§ 8056 — Offshore wind transmission and procurement authority

(a)Definitions. —

For the purposes of this section:

(1) “Department” means the Department of Natural Resources and Environmental Control.

(2) “DPA” means the Delaware Division of the Public Advocate.

(3) “Offshore wind project” means a power production facility located in waters off the Atlantic coast, converting ocean winds into electricity.

(4) “PJM Interconnection” means PJM Interconnection, LLC or any successor organization that services the PJM region.

(5) “PSC” means the Delaware Public Service Commission.

(b)Transmission planning. —(1) The Department shall cooperate with PJM Interconnection in an analysis of the impacts on transmission of offshore wind procurement goals of other states within the PJM region and the potential for procurement by Delaware of electricity from offshore wind projects including transmission system upgrade and expansion options that take into consideration both onshore and offshore infrastructure. The Department shall consult with the PSC, the DPA, and all electric utilities in Delaware prior to engaging with PJM Interconnection in this analysis and shall provide the results of any such analysis to the PSC, the DPA, and all electric utilities in Delaware.

(2) The Department shall consult with the state energy offices, or equivalent offices, in other states served by PJM Interconnection to evaluate regional transmission cooperation that could help achieve the State’s renewable energy goals with greater efficiency. The Department shall report to the PSC, the DPA, and all electric utilities in Delaware on this effort.

(c)Offshore wind procurement planning. —

The Department shall study the procurement processes, including those used in other Atlantic states for electricity from offshore wind projects, evaluate the options for conducting and evaluating a request for proposal process to procure offshore wind power, and prepare recommendations for potential offshore wind procurement. Any procurement process should consider at least the following:

(1) The long-term cost impact, if any, on ratepayers in Delaware.

(2) Potential economic costs and benefits for the State and for Delawareans.

(3) The consistency of such a procurement with the Delaware Climate Action Plan, the Delaware Energy Plan, and the ability of the State to meet its Renewable Energy Portfolio Standards.

(4) The avoided costs of greenhouse gas emissions and other air pollutants on the State from power generation sources.

(5) Potential health benefits for the State and for Delawareans.

(6) The availability and scale of suitable offshore wind locations.

(7) The state of the offshore wind industry and associated supply chains.

(8) The impacts on the electricity transmission system.

(d)Offshore wind procurement authority. —(1) The State Energy Office is authorized and directed to develop and conduct a solicitation or solicitations, as it may deem necessary and appropriate, through a request for proposals for a single or multiple offshore wind contracts relating to energy, capacity, ancillary services and RECs, or only RECs, generated by a qualified offshore wind project or projects equal to an aggregate nameplate capacity of not more than 1,200 megawatts in accordance with the provisions of this section.

(2) The State Energy Office may, in its discretion, develop such solicitation or solicitations for a project that serves only Delaware (a “Delaware solicitation”) or in coordination with solicitations, requests for proposals, or other procurement processes conducted by other states and may consider proposals in connection with such other states’ procurement processes (a “coordinated solicitation,” and collectively with a Delaware solicitation, a “solicitation”). A Delaware solicitation shall include project labor agreements, and may include requirements for community benefits agreements, supply chain requirements, workforce development, and conservation and mitigation elements.

(3) For both Delaware solicitations and for coordinated solicitations, the State Energy Office is directed to ensure that the ratepayers of 1 utility never bear the costs of any project alone, either by using a coordinated solicitation, or by including at least 1 additional offtaker for any Delaware solicitation. For Delaware solicitations, the State Energy Office is directed to either identify an additional offtaker prior to issuance of a solicitation (as set forth in paragraph (d)(6) of this section) or the bidder must identify an additional offtaker (as is set forth in paragraph (d)(4)d. of this section).

(4) Any Delaware solicitation shall require proposals to meet the following offshore wind solicitation requirements (the “OSW solicitation requirements”), which shall be weighted by the State Energy Office in any solicitation:

a. Have a term of at least 20 years.

b. Have a first-year price expressed in dollars per megawatt-hour that does not exceed 110% of the Delaware benchmark price, as adjusted for inflation to the anticipated starting date of commercial operation, provided that any price escalator for subsequent years shall be limited to a maximum of 2% per year. Furthermore, if the contract is only for the purchase of RECs with no requirement to either:

1. Purchase energy, capacity, or ancillary services; or

2. Transfer revenues from the sales of such electricity products to Delaware electricity ratepayers,

then such contract shall have a first-year price that does not exceed 110% of the weighted average cost per megawatt-hour of compliance, through REC procurement, net energy costs of renewable energy contracts, and alternative compliance payments, with the Renewable Energy Portfolio Standards Act [subchapter III-A of Chapter 3 of Title 26] for Commission-regulated public utilities during the 3 immediately preceding years, as adjusted for inflation to the anticipated starting date of commercial operation, provided that any price escalator for subsequent years shall be limited to a maximum of 2% per year.

c. Sell or transfer energy, capacity, and RECs, or only RECs, from a qualified offshore wind project.

d. Shall identify at least 1 commitment to enter into a long-term contract to purchase offshore wind energy or renewable energy credits with businesses, nonprofit organizations, the State, municipalities or groups of municipalities, or with cooperative associations. The State Energy Office may identify in the solicitation materials that this commitment has been secured prior to the solicitation. However, if no such commitment is identified by the State Energy Office, then such commitment must be included as a part of the bid submitted by a project proponent.

