Op-ed: Offshore wind procurement should use ‘Massport model’
This May, the Baker Administration will release a request for proposals (RFP) for enough offshore wind energy to power over 800,000 Massachusetts homes — one in three. The selected project will represent a capital investment of between $4-5 Billion. And this is just the beginning. By 2050, Massachusetts policymakers expect offshore wind will power half of our electric grid. Over the next 30 years, this nascent industry is poised to drive over $100 Billion in capital investment across New England and create tens of thousands of new jobs. The business leaders, investors, trainees, innovators, and contractors that get to work in offshore wind today will enter an industry positioned to be a key driver of the Massachusetts economy for decades to come.
Who will those people be? We have the opportunity to build an inclusive, equitable industry from the ground up, learning from our past to create a better future.
Other states are racing forward: Maryland, Virginia, New Jersey, and New York are codifying minority economic participation into law, or setting goals for diversity, inclusion and environmental justice in their offshore wind projects. Nationally, President Biden’s ‘Build Back Better’ plan sets a goal that disadvantaged communities receive 40% of the benefits of clean energy deployment.
Massachusetts has a proven playbook for diversity in procurement. The benchmark is the “Massport Model” used to develop properties owned by Massport, including the Omni Boston Hotel near the Seaport Convention Center. The RFP awards 25% of points on the strength of the bidder’s Diversity and Inclusion (D&I) plans. Rather than set prescriptive quotas or targets for minority participation, the Massport Model simply sets a transparent and significant number of points in the RFP. This unleashes the private sector to do what it does best: get creative — and compete. Developers bring their resources, ideas, and expertise to building a diverse, inclusive project. There is no path to win without an outstanding D&I plan at the heart of a competitive bid.
Seeing these successes, civic leaders have been calling on the Baker Administration to expand the Massport Model to other areas of state procurement. The Administration has been listening, and taking steps to do so. For example, MassDOT just embraced the Massport Model for a development on Kneeland Street in Boston.
The Baker Administration is refining the draft offshore wind RFP now. They should apply these best practices. We credit the Administration for receiving and incorporating early feedback from the Environmental League of MA and other business and civic leaders. Already, the draft RFP has been updated in two positive ways: First, developers are now required to submit D&I plans with their bids. Second, 5 points have been added to the qualitative criteria. This helps, but the point allocations fall short of the Massport Model.
Let’s break down the current draft RFP. An overwhelming 70% of the points are for price. The remaining 30% is for a long list of qualitative factors that include fisheries mitigation, wildlife management, ecosystem considerations, labor, economic development, minority participation, and more. The qualitative components are not disaggregated into point sub-categories. It is impossible to know the specific value that will be placed on each of the many factors. From a close reading of the documents,
we infer that minority participation and benefits to environmental justice communities are likely worth 5% – 8%. It could be more or far less, depending on how reviewers choose to value the many other important qualitative attributes.
Today, the dynamics among offshore wind firms are similar to those of real estate developers vying for a Massport parcel: highly-qualified, world-class developers are competing fiercely to win a valuable and limited right to build. Most of the development costs – engineering, permitting, concrete, and steel – are relentlessly negotiated and similar between bidders. Developers therefore are keen for the chance to embrace qualitative differentiators – like economic inclusion – to complement a cost-effective bid.
We urge the Administration to capitalize on this competitive energy: Apply a version of the Massport Model to this procurement. Reapportion some points currently awarded for price and create a new standalone category for diversity and inclusion. Give it enough points to really matter — so it could determine the difference between winning and losing the bid.
Our state and nation are reckoning with systemic racism and income inequality. We are also in the fight of our lives against climate change. Offshore wind gives us a chance to sustain our planet for future generations and adopt a proven model for economic inclusion. Intentional changes to this RFP can correct the course of offshore wind development and lay the foundation for a more diverse, inclusive industry for years to come.
Elizabeth Turnbull Henry is President of the Environmental League of Massachusetts which founded the New England for Offshore Wind Coalition
L. Duane Jackson is Managing Member of Alinea Capital Partners. He is former Vicechair of the Board of the Massachusetts Port Authority and Chair of the Real Estate Committee. He is the architect of the Massport Model.
Originally published on Boston Business Journal on 04/16/21. Read here.