Offshore Wind Project Spins Big Economic Output

Wind turbines in the ocean

Photo: Getty Images

BOSTON (State House News Service) - In the five years that the Vineyard Wind I project has been in development or very early construction, it has exceeded all initial projections for job creation and has more than doubled labor-related economic output predictions, the developers behind the country's first utility-scale offshore wind farm reported to Massachusetts state officials.

The first annual report to the Massachusetts Department of Energy Resources came with a significant caveat -- federal permitting delayed the project by two years and essentially doubled the length of the development phase -- but officials at the Avangrid-Copenhagen Infrastructure Partners joint venture said the report nonetheless shows that the project is turning the "tremendous potential for positive job growth and economic impact that the offshore wind industry will have in Massachusetts" into reality.

Jennifer Cullen, senior manager for labor relations and workforce development, said Vineyard Wind wanted to work with the University of Massachusetts Dartmouth and Springline Research Group, the same teams that did a preliminary analysis of the potential job creation and economic impact for the project in 2017, to make as close of an apples-to-apples comparison of estimates and data as possible.

"We were even more excited that, when we went through this process of collecting all the data, analyzing it, really digging deep into where the project had spent our money and what that money had done in terms of job creation, we found that we had already exceeded the estimations for at least the development phase of the project," she told the News Service this week.

Cullen acknowledged that there were a few contributing factors at play. For one, the Trump administration effectively put the project on hold for two years, and changes in technology during that period led to changes in project design like switching to more efficient (and fewer) turbines.

"We should have never spent as long in development as we did due to project delays and just getting the industry off the ground," she said. "But regardless, we were excited to see that, once we actually did the data, the project is fulfilling its commitments and following through on its promises of the expected job creation and economic impact to the state."

During the project's development phase between 2017 and 2021, direct Vineyard Wind employment in Massachusetts was 278 full-time equivalent job years. That's 152 FTE job years more than the 126 FTE job years that UMass Dartmouth estimated in 2017.

The payroll for those jobs and the project's other expenditures supported an additional 137 indirect jobs during development. In turn, the direct and indirect jobs induced an additional 251 jobs in development, the report found.

"In total, Development phase economic activity generated 666 jobs, $59.3 million in labor income, $79.1 million in value added, and $166.6 million in economic output," UMass Dartmouth and Spring Line Research concluded.

That compares to estimates of 274 jobs, $29.9 million in labor income, $42.7 million in value added, and $81.1 million in economic output in UMass Dartmouth's 2017 base scenario, according to the report.

Cullen said Vineyard Wind "felt confident that the reason it was double was because of the extended amount of time" spent in development but that the project would have hit the projections on its original timeline.

"And had we gone through permitting in a shorter time frame, we would have met the expected numbers," she said.

Michael Goodman, who led the UMass Dartmouth Public Policy Center and is now senior advisor to the chancellor on economic development and strategic initiatives, said it makes sense that a project that takes longer than expected would cost more and noted that post-pandemic inflation also drove up costs for the project, requiring it to spend more.

"I think that redounds to the benefit of the commonwealth in terms of the amount of expenditure that was involved. So it took longer and it has cost more, I think due to a number of developments we couldn't anticipate in 2017 including the emergence of the pandemic, the -- I think fairly extraordinary -- regulatory delays during the Trump administration, and then the wage inflation and the cost of goods inflation during key periods of the project development," he said. "I think more expenditures mean more income for Massachusetts-based contractors and workers."

"The silver lining to those additional expenses is, I think, a much larger and positive economic impact than we'd estimated in 2017 knowing what we knew then," Goodman said.

David Borges, the founder and principal at Springline Research Group who spent two decades at UMass Dartmouth's Public Policy Center, said too that the 2017 estimates were on the conservative side given that offshore wind was such a new industry in America.

"We had a lot of back-and-forth with the Vineyard Wind folks early on this project where we were calling them out for certain things and they would say, 'yeah, you're probably right about that.' And it was a nice, healthy back-and-forth to get to a place where we weren't over-promising," he said. "That's something we didn't want to do from the start."

As the first utility-scale offshore wind project in the United States, Vineyard Wind I is at the front edge of a growing new industry that Massachusetts policymakers hope will be an economic engine in the Bay State -- not to mention a key contributor to decarbonization efforts. The first annual report from Vineyard Wind, required as part of an agreement with DOER, provides an initial point of measurement.

"Avangrid is proud that our joint venture, first-in-the-nation Vineyard Wind 1 project is delivering on this vision and already exceeding its immense potential for job creation and economic impact," Sy Oytan, Avangrid's senior vice president for offshore wind projects, said. "We look forward to building on these strong benchmarks as the staging and assembly work for this historic project begins in New Bedford, where Massachusetts workers will chart a new course for clean energy in the United States."

But while Vineyard Wind moves closer to delivering power to the grid, the other offshore wind projects in the Massachusetts pipeline recently went the other direction.

SouthCoast Wind Energy, formerly known as Mayflower Wind, was selected for a 804 megawatt project in 2019 and a 400 MW project in 2021 but has said its combined 1,200 MW project will now come online by 2028, three years later than its first project was expected to begin providing cleaner power to Massachusetts.

And Commonwealth Wind, Avangrid's roughly 1,200 MW project chosen by Massachusetts utilities in 2021, has said it is no longer viable and sought to scrap the contracts it agreed to last year with utility companies. That project would also come online by 2028 if it is allowed to renegotiate the terms of the contracts.

Vineyard Wind I meanwhile is in the early stages of construction on what will be a 800 MW project located 15 miles off the coast of Martha's Vineyard. As of September 2022, 199 workers had been employed by the project that year, with 105 of them being union employees. The majority of the offshore construction is expected to begin in the second quarter of 2023, the report said.

In addition to the jobs and economic impact benefits, Vineyard Wind I is projected to generate enough electricity for more than 400,000 homes and businesses in Massachusetts, and reduce carbon emissions by more than 1.6 million metric tons per year, which the company said is the equivalent of taking 325,000 cars off the road annually.

"The promise of these electrons starting to be available as soon as late this calendar year, I think is is another impact that we haven't really assessed," Goodman said. He added, "This [report] is really about the project itself. But, you know, once it's up and running ... it will be the gift that keeps on giving in terms of predictably-priced clean, green electrons."

Written By Colin A. Young/SHNS

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