Along the US east coast, offshore wind power would have the greatest market value off New York, Connecticut, Rhode Island and Massachusetts. That’s according to US researchers who developed a method to assess the economic value of potential offshore wind sites.
The technique shows that the market value of offshore wind could vary from $40 to more than $110 per megawatt-hour. It included the influence of factors such as renewable energy credits
“What we are trying to provide is relevant information to policy makers and to the public and to developers,” says Dev Millstein of Lawrence Berkeley National Laboratory. “The idea is that this information will help each region make informed decisions about policies related to offshore wind development.”
The US lags behind Europe and China in its uptake of offshore wind, hosting just a single 30 MW offshore wind farm off the coast of Rhode Island. According to Andrew Mills, Millstein and colleagues at Lawrence Berkeley, the reasons for this could include stiff competition from natural gas, onshore wind and solar, as well as the presence of complex regulations and a lack of existing infrastructure. This is despite the fact that there are strong winds and shallow waters off heavily-populated areas of the US east coast – factors that generally favour offshore wind power.
To see the economic case with better clarity, the researchers estimated the market value of offshore wind at some 7,000 potential offshore wind sites using data going back to 2007. For each site, and for each hour between 2007 and 2016, they estimated the wind speed and the potential for energy generation. They then matched each site to a connection point on the electricity grid, and for each of these points calculated the varying energy price and energy value.
The researchers included the possibility of wind farms selling renewable energy credits – additional revenue gained by utility companies that better their portfolios of renewables. They also estimated the value or benefit of additional effects of offshore wind farms, such as the lowering of gas and electricity prices and the reduction of air pollution and greenhouse gases.
The result was a range of market values that each region off the coast of the eastern US could see for offshore wind. “This provides information about what type of cost structures would be profitable in each region, and what other value streams might be important for local policy makers, and residents, to consider when developing policies related to offshore wind,” says Millstein.
According to Millstein and colleagues, energy consumers would receive some value, possibly temporary, from a reduction in gas and electricity prices, and emissions would be significantly reduced. In addition, the group found that offshore wind was more valuable per megawatt hour than onshore wind. “This was due to offshore wind being located closer to population centres, and also due to offshore winds having closer correlation than onshore wind to high-price hours,” explains Millstein.
The researchers believe ongoing work should explore how the value streams of offshore wind will change in the future as a result of, for example, sensitivity to natural gas prices.
The team published the findings in Environmental Research Letters (ERL).
