US 'First State' Delaware finally comes to offshore wind with bill for up to 1.2GW

US President Joe Biden’s home state of Delaware has finally gotten into offshore wind with the passage by the state legislature of a bill mandating up to 1.2GW.

The Delaware General Assembly passed the Energy Solutions Act of 2024 on Sunday (30 June) mandating the state procure offshore wind as part of its decarbonisation goals. Governor John Carney, a sector supporter, is expected to sign the bill into law shortly.

“Passage of the Delaware Energy Solutions Act represents a pivotal moment for Delaware and an important milestone for the offshore wind industry up and down the East Coast,” said Sam Salustro, vice president of strategic communications at Oceantic Network.

“The state now takes its rightful place as an active offshore wind state ready to play an important role supporting development of the regional supply chain.”

Virginia mandates 5.6GW by 2034, while New Jersey has a goal of 11GW by 2040.

Delaware Benchmark Price

The bill would instruct the State Energy Office (SEA) to issue a solicitation for offshore wind only if it believes market conditions would result in a bid of no more than 110% of the ‘Delaware Benchmark Price’, defined as “the average price that Delmarva Power has paid for power and renewable energy compliance over the prior three years,” according to the synopsis.

Exelon-owned Delmarva Power is the state's main provider, with 10 million customers in Delaware and Maryland.

This cap could be a major obstacle for developers as prices for US offshore wind have skyrocketed in recent years, far outpacing other renewables.

Linking to the Delaware Benchmark creates “an upper limit to the price that an offshore wind developer can be awarded to develop and build” a project, said Kris Ohleth, director of the Delaware-based think tank Special Initiative for Offshore Wind (SIOW).

“Each developer will have to evaluate this factor as they put together their bids to the state for their project and determine if they find it to be an acceptable parameter,” she added.

“It was an absolute necessity, politically and practically, that costs around offshore wind were contained as we moved forward,” he said.

Lean tender

In contrast to other US states that have looked to offshore wind for hundreds of millions of dollars in economic and workforce development, “what we are asking for his energy,” he said.

“We are confident that we will see bids at the benchmark price when we go out for solicitation sometime next year,” he added.

“The success of a Delaware offshore wind procurement will depend both on the details of the second offtake agreement as well as the Benchmark Price,” she said.

The bill enables regional collaboration with neighbouring states on procurement to enhance economies of scale, a vital component for the tiny state, the smallest in the US by area with a population of only 1 million.

Additionally, it allows private renewable developers to use state-owned roadway rights-of-way for their transmission infrastructure, which Fletcher said was “critical to the success of a future offshore wind project in Delaware.”