e. Specify the avoided greenhouse gas emissions associated with the proposal and a calculation of the economic benefit to the State and Delawareans of such avoided greenhouse gas emissions calculated in total and on a per megawatt-hour basis.

f. Specify the avoided health impacts to the State and Delawareans associated with the proposal, including through avoided emissions of air pollutants, and a calculation of the economic benefit to the State and Delawareans of such avoided health impacts calculated in total and on a per megawatt-hour basis.

g. Specify the economic costs and benefits for the State and Delawareans associated with the proposal, including the number of in-state jobs created by the project; any increase in wages, taxes, receipts, in-state expenditures, and investments in Delaware offshore wind supply chain; and utilization of instate port and supply chain facilities, and a calculation of such economic costs and benefits to the State and Delawareans calculated in total and on a per megawatt-hour basis.

h. Specify the impacts to the electric transmission system and capacity and energy markets in Delaware and within the PJM region and include a calculation of the economic benefits and costs to the State and Delawareans of such transmission, capacity, and energy impacts calculated in total and on a per megawatt-hour basis.

i. Specify the expected bill impact for each class of service based upon the Delaware benchmark price.

(5) For any coordinated solicitation, any contract applicable to Delaware offtakers shall meet the requirements of paragraph (d)(4)b. of this section (the Delaware benchmark price). Contracts involving offtakers from other coordinating states need not meet the requirements of paragraph (d)(4)b. of this section. Additionally, any proposal resulting from a coordinated solicitation is subject to paragraphs (d)(7) through (d)(9) of this section.

(6) The State Energy Office may, prior to the issuance of Delaware solicitation or a coordinated solicitation, enter agreements with potential offtakers, including but not limited to businesses, nonprofit organizations, the State, municipalities or groups of municipalities, or with cooperative associations, who are willing to enter long term contracts in the event that a project moves forward. Notwithstanding the provisions of Chapter 69 of Title 29, the State has authority to enter such an energy supply contract for any portion of the power supply needs of the State upon approval of the Director of the Office of Management and Budget.

(7) Prior to the issuance of any Delaware or coordinated solicitation, the State Energy Office shall present the proposed solicitation to the Renewable Energy Taskforce for review and recommendations in accordance with § 360(d)(4) of Title 26. The State Energy Office may, in its sole discretion, adopt or reject recommendations from the Renewable Energy Taskforce. Should the Renewable Energy Taskforce fail to provide recommendations within 60 days of being presented with the solicitation, the State Energy Office may, in its sole discretion, move forward with a solicitation without such recommendations.

(8) Following receipt of the recommendations of the Renewable Energy Taskforce, or the expiration of the 60-day period set forth in paragraph (d)(7) of this section, the State Energy Office shall present the solicitation to the Public Service Commission for review and approval in accordance with § 365 of Title 26. The State Energy Office shall not issue any solicitation not approved by the Public Service Commission. If the Public Service Commission issues a “preliminary order,” as defined in § 365 of Title 26, the State Energy Office shall issue the solicitation.

(9) After receipt of proposals, from either a Delaware solicitation or a coordinated solicitation, the State Energy Office shall determine whether a Delaware solicitation proposal meets the OSW solicitation requirements, and whether any coordinated solicitation meets the requirements applicable to coordinated solicitations in this section. Any solicitation that does not meet such requirements, shall be excluded from further consideration. For any proposals which includes a price term at or below the requirements set forth in paragraph (d)(4)b. of this section, the State Energy Office may determine, in its sole discretion, whether to proceed to negotiate contract terms with the proposer based on consideration of the following factors:

a. The proposal’s likelihood of achieving commercial operation.

b. The proposal’s consistency with the Delaware Climate Action Plan and the Delaware Energy Plan.

c. Whether the proposal will result in a net reduction in greenhouse gas emissions from the electricity consumed within Delaware, or states bordering Delaware, or within the PJM region.

d. The proposal’s impact on the ability of the State to meet the 2030 target and 2050 target for greenhouse gas emissions reductions set forth in § 10003 of Title 7 and to meet the minimum percentage of electric energy sales with eligible energy resources as required by § 354(a) of Title 26.

e. Whether the proposal is competitive with new renewable or carbon-free energy projects of similar scale and production profile interconnecting to the PJM grid in Delaware, or states bordering Delaware.

f. The potential economic costs and benefits for the State and Delawareans associated with the proposal and the strength of economic benefit guarantees in the proposal.

g. The avoided costs of greenhouse gas emissions and other air pollutants.

h. The potential health benefits for the State and for Delawareans.

i. The availability and scale of suitable offshore wind locations.

j. The state of the offshore wind industry, the project applicant, and the associated supply chains.

k. The impacts, if any, of the proposal on the electric transmission system and capacity and energy markets, including the ability to facilitate future expansion of offshore wind energy delivery capability.

(10) If the State Energy Office moves forward with negotiation of contract terms on any proposal, such contract terms shall include project labor agreements, and may include community benefits agreements, supply chain requirements, workforce development requirements, and conservation and mitigation elements. The State Energy Office may approve the terms and conditions of an offshore wind contract provided it determines that entering into an offshore wind contract with such terms and conditions is in the public interest, which the State Energy Office shall determine after consideration of the OSW solicitation requirements and the criteria set forth in this section. If the State Energy Office issues such approval, the offshore wind contract shall be submitted to the Commission for approval pursuant to § 365 of Title 26.

Legislative History

84 Del. Laws, c. 146, § 2 ; 84 Del. Laws, c. 401, § 3