Guest post by David Middleton
Deepwater Wind LLC is on the verge of completing the first offshore wind farm in U.S. waters, a milestone for an industry that has struggled for a more than decade to build in North America.
Workers have installed blades on four of the five 589-foot turbines at the site off the coast of Rhode Island and construction may be complete as early as this week, according to Chief Executive Officer Jeff Grybowski. The 30-megawatt, $300 million project is expected to begin commercial operation in early November.
“We will finish in advance of our original schedule,” Grybowski said in an interview at a dock on Block Island. “And we are in-line with our budget.”
After years of false starts, the offshore wind industry appears to be gaining momentum in the U.S. The federal government has awarded 11 leases to companies to develop projects along the East Coast, off New Jersey, Rhode Island, Massachusetts, Maryland and Virginia. This month, Massachusetts Governor Charlie Baker signed a bill requiring utilities to buy 1,600 megawatts of electricity from offshore wind farms over the next decade. And in the coming weeks, New York State plans to release a long-range plan to develop wind farms off the coast of Long Island.
$300,000,000 / 30 MW = $10,000,000/MW
Nuclear power plants can be built for less than $6,000,000/MW. Combined cycle natural gas power plants cost less than $1,000,000/MW. And… nuclear and natural gas can operate at 85-90% of capacity. While offshore wind turbines can only be expected to operate at less than 50% of capacity.
The economics of offshore wind don’t make any sense at all unless electricity prices are well over 20¢/kWh… like they are in much of Europe.
Fortunately for the owners of the Block Island Wind Farm, they will be getting Euro-sized electricity prices…
Under the contract, National Grid will pay Deepwater a maximum of 24.4 cents per kilowatt-hour for the electricity in its first full year of operation. After that, the price will increase 3.5 percent per year – theoretically to 25.3 cents in the second year, 26.1 cents in the third year, etc.
One difference between the agreement approved Wednesday and the one the PUC rejected in March is that the new deal is “open book,” which means any cost savings Deepwater achieves while building the wind farm will be passed on to ratepayers in the form of a lower electricity price.
Onshore wind power is relatively cheap and works very well in some places, like Texas, where the physical geography enables fairly high capacity factors. Texas has more wind generation capacity than most countries, yet the average residential electricity rate is only about 11¢/kWh. New Englanders are already paying over 19¢/kWh… Why would they want to pay more?
Oh yeah… I forgot. They want to fight climate change. Which, if there actually was a need to fight climate change and they were serious about fighting it, they would be pursuing an N2N strategy (natural gas to nuclear). The fastest, most cost effective, way to reduce carbon emissions would be to transition from coal to natural gas and nuclear power.