Pricing for America’s first large-scale offshore wind farm just came in at a record low.

Joint developers of the 800-megawatt Vineyard Wind project, Avangrid and Copenhagen Infrastructure Partners, published pricing for Phase 1 the project this week at $74 per megawatt-hour in year one, escalating 2.5 percent each year over a 20-year period. The price represents both energy and renewable energy credits (RECs).

In Phase 2, the long-term contract price for energy and RECs begins at $65 per megawatt-hour, with a 2.5 percent annual increase. The 20-year average cost of the two long-term contracts is $84.23 per megawatt-hour in levelized nominal dollar terms.

The Massachusetts project bid came in well below analyst expectations and set a new U.S. record for offshore wind. The next lowest price came in a Maryland auction in 2017, which contracted at about $131 per megawatt-hour, according to Anthony Logan, North America wind power analyst at MAKE Consulting, a Wood Mackenzie company.

“This is an extremely low bid,” he said of the project going in south of Martha's Vineyard.

Tom Harries, a wind analyst at Bloomberg New Energy Finance, called the price “shocking.”

Vineyard Wind Phase 1 Product Price

The Vineyard Wind pricing is a testament to the value of the federal Investment Tax Credit available to large wind projects, said Logan. The ITC is scheduled to decline and will not be available for projects that start construction after December 31, 2019.

“Vineyard, with the earliest schedule, was able to leverage much more of the ITC than its competitors,” he said.

According to a letter published Wednesday by the Massachusetts Department of Energy Resources, Vineyard Wind will provide power and RECs at a levelized price of 6.5 cents per kilowatt-hour (in 2017 dollars) over the term of the contracts.

“This total price is materially below the levelized projected costs of buying the same amount of wholesale energy and RECs in the market, which is projected to be a total levelized price of 7.9 cents/kWh in 2017 dollars over the 20-year term of contract,” the letter states.

The state expects electricity customers will see $1.4 billion in direct and indirect benefits over the term of the contract.

The Vineyard Wind Project includes a $15 million initiative to accelerate the U.S. offshore wind market, comprising a $10 million offshore wind industry accelerator fund, $2 million for workforce development and $3 million for innovations in protecting marine mammals.

The developers will also establish a Resiliency and Affordability Fund and contribute $1 million each year for 15 years to support the construction of battery storage and solar projects in the region and provide low-income ratepayer benefits to the communities hosting the Vineyard Wind Project.

The Department of Energy Resources requested that the Massachusetts Department of Public Utilities approve the long-term contracts, which represent over a year’s worth of collaboration and consultation between the state government and electric utilities.

“The implementation of this 800 MW Vineyard Wind Project has the potential to support Massachusetts’ 'first mover' advantage in offshore wind development, providing greater opportunities for development of local supply chain and offshore wind industry jobs in the Commonwealth,” the letter says.

MAKE Consulting forecasts the U.S. offshore wind market will see a compound annual growth rate of more than 50 percent through 2026.