore Wind Generation Goal
The bill establishes a state goal of 3,000 megawatts of installed offshore wind by 2040, a goal that can be increased beginning in 2025 and every two years after. The scale of this generation goal is similar in scale to initial offshore wind goals established by other New England states as they enter the offshore wind market.
Offshore Wind Generation Solicitation
The bill directs the Governors Energy Office (“GEO”) to establish a schedule, consistent with the 2040 goal, for the competitive solicitation of offshore wind and develop a Request for Proposals (RFP). Each solicitation will be for projects not less than 600 MW in size to enable cost-competitive commercial-scale development unless the solicitation is coordinated with other regional entities. GEO will be required to solicit public comment during the solicitation development process, and is expressly directed to seek public input on contracting mechanisms to address market dynamics and impacts to ratepayers, including indexing and price adjustments. Including the consideration of such mechanisms ensures that Maine’s procurement policies remain consistent with actions being taken in other jurisdictions to ensure viability of offshore wind projects while providing additional protection for ratepayers.
While GEO will design the solicitation and RFP, the Maine Public Utilities Commission (MPUC) will ultimately approve and issue the RFP and evaluate responses. The bill directs the commission to issue the first Request for Proposals by January 2026, or three months after the first BOEM auction for offshore wind leases in the Gulf of Maine.
The MPUC must ensure that projects selected through the RFP process will result in contracts that are cost-effective for ratepayers, considering potential economic, environmental, and other benefits to ratepayers. The bill directs the MPUC to give priority to projects that are located outside of Lobster Management Area 1 (LMA 1), demonstrate an ability to provide in-state economic benefits, provide ratepayer benefits, and align with several other policy priorities (such as using project labor agreements or meeting certain community and workforce enhancement standards for offshore wind construction work.)
Offshore Wind Transmission Solicitation
The bill provides broad authority to the MPUC, in coordination with GEO, to participate or direct participation in a regional or state-specific transmission procurement. The bill provides that the MPUC may conduct one or more competitive solicitations for the development and construction of offshore wind energy transmission or related infrastructure projects. The bill also provides MPUC with the ability to coordinate with other entities, including other New England states, to solicit and select proposals for offshore wind transmission.
The MPUC may consider proposals for projects that serve to upgrade the existing grid, extend the grid closer to offshore wind projects, upgrade optimal landfall approaches, or provide an interconnection between offshore wind substations.
Fishing Community Tax Incentive Program
The bill directs various state agencies to develop a Fishing Community Tax Incentive program that will provide a tax credit of up to $16,000,000 annually for up to 20 years for qualified investors in offshore wind power projects. The tax credit will be designed to incentivize siting offshore wind projects outside of LMA 1, protect ratepayers from additional costs associated with siting projects outside of LMA 1, and increase Maine’s competitiveness in securing offshore wind projects and benefits.