Offshore Wind Energy Model Robert Griffin*, CK Kim, Doug Denu naturalcapitalproject.org *rmgriff@stanford.edu Natural Capital Project Annual Meeting, 2013

Wind energy in the U.S. Land - 50,000 MW installed (12 million homes) - 32% of all new electric capacity in 2011 - 3% of national energy portfolio Ocean - Higher wind speeds, close to population centers - Developer interest, federal approval of OCS areas - Public areas with multiple users Source (U.S. DOE) Land is second to China. Potential 4 TW of power offshore (BOEM), 11TW onshore (DOE). US grid has approximately 1TW generating capacity (BOEM), worldwide capacity is 16TW (Wiki)

Spatial wind energy model Why important? Spatial understanding of … - Energy potential - Cost - Value - Use conflicts InVEST model software - SupplyServiceValue models - Integrated management - Open source - Replicable/Flexible - Naturalcapitalproject.org

Levelized Cost of Energy Nuts and bolts Energy Model Inputs Outputs Power density 𝑃= 1 2 𝜌 𝑗=1 𝑐 𝑓 𝑉 𝑗 𝑉 𝑗 3 Weibull 𝑓 𝑉 𝑗 = 𝑘 𝜆 𝑉 𝑗 𝜆 𝑘−1 𝑒 − 𝑉 𝑗 𝜆 𝑘 Profile power law 𝑉 𝑍 𝑟 = 𝑍 𝑍 𝑟 α Output power 𝑃(𝑉)= 0 &𝑉< 𝑉 𝑐𝑖𝑛 