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| Fig. 1: Offshore Wind Farm off the Virginia Coast. This wind farm is the first in U.S. federal waters and began operation in 2020. The wind farm is located approximately 27 miles off the coast of Virginia Beach. (Source: Wikimedia Commons) |
In 1990, the first offshore wind turbine was installed 250 m from the Swedish coast with a rated power of 220 kW. [1] Since then, offshore wind has spread throughout the world, with more than 20 GW of installed capacity. [2] However, the U.S. employs significantly less offshore wind compared with Europe. In fact, the U.S. presently has only 5 offshore wind turbines! [2] (See Fig. 1) The following piece seeks to succinctly explore economic and non-economic factors that influence offshore wind turbine development, with a specific focus on the U.S.
The economic viability of offshore wind can be accessed using a variety of metrics. One widespread metric is levelized cost of energy (LCOE), which divides the total cost by the amount of electricity generated to provide an estimate of cost per unit of energy. LCOE is commonly described using the formula
| LCOE | = | OpEx + (CapEx × FCR) AEP |
where CapEx represents capital expenditures (USD/kW), OpEx represents operational expenditures (USD/kW/y), AEP represents the average annual energy production (MWh/kW/y), and FCR represents the fixed charge rate. [3] In its 2022 Annual Energy Outlook, the U.S. Energy Information Administration (EIA) calculated the LCOE for a variety of energy sources, a few of which have been reproduced below. [4]
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| Table 1: EIA assessment of the levelized cost of energy (LCOE) for various power plant types. [4] |
As shown in the table above, offshore wind has the greatest LCOE, indicating that it is the most expensive type of power plant surveyed. Following offshore wind, biomass has the second greatest LCOE. On the opposite end of the spectrum, combined cycle power plants, which use a gas and steam turbine to generate electricity, have the lowest LCOE. Thus, the LCOE of offshore wind is (136.51 USD MWh-1 − 39.94 USD MWh-1)/(39.94 USD MWh-1)×100% = 242% more expensive than the cheapest energy source. In addition to the above estimates of LCOE from the EIA, a prior Physics 240 report calculated the LCOE of onshore and offshore wind turbines to be 61.03 USD MWh-1 and 181.36 USD MWh-1, respectively. [5] Regardless of the estimate used, the price discrepancy between offshore wind and other energy sources represents a large barrier to the growth and implementation of the technology.
However, the picture may not be as bleak as it first appears. As a part of the Energy Investment Tax Credit, the U.S. government provides a 30% tax credit for offshore wind facilities that began construction after 2016. [6] Assuming all companies are able to take full advantage of this credit, the effective LCOE for offshore wind becomes (136.51 USD MWh-1)×(0.7) = 95.56 USD MWh-1. While still marginally more expensive than other energy sources, this tax credit makes offshore wind significantly more feasible in the U.S.
In addition to economic factors, offshore wind has several other influences, including wind speed, public opposition, and land use. Offshore wind speed is higher than onshore wind speed; therefore, offshore wind turbines can generate more electricity more reliably than their land-based counterparts. [7] Another positive aspect of offshore wind turbines is their (lack of) land use. Among others, Dreyer argued that conserving land use will be increasingly important as the global population increases, making offshore wind an attractive option. [8]
Despite its benefits, others argue that offshore wind creates a blight on the landscape, degrading the natural beauty of the coastlines. [9,10]
The current evidence does not lead to a simple conclusion about the future of offshore wind in the U.S. With present tax credits, offshore wind remains more expensive than other energy generation methods but becomes much more feasible. Additionally, offshore wind speed and reduced land use make offshore turbines an attractive proposition. On the other hand, there is substantial public outcry against offshore wind turbine development. While it is impossible to predict the exact future of offshore wind, it is the opinion of the author that offshore wind will grow in the U.S. to inhabit a small portion of the domestic energy budget but will be hindered by public outcry and uncompetitive economics without tax subsidies.
© Spencer Barnes. The author warrants that the work is the author's own and that Stanford University provided no input other than typesetting and referencing guidelines. The author grants permission to copy, distribute and display this work in unaltered form, with attribution to the author, for noncommercial purposes only. All other rights, including commercial rights, are reserved to the author.
[1] M. Bilgili, A. Yasar, and E.Simsek, "Offshore Wind Power Development in Europe and Its Comparison With Onshore Counterpart," Renew. Sustain. Energy Rev. 15, 905 (2011).
[2] H. Díaz and C. Guedes Soares, "Review of the Current Status, Technology and Future Trends of Offshore Wind Farms," Ocean Eng. 209, 107381 (2020).
[3] C. Mone et al., "2015 Cost of Wind Energy Review," U.S. National Renewable Energy Laboratory, NREL/TP-6A20-66861, May 2017.
[4] "Levelized Costs of New Generation Resources in the Annual Energy Outlook 2022," U.S. Energy Information Administration, March 2022.
[5] A. Liang, "Offshore vs. Onshore Wind Power," Physics 240, Stanford University, Fall 2017.
[6] "The Energy Credit or Energy Investment Tax Credit (ITC)," Congressional Research Service, IF10479, April 2021.
[7] M. D. Esteban et al., "Why Offshore Wind Energy?," Renew. Energy 36, 444 (2011).
[8] J. Dreyer, "The Benefits and Drawbacks of Offshore Wind Farms," Physics 240, Stanford University, Fall 2017.
[9] P. Higgins and A. Foley, "The Evolution of Offshore Wind Power in the United Kingdom," Renew. Sustain. Energy Rev. 37, 599 (2014).
[10] C. Haggett, "Understanding Public Responses to Offshore Wind Power," Energy Policy 39, 503 (2011).
