
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.
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.
Continue reading “Get Ready for “Head Spinning” Offshore Wind Prices”






