Estimating the value of offshore wind along the United States’ Eastern Coast

Abstract

Offshore wind power deployment has been concentrated in Europe, and remains limited in other areas of the world. Among the many challenges to deployment is the need to understand the value that offshore wind provides within electricity markets. This article develops a rigorous method to assess the economic value of offshore wind along the eastern coastline of the United States, seeking improved understanding of how the value of offshore wind varies both geographically and over time, and what has driven that variation. The article uses historical (2007)(2008)(2009)(2010)(2011)(2012)(2013)(2014)(2015)(2016) weather data at thousands of potential offshore wind sites, combined with historical wholesale electricity market outcomes and renewable energy certificate (REC) prices at hundreds of possible transmission interconnection points. We find that the average historical market value of offshore wind from 2007 to 2016considering energy, capacity, and RECs-varies significantly by project location, from $40/MWh to more than $110/MWh, and is highest for sites off of New York, Connecticut, Rhode Island, and Massachusetts. As energy and REC prices have fallen in recent years, so too has the market value of offshore wind. The historical value of offshore wind is found to exceed that of onshore wind, due to offshore wind sites being located more favorably in terms of constrained pricing points, and also due to a more-favorable temporal profile of electricity production. Cost reductions that approximate those witnessed recently in Europe may be needed for offshore wind to offer a credible economic value proposition on a widespread basis in the United States.

Extreme Wind and Waves in U.S. East Coast Offshore Wind Energy Lease Areas

“…For example, Massachusetts has an estimated electricity generation potential (2858 TWh/yr) that is more than 100 times current total electricity generation. An analysis based on the market value of offshore wind from 2007 to 2016 varied substantially along the eastern seaboard (from $40/MWh to > $110/MWh), with the highest value off the coast of New York, Connecticut, Rhode Island, and Massachusetts [13]. Accordingly, BOEM has 16 active leases along the northeast/Atlantic coastal states ( Table 2 and Figure 1 [14].…”

Spatial and temporal variation of offshore wind power and its value along the Central California Coast

“…Moreover, temporal variability of wind power impacts its value within electricity markets (Fripp and Wiser 2008). For example, the economic value of offshore wind production along the East Coast of the United States varies with time and space, driven by electricity pricing and production fluctuations (Mills et al 2018). The value of offshore wind to a broader energy portfolio (including both renewable and non-renewable sources) is driven by both the seasonal and daily variability in power production from wind and the other sources, as well as seasonal and daily variations in grid demand for power (Sinden 2007, Fripp and Wiser 2008, Wiser et al 2017.…”

Offshore renewable energy development: U.S. experience and takeaways for Ukraine

“…Although this complex and lengthy regulatory process is a commonly noted as a barrier to the offshore wind industry in the U.S. (Mills, et al, 2018), offshore wind remains of interest and can set an example for Ukraine due to high standards related to environment protection. Even though Ukraine and the U.S. are countries with different legal systems, nowadays the world observe a significant rise in environmental opposition and climate change litigation.…”