Offshore wind report says Delaware could procure power at less than half current cost

Source: By Jon Hurdle, Delaware Public Media • Posted: Monday, April 11, 2022

Ørsted wind farm

Delaware Public Media’s Tom Byrne and contributor Jon Hurdle discuss studies on offshore wind and its potential impact on Delaware.

Delaware could buy offshore wind power at less than half the cost it currently pays for fossil fuel-powered electricity, after the health and climate impacts of the current supply are taken into account, according to a University of Delaware report for the state, released Thursday.

The long-awaited report from UD’s Special Initiative on Offshore Wind made no recommendations but calculated that wholesale cost of power currently purchased by Delmarva Power is within the range of offshore wind power that will be purchased by Maryland and Massachusetts, two of the East Coast states that have committed to buying specific quantities of electricity from planned wind farms.

“When added to the market costs of both offshore wind power and today’s conventional power, the result shows that offshore wind power is less than half the total social cost of Delaware’s electricity today,” the report said.

In light of the rapid recent development of the wind industry off the Atlantic Coast, the report lays out the options for Delaware to join eight other coastal states that have agreed to procure offshore wind power. Four years ago, Delaware rejected the idea, following the recommendations of a working group set up by Gov. John Carney.

“While it does not address all of the options put forward by the Governor’s Offshore Wind Working Group, this new report provides insights into current market conditions, outlines policy options for Delaware, and identifies important tradeoffs based on priorities determined by the Governor and state legislature,” Department of Natural Resources and Environmental Control Secretary Shawn Garvin said, in a statement. “The report, along with the findings put forward by the Offshore Wind Working Group, are essential pieces that will help ensure we make the right decisions moving forward.”

Any decision to buy offshore wind power would help Delaware hit its target of achieving 40 percent renewable energy by 2035. Shifting to renewables is among the strategies identified in Delaware’s Climate Action Plan to reduce the harmful greenhouse gas emissions that are driving climate change.

Willett Kempton, a University of Delaware professor who is a technical advisor to the offshore wind group, said the cost of offshore wind has plunged to about half of what it was in 2018 when a state task force decided the time wasn’t right for Delaware to commit to buying power generated offshore.

Kempton previewed the report during a March 22 webinar hosted by the League of Women Voters of Sussex County.

In just a few years, Kempton said, a big market for offshore wind has been created by the commitment of every other mid-Atlantic and northeastern state to buy offshore wind power. New York and New Jersey, for example, have agreed with wind developers to buy a total of 16,500 megawatts of electricity from planned wind farms by 2035, or enough to power almost 5 million homes.

In the latest sign of a surge in commercial interest in building wind farms off the Atlantic coast, the federal government in February sold 488,000 acres of wind-area development rights off New York and New Jersey for more than $10,000 an acre, or 10 times the previous record, raising more than $4 billion, according to the U.S. Interior Department.

Eight Atlantic coast states have committed to buying about 28,000 mw of offshore wind power by 2035, according to an earlier UD calculation.

The influx of investment, encouraged by the Biden administration’s goal of building 30,000 mw of offshore wind power nationwide by 2030, has quickly halved the cost of developing offshore wind since Delaware backed away from the idea of committing to it, Kempton said.

State Sen. Stephanie Hansen (D-Middletown), predicted that lawmakers, when reading the UD report, would ask her what had changed since Gov. Carney’s Offshore Wind Working Group rejected the idea of a state procurement less than four years ago.

“Legislatively, what I’m going to hear at some point is ‘OK so this didn’t work in 2017-18 and it was decided that now is not the time for us.’ What is it that has changed?” she said, during the webinar.

Kempton replied that costs have dropped sharply and the economics have been helped by advancing technology.

“The cost has dropped in half – it’s crazy,” he said. “There has been a very large market created. It’s not just two or three projects, it’s enough projects where it’s worth building a factory, getting some ships that are specialized. That threshold has been reached and passed.”

He noted that wind turbines have got bigger. Some, such as those planned off the coast of New Jersey, will tower some 850 feet above the ocean surface.

Developers such as Orsted, the Danish wind giant that is planning wind farms off New Jersey and Maryland, are also encouraged by a 30 percent federal tax credit for offshore wind that is currently due to last until 2026, Kempton said.

Developers are now able to bid at the cost of the project, and subsidy is no longer likely to be needed, so that would mean the state would just have to sign a power-purchase agreement with a wind developer to kickstart the process, he said.

Building a wind farm generating 800-1,200 mw – approximately the size of the two wind farms that are planned off the coast of New Jersey — would meet about a third of Delaware’s electricity needs, and would not result in higher electricity prices for consumers, he said.

If all of the wind resource from a federally designated Wind Energy Area off Delaware was developed, it would meet all of the state’s needs, he said. “It’s a huge resource, it’s more than enough to run all of Delaware on renewable energy,” Kempton said.

The rapidly growing industry is also expected to generate thousands of jobs in construction, planning, manufacturing and related fields that service offshore wind all along the East Coast. Kempton previously proposed creating a Delaware-based port to assemble and service wind farms, emulating one that is already under construction on the Delaware Bay shore of New Jersey. That state, which is investing $300 – $400 million to build the “Wind Port”, estimates it will create 1,500 permanent jobs.

