The US is a latecomer to the offshore wind world. The first commercial offshore wind farm in the US, a small 30 MW installation with five turbines off the coast of Rhode Island, was only commissioned just in December 2016. new farms have been announced for the New York and Massachusetts coastal waters.
Compare that to Europe. The continent now has 15,780 MW of offshore wind, according to Wind Europe, 526 times the capacity that the US has. European projects added 560 new offshore wind turbines in 17 different offshore wind farms in 2017 alone.
A group of researchers at Lawrence Berkeley National Laboratory (LBNL) are now asking themselves: What’s the value of the offshore wind the US hasn’t built in the past decade? While many analyzes have studied the declining costs of installing offshore wind, assigning a where the for offshore wind, ground is less well-trafficked. Although it is much more expensive to build turbines in the ocean, offshore wind can also generate more value because the sea breeze is usually stronger and more reliable and wind turbines can be built larger.
The Berkeley researchers found that over the past 10 years, the value of hypothetical offshore wind energy in the US has ranged from $40/MWh to over $110/MWh, depending on where the wind was located and how renewable energy was priced in that region. . This partly explains why so little offshore wind had been built in the US to date – in January last year, offshore wind costs hit a low of $121/MWh in the UK. Not quite the cost-benefit ratio that’s getting investors excited, but as offshore wind costs continue to fall, we’re likely to see that change.
The value of wind in terms of energy prices plus renewable energy credit (REC) prices was highest off the coasts of New York, Connecticut, Rhode Island and Massachusetts. (RECs are credits issued per unit of renewable energy produced that can be sold on a secondary market.) Unsurprisingly, the states where offshore wind is said to have been most valued over the past decade are the same states where wind developers are building more offshore wind farms. Today.
Still, the researchers caution that “as prices of energy and REC have fallen in recent years, so has the market value of offshore wind.” Ironically, a growing renewable energy market has pushed prices for RECs down, which could slow offshore wind growth in the future.
Wind also has more than a dollar amount. If you’re a policy maker trying to reduce emissions, the environmental benefits of offshore wind will vary by region, and the researchers tried to quantify that as well. Depending on where you are on the East Coast, offshore wind can replace coal plants (a net benefit, in terms of emissions) or nuclear power plants (no substantial change in emissions).
An interesting effect of not building wind is that it appears that the US may have missed an opportunity to replace highly polluting generators with offshore wind and instead shift the load from highly polluting coal to less polluting natural gas. An offshore wind farm installed in 2007 would have displaced more harmful emissions, especially sulfur dioxide (SO2), than it would have been in 2016, so it would have been more environmentally “valuable” then than it is today.
Of course, not all retired coal-fired generators could have been replaced by variable wind, but if some of their capacity could have been shifted to renewables instead, we might have seen a higher environmental return. Natural gas burns cleaner than coal, and using natural gas to replace coal is better than doing nothing, but in terms of emissions, it’s not as good as replacing marginally used coal capacity with zero-emission generation. In addition, it lowers the environmental value of replacing fossil fuels with renewable energy sources in the future.
The researchers also concluded that more offshore wind would have reduced demand for natural gas, not only locally but also nationally. “When the marginal unit of generation displaced by offshore wind is a gas-fired generator, offshore wind not only avoids emissions but also reduces natural gas consumption,” the authors note. “Because the natural gas supply is relatively inelastic in the short term, a reduction in natural gas demand can lead to price reductions, resulting in consumer throughput benefits in the form of lower natural gas spending across the economy.”
How to go further?
A world facing climate change should want to cut emissions by some means, but the fact is someone has to pay for offshore wind installations, and if the return on investment isn’t there, it won’t happen in the US. , except new subsidies. However, the authors of the article make some suggestions on how offshore wind installations can maximize their profits in the future.
An obvious suggestion is to make sure your installation is connected to the electricity market where you would make the most money, but the paper notes that for wind installations it may be worth having “more than one point of interconnection”. , allowing operators to arbitrate between the two markets. That practice “may increase value by $40/MWh of wind in some cases.”
Another interesting result was that “adding battery storage (in MWh terms) to about a quarter of the offshore wind project capacity can increase value by up to $3/MWh of wind, with an even greater incremental value as the battery grows.” Batteries offer an attractive prospect for renewable energy developers as they reduce the effect of wind’s natural variability. Energy storage has been very expensive in the past, but as battery prices continue to fall, using batteries to store wind energy could solve some of the problems associated with a variable energy source. To estimate that value, we need only look as far as the Neoen/Tesla wind farm/battery installation, which has reportedly been very lucrative in maintaining grid frequency.