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Wind power now competitive with conventional sources

Contracts would bring savings

Wind turbines at Hoosac Wind Farm.

Globe File

Wind turbines at Hoosac Wind Farm.

The state’s biggest utilities, in a milestone for New England’s wind power industry, have signed long-term contracts to buy wind-generated electricity at prices below the costs of most conventional sources, such as coal and nuclear plants.

The contracts, filed jointly Friday with the Department of Public Utilities, represent the largest renewable energy purchase to be considered by state regulators at one time. If approved, the contracts would eventually save customers between 75 cents and $1 a month, utilities estimated.

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“This proves that competitively priced renewable power exists and we can get it, and Massachusetts can benefit from it,” said Robert Rio, a spokesman for Associated Industries of Massachusetts, a trade group that represents some of the state’s biggest electricity users.

The utilities — National Grid, Northeast Utilities, and Unitil Corp. — would buy 565 megawatts of electricity from six wind farms in Maine and New Hampshire, enough to power an estimated 170,000 homes.

The projects, in various stages of permitting or development, are expected to begin operations between 2014 and 2016.

John Howat, senior energy analyst at the Boston-based National Consumer Law Center, said he needed to review the details before he could provide a thorough assessment of the contracts. But his initial reaction to the price — on average, less than 8 cents per kilowatt hour? “Wow.”

“It seems like there’s something for environmental and consumer advocates here to be happy about,” he said.

The agreements forecast further growth for the wind industry as the willingness of utilities to make long-term commitments makes it easier for developers to obtain financing for more wind farms. That, in turn, would probably lead to new conflicts in rural areas, where large-scale industrial wind farms are typically sited.

Such projects have sparked fierce opposition from residents who complain about noise, health problems, and damage to pristine landscapes.

“People are really concerned about it, and that’s not going to go away,” said Lisa Linowes, executive director of the Wind Action Group, a New Hampshire-based advocacy organization that opposes industrial wind projects.

Wind has become a larger part of the energy mix as a result of government policies requiring utilities to acquire power from renewable sources such as wind and solar. Massachusetts, for example, requires utilities to get 15 percent of their power from renewable sources by 2020.

Such policies have created markets for wind, leading to more competition, better technology, larger projects, and ultimately lower prices.

Over the life of the 15- to 20-year contracts, utilities would pay an average price of less than 8 cents per kilowatt hour, compared with projected prices of about 10 cents for coal, 11 cents for nuclear, and 14 cents for solar.

National Grid, Unitil, and Northeast Utilities sought the wind-generated electricity because of new provisions in the state’s Green Communities Act, which mandate that utilities acquire a set amount of renewable energy through long-term, competitively bid contracts. Wind, the utilities said, was the best deal, especially after combining their purchasing power to obtain a large amount of energy at cheaper prices than they each might have negotiated separately.

Another big wind generating project, Cape Wind in Nantucket Sound, will have an estimated generating capacity of 468 megawatts, about 100 megawatts less than the new purchase — but because the wind offshore is more powerful, the Nantucket Sound facility will probably end up serving more homes.

Cape Wind has signed contracts to sell roughly three- quarters of its power to NStar and National Grid for 18.7 cents per kilowatt hour — compared with the 8 cent average in the new purchase.

A forecast by the US Department of Energy indicates that the average cost of wind power would be lower than most other sources in the next few years. Only electricity generated by natural gas would have a lower wholesale price, just under 7 cents per kilowatt hour, according to the forecast.

Even hydropower, at about 9 cents per kilowatt hour, would cost more.

“Not only are we getting clean energy,” said Ronald Gerwatowski, National Grid’s senior vice president for regulation and pricing, “it’s below market.”

Northeast Utilities, National Grid, and Unitil are seeking an expedited review by state regulators so the wind farms can qualify for federal production tax credits before the incentives expire at the end of year. The tax credit is a factor in the prices.

If approved, Northeast Utilities’ Massachusetts subsidiaries, NStar and Western Massachusetts Electric Co. would buy 53.1 percent of the power, National Grid, 45.9 percent, and Unitil, which has just a fraction of the customers of the other utilities, 1 percent.

The Massachusetts utilities filed their contracts the same day that Connecticut’s governor, Dannel P. Malloy, said two of his state’s utilities, Connecticut Light and Power, another Northeast Utilities subsidiary, and United Illuminating Co., had signed long-term contracts to buy 250 megawatts of electricity from a Maine wind farm and 20 megawatts of solar power, also at an average of less than 8 cents per kilowatt hour.

Combined, the wind contracts in Massachusetts and Connecticut are contributing to “a huge explosion” of growth for the sector in the Northeast, said Emily Williams, senior policy analyst for the American Wind Energy Association, an industry group.

State Energy and Environmental Affairs Secretary Richard K. Sullivan Jr., said the contracts will boost Massachusetts’ efforts to use renewable energy.

“It’s improving our energy security, it’s great for our environmental policy,” Sullivan said. “We’re going to be able to bring down the price of power using competitively bid renewable energy.”

Erin Ailworth can be reached at eailworth@globe.com. Follow her on Twitter @ailworth.
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