Most other states with offshore wind procurement policies have begun the process by passing a law committing the state to buying a certain quantity of power from a specific developer, Kempton said.

Any state considering procuring offshore wind power should issue a request for proposals to ensure that qualified bidders come forward, Kempton said. He argued that competition is essential to keep the cost as low as possible. The projects typically cost $2.5 -$3 billion, he said.

Although climate change argues for a switch to renewable energy as soon as possible, building an offshore wind farm takes around four years of planning and permitting, followed by about two years of construction, he said.

In sum, the industry’s growth has shifted policy in other states, and may suggest that it’s time for Delaware to follow, Kempton said.

“Ten years ago, it was, ‘This is renewable energy and it’s expensive so we’d better have a smaller project so it doesn’t increase people’s bills,’” he said. “If it’s the same price, that’s no longer the same consideration.”

Kempton advised Massachusetts and New York on their procurement programs. He said those states followed many of his recommendations, and are “fairly far along the track of becoming major offshore wind sources.”

But he said the new Delaware report is analysis, not advocacy. “We generally think it’s a good idea for coastal states to develop offshore wind but we’re not advocating for that,” he said.

Meanwhile, scientists at the University of Maryland will this year start work on investigations into possible impacts on marine mammals, birds, and fish from the hundreds of wind turbines that are scheduled to be installed off the Atlantic Coast in the next decade, including in waters near Delaware.

Although Delaware is the only one of nine East Coast states that does not currently have a commitment to buy offshore wind power, it’s close by a Maryland-approved project called MarWin some 15 miles off Fenwick Island near the state line. That project is due to generate 300 megawatts, enough to power 80,000 homes, starting in 2024. Another project by US Wind in the same area is due to generate 800 mw; together, they would power some 380,000 homes, the company says.

The new wildlife study, by the University of Maryland’s Center for Environmental Science, will be conducted in the 80,000-acre area which has been leased by the federal government to Baltimore-based US Wind. The company is providing $11 million to the researchers for their work over the next eight years.

The team aims to shed new light on industry impacts which are still uncertain even in Europe where offshore wind has been established for some 30 years. Environmentalists worry that the rotating blades of giant turbines will kill migrating birds; that fish passage will be disrupted by the legs of hundreds of turbines, and that marine mammals – especially critically endangered species like the North Atlantic Right Whale – will be hurt by the new structures.

To try to answer those questions, the researchers will deploy a “near real time” whale detection system that alerts observers to the presence of four species of baleen whales, including the North Atlantic Right Whale.

Scientists will also use “passive acoustic monitoring” to detect large whales and better understand their migratory patterns.

And they will study whether the construction and operation of offshore wind farms affects the behavior of black sea bass, a species that is attracted in large numbers to undersea structures like artificial reefs and wrecks. Studying the black sea bass will help scientists determine whether wind turbines will help to nurture that and other species.

“Understanding both positive and negative impacts of offshore wind development on Maryland’s fisheries and marine wildlife requires strategic partnerships with the fishing community and state scientists, careful baseline investigations, and long-term studies employing state-of-the-art observing systems,” said UMCES professor and fisheries expert Dave Secor, who will help to lead the studies.

In an interview, Secor said the long European experience with offshore wind was at first marred by the lack of baseline studies that would have allowed operators to tell whether their turbines affected marine life. In the U.S., wind farm developers are now urged by the federal government to get at least two years of pre-construction information about sea life, such as that which will be gathered by the new University of Maryland studies, he said.

“That was the biggest lesson from the EU experience, that you’ve got to have the baseline information, otherwise you can’t detect what’s owing to the wind farm or what’s due to natural variability,” he said.

Dr. Howard Rosenbaum, director of Ocean Giants Program at the nonprofit Wildlife Conservation Society, said research like the University of Maryland project is needed so that policymakers and developers will know how to balance the urgent need for renewable energy with protecting wildlife.

In the United States, the task is complicated by the fact that some of the species to be protected, notably including the North Atlantic Right Whale, don’t occur in Europe where the industry is so much more mature.

“We’re in new territory here, so we’re in a race to generate needed baseline information,” he said.

Still, the offshore wind industry in Europe has shown that it’s possible to operate with “minimal” environmental disturbance, and that has been borne out in a handful of small U.S. projects so far, said Laurie Jodziewicz, US Wind’s Senior Director for Environmental Affairs.

Impacts to wildlife can also be reduced by creating exclusion zones or dampening the underwater sound from pile-driving during construction, and operators like US Wind are legally required to conduct environmental reviews, she said.

And the acoustic monitoring buoys that will be set up as part of the Maryland study are among others along the East Coast that will gather information about the presence of whales and the timing of their migration.

For all kinds of marine life, not enough is known about the effects of offshore wind farms, said Danielle Brown, a whale expert at Rutgers University in New Jersey.

“The problem is that we don’t know enough about the effects of offshore wind on whales, which is why these research projects are so important,” she said.