Offshore Wind: Looking Forward and Looking Back

According to a recent study, it might be quite some time before offshore wind energy takes hold in the United States, if it ever does. That’s because the cost of offshore projects continues to increase.

Because offshore wind resources tend to be more plentiful and predictable than those on land, renewable energy proponents in the past have argued that offshore wind projects are able to overcome the fundamental flaw of intermittency. Offshore wind tends to blow without interruption, while wind installations on land often perform best at times of lower demand. Consider the case on August 4, 2010, when Texas reached an all-time record electricity demand, only to see its wind capacity come up short, with only 5% of installed capacity producing power. That scenario is unlikely with offshore wind. And, the thinking goes, as engineers develop new and better offshore wind technologies, those projects will become less expensive.

Not so fast, though, according to Offshore Report 2013 from Navigant Research, which points out that the costs of offshore wind projects are actually increasing drastically. In fact, researchers found that costs for new offshore wind projects in Europe are now 50% to 100% higher than their first generation counterparts.

The study’s authors found that an offshore wind machine in Europe today costs about $5.1 million per megawatt of capacity, compared to about $2 million per megawatt for onshore wind installed in the United States. Add to that the cost of operation and maintenance, which researchers found to be about $50 per megawatt hour and the math quickly exposes such projects as far too costly. That is, unless the federal government or the states support such projects financially, as is the case with two projects currently underway in Massachusetts and New Jersey.

“People won’t do it unless they’re forced to,” explains Bruce Hamilton, a wind expert with Navigant, rather bluntly.

Which makes Southeastern power consumers fortunate that their policy makers didn’t take the advice of the Southern Alliance for Clean Energy (SACE) back in 2009, when the organization urged energy producers to rush headlong into offshore wind. In a report entitled “Yes We Can,” seizing apparently on the support of renewable energy mandates by the newly elected Obama Administration, SACE claimed that the Southeast had feasible capacity of nearly 180,000 megawatts from offshore wind, more than enough to power the entire region if properly developed.

Explaining the way in which offshore wind could help satisfy the government renewable energy mandates the organization supports, the SACE report states, “The Southeast will need to look to offshore wind and ocean energy to meet a goal of 25% by 2025…”

Putting SACE’s claims about offshore wind in perspective, the organization’s report estimates that the states of Florida, Georgia, North Carolina, South Carolina, and Virginia alone could produce 179,390 megawatts of power from offshore wind sources. How much capacity is that? That’s about as much as the total combined capacity of the Tennessee Valley Authority (TVA), Duke Energy, Southern Company, and American Electric Power (AEP), some of the nation’s largest power systems.

Even at that time, before Navigant’s recent revelations about the high cost of offshore wind projects, PACE was skeptical about the claims of the Southern Alliance for Clean Energy’s report, issuing a statement in March of 2009.

“The report by the Southern Alliance for Clean Energy is entirely out of step with reality,” said PACE Executive Director Lance Brown at that time. “They grossly overestimate resources in the Southeast, while never discussing the financial and economic consequences of an aggressive move toward renewables.”

Today, through Navigant’s research, we know a lot more about the financial and economic consequences of pursuing expensive offshore wind. And while hindsight is always 20/20, just imagine if the Southeast’s policy makers had heeded SACE’s advice to disregard traditional power sources in favor of offshore wind. Power customers could have found themselves on the hook for exorbitant operations and maintenance costs. After all, $50 per megawatt hour for the operations and maintenance cost alone of offshore wind is more than the total current wholesale cost of electricity in New England. Something to keep in mind when groups such as SACE argue about the “high cost” of utility bills in our region. The truth is that the vision espoused in the Yes We Can report would have cost us much, much more.

Wise energy policy demands that our leaders know the difference between whether an idea is possible and whether that idea is practical. That includes offshore wind. Can we? Sure. Other nations have proven it’s possible. But should we? Not if we’re truly concerned about protecting those who pay for power.