U.S. investment could make turbines cost-competitive by 2030 — report
The Brattle Group Inc. study found that such an investment would produce “modest” increases in consumers’ monthly energy bills and that investments in the technology would help diversify the country’s energy portfolio.
“In essence, the cost of scaling up offshore wind looks like a reasonable insurance premium against unexpectedly higher costs under a ‘one technology’ strategy,” the report says. “At a minimum, some initial support for scaling up offshore wind energy makes sense.”
The report, commissioned by the Center for American Progress, Clean Energy States Alliance, Sierra Club and U.S. Offshore Wind Collaborative, was released yesterday as a bipartisan group of lawmakers reintroduced legislation that would subsidize the first few thousand megawatts of offshore wind in U.S. waters (E&E Daily, Feb. 28).
Offshore wind is expected to cost about 24 cents per kilowatt-hour in 2016, far higher than onshore wind farms or conventional fossil fuels, according to federal economists. In part, that’s because there is no established supply chain in the United States for offshore wind, and some equipment and ships must be imported from Europe. Installing turbines in the ocean is also more costly, and there is currently no transmission to carry the power to market.
The Brattle study found that with as little as $18 billion over the next two decades, the power source could reach “grid parity” with fossil fuels with “only a minor impact on electricity rates.”
If spread across the country, those rates would amount to 25 cents to $2.08 per month. If localized to coastal ratepayers — mostly on the East Coast and Great Lakes — it would cost between 51 cents and $4.29.
“Given the fact that at present the portion of household consumption spent on electricity and gas is at a 50-year low, we believe such costs are an acceptable price to pay in exchange for [creating] the option of another cost-competitive power generation technology,” said the report, which was authored by Jurgen Weiss, Mark Sarro and Mark Berkman.
The investment would be comparable to the support other energy sources have received in the past, the report notes.
The report does not take into account the current subsidies offered to offshore wind, which include the investment tax credit and accelerated depreciation. The investment tax credit, which allows developers to claim a 30 percent tax credit on the cost of a project in lieu of the production tax credit, is set to expire at the end of the year.
Yesterday, Sens. Tom Carper (D-Del.) and Susan Collins (R-Maine) reintroduced a bill that would offer the ITC to the first 3,000 MW of new offshore wind projects, which would likely cover at least the first several offshore wind farms. Companion legislation was introduced in the House by Reps. Bill Pascrell (D-N.J.) and Frank LoBiondo (R-N.J.).
Environmental groups hailed the bill and the Brattle study.
“Offshore wind can provide the East Coast with a virtually limitless source of clean energy right in its own backyard, with zero fuel costs and without the need to build expensive land-based transmission lines through the region’s urban and rural landscapes,” said Mark Sinclair, executive director of Clean Energy States Alliance, in a statement. “And the good news, as this analysis shows, is that offshore wind power with scale-up can become price competitive with other dirtier electricity resources very soon and without hardship to ratepayers’ wallets.”