Get Ready for “Head Spinning” Offshore Wind Prices

January 24, 2018

offshorewind

Forget about oil drilling. Not happening.
Ironically, some of the technologies developed for offshore drilling have made ocean based wind turbines more competitive.
US East Coast is suddenly a hotbed of offshore wind activity.

Utility Dive:

Until now, the U.S. offshore wind industry has been slow to develop. There is only one operational project, with only 30 MW installed capacity and a power purchase agreement price of $0.244/kWh.

The just-locked-in price for two projects yet to be built in Maryland has come down drastically, to $0.132/kWh. But even that is nowhere near the high end of the levelized cost for energy reported by Lazard for onshore wind, at $0.06/kWh, or for natural gas, at $0.078/kWh.

Researchers and advocates in the U.S. say there are changes within reach that can bring offshore wind costs down. Wind builders are perfecting methods of identifying where the best winds are. The needed domestic supply chain will respond to the right market signals. And where the market goes, the money will eventually follow, they say.

Europe setting the bar

Europe has set the bar for low-price offshore wind so far, with almost 15 GW online. Global offshore wind leader Ørsted reported a 63% price drop between 2010 and 2016. In the UK, which has 36% of global installed capacity, the levelized cost dropped 32% from 2010 to 2016 and the current Europe-wide price is projected to drop 67% by 2025, according to the U.S. Department of Enegy’s National Renewable Energy Laboratory (NREL).

Prices for projects in Germany, which has 29% of global capacity, and Denmark, with 8.8%, fell to near $0.06/kWh in 2016. In April 2017, four winning bids in Germany’s annual government auction averaged $0.054/kWh. Last December, the Netherlands opened a 3.5 GW auction only to developers whose bids require no subsidy. Results will be announced in April.

Last May, Maryland offered two developers $0.132/kWh for 368 MW of offshore capacity. It blew away the only previous hard price for U.S. offshore wind — the $0.244/kWh paid by National Grid for the generation from the 30 MW Block Island project off Rhode Island.

The 45% price drop from Block Island to the Maryland projects came mainly from “efficiencies in technology and the larger turbines,” said Stephanie McClellan, director of the University of Delaware’s Special Initiative on Offshore Wind. The “next big data point” will be the late April announcement of the winners of Massachusetts’ offshore wind solicitation.

Analyst speculation is that the Massachusetts awards will come in at or below the prices paid in Maryland.

Between commitments announced by the governors of Massachusetts, New Jersey and New York, the U.S. could have 7.5 GW of new offshore wind capacity in the near future.

DelMarvaNow:

On behalf of the Salisbury Area Chamber of Commerce — representing hundreds of regional Delmarva businesses and thousands of their employees — we want to express our strong commitment to capturing the immense wind energy resource off our shores. To protect our health, wildlife and economy — and the quality of life for future generations — we must reduce pollution and launch a new clean energy chapter for America.

The Eastern Shore of Maryland has enough offshore wind potential to meet much of the state’s energy needs. Despite this, we risk falling behind neighboring states with far less potential.

Offshore wind projects in Maryland are expected to produce up to 750 MW of power, which will meet 100 percent of Maryland’s offshore wind renewable energy goals. This is enough power for more than 500,000 Maryland homes.

Investing in this pollution-free energy source, with no fuel costs, can help us reduce pollution and boost our local economies. Offshore wind blows strongest during times of peak energy demand — summer afternoons and winter cold snaps. It will diversify our energy portfolio with large amounts of valuable, clean power just when we need it most.

According to experts the project will create 5,000 jobs in the well-paying construction and manufacturing fields, create a net-export industry for Maryland, provide a $16 billion net economic benefit for Maryland, spur $190 million in investment in critical infrastructure, and support nearly 100 long-term operations and maintenance careers; these are all incredibly positive outcomes for Maryland.

Windbaggers are of course active in the discussion, attempting to raise fears about views and property values.  Ironic that they seem unconcerned about the impact of rising sea levels due to fossil fuel burning..

DelMarvanow:

Scores of wind turbines off Ocean City’s coast, many standing about as tall as the Washington Monument, likely won’t lower property values and may even become a tourism draw, a new report suggests.

The economic analysis prepared on behalf of U.S. Wind Inc. seeks to allay concerns among Ocean City officials that the proposed structures will turn off tourists and mar the resort’s iconic ocean views.

On the contrary, the turbines “could be the backbone of a year-round Ocean City/Worcester County economy,” said Anirban Basu, chairman and CEO of Sage Policy Group, the Baltimore consulting firm that authored the study.

The offshore wind farms could generate 9,700 direct and indirect jobs, Basu said at a press conference Friday, citing an earlier analysis of the projects’ economic impact. Not all of those jobs would be based in Worcester County, he said.

The economic benefits should linger long after the blades start spinning, said Matt Drew, a co-founder of the advocacy group Lower Shore Wind.

The Town Council asked state regulators earlier this year to move the projects far enough offshore so they wouldn’t be seen from land. In July, U.S. Rep. Andy Harris, whose district includes Ocean City, shepherded an amendment through the Appropriations Committee requiring the turbines to loom no closer than 24 miles from shore.

Paul Rich, U.S. Wind’s director for project development, said Friday he is working with Harris to address residents’ concerns without having to move the turbines any farther offshore. He is seeking the congressman’s support for requiring the turbines’ nighttime lights to be switched on only when aircraft are in the vicinity.

In a typical study, the Massachusetts Clean Energy Center analyzed more than 122,000 home sales within five miles of current or future turbine locations between 1998 and 2012. The research showed slight evidence of a depression in price in the wake of a project’s announcement but none after its completion.

Meanwhile, Basu found that the majority of visitor surveys have found “little to no impact” on tourism.

He also sought in his public remarks to downplay a tourism study widely cited by Ocean City detractors. The North Carolina State University survey found that 54 percent of respondents said they would be unwilling to stay wherever turbines are visible.

“What we really care about is observed experience,” he said, adding that studies that focus on the effects of existing turbines have shown no negative consequences.

Surveys show that the proportion of visitors attracted by offshore wind outnumbers those expressing aversion by 66 percent to 26 percent, according to Basu’s review.

 

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