Offshore Wind Power Has High Potential in the US Northeast

Topics: green energy, renewable energy, wind power, offshore wind power

Jahnavi Sajip
Author : Jahnavi Sajip on June 1, 2018

Offshore wind power takes advantage of the consistent wind speeds out in the sea, where there are no obstacles like hills, trees and buildings. However, access to these favorable winds comes with a higher upfront cost. The International Renewable Energy Agency (IRENA) publishes yearly reports comparing generation technologies globally; the latest report for 2017 reveals a median cost of $4,239/kW for offshore wind power, and $1,477/kW for conventional onshore wind power.

There are two main ways to build an offshore wind farm. The wind turbines can be anchored directly to the bottom of the sea, or they can be mounted on floating platforms with a self-stabilization system, the same technology used in oil platforms. The first approach becomes less viable as depth increases, while the second is not limited by depth.

From the economic standpoint, it makes more sense to use a few megawatt-scale turbines instead of numerous kilowatt-scale units.

  1. Large turbines achieve a lower installed cost per kW, thanks to economies of scale.
  2. Winds are more consistent at higher altitude, which favors a tall turbine. Close to the ground, there is more turbulence due to artificial and natural objects. This effect is reduced in the sea, but not eliminated completely - the wind is slowed down when it interacts with the marine surface and waves.

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Why Invest in Offshore Wind Power?

The main benefit gained from offshore wind power is an increased capacity factor (CF), thanks to the constant wind. With a higher capacity factor, you get more generation per megawatt each year. Since the project cost is strongly determined by the number of megawatts, a higher CF translates into a higher return on investment.

  1. As an example, assume a wind farm has a rated output of 100 MW.
  2. If the project operates at full output for the entire year (8,760 hours), the generation is 876,000 MWh and the capacity factor is 100%. However, this is not achieved in practice.
  3. Assuming the actual generation is 292,000 MWh, the CF is 33%.

Many offshore wind farms in Denmark are now achieving a CF above 40%, and the 399.6-MW Anholt 1 project is above 50%. For comparison, most onshore wind farms in the USA have a CF around 33%.

Offshore Wind Power Market Value in the US Northeast

Lawrence Berkeley National Laboratory (LBNL) carried out a study for offshore wind power along the East Coast, funded by the US Department of Energy. According to their findings, offshore wind power has the highest value along the coast of some New England states: New York, Connecticut, Rhode Island and Massachusetts.

There are many conditions that make the northeast suitable for offshore wind power:

LOCAL CONDITIONS

OFFSHORE WIND POWER CONTRIBUTION

1) Expensive electricity

Since the energy input for wind turbines is free, their output becomes more valuable when local generation is expensive.

2) Renewable Portfolio Standard (RPS)

The New England states have laws that establish ambitious renewable energy targets, where utility companies are subject to hefty penalties for non-compliance.  For example, New York aims for 50% renewable generation by the year 2030.

3) Renewable Energy Credit (REC) programs

These improve the business case for renewable energy, since REC trade provides extra income beyond electricity sales. REC markets were created to draw additional investment in renewable energy, contributing to the targets established in RPS laws.

4) Fossil fuel dependence

Electricity tariffs are volatile in the Northeast, and the grid has a high carbon footprint. Renewable sources can help reduce generation costs and greenhouse gas emissions.

Although the market opportunity is significant, there is only one offshore wind project in New England so far - a 30 MW installation off the coast of Rhode Island. The estimated value of offshore wind power goes as high as $110/MWh, and the emissions avoided are above 500 kg of carbon dioxide per MWh.

The business case for offshore wind power becomes much less favorable for sites to the southeast. For example, the estimated market value for an installation off the coast of Georgia is only around $40/MWh.

Combining Wind Power with Battery Storage

In the case of New York, where an energy storage target is being proposed in addition to the renewable energy target, offshore wind power can achieve synergy with batteries. Wind power has already been combined successfully with battery storage in South Australia, where a 315-MW wind farm was enhanced with a 100-MW/129-MWh Tesla battery. During its first four months of operation, the battery reduced the local cost of ancillary grid services by more than 90%, representing over $26 million in savings. This is an excellent financial return, considering that the project cost was around $50 million.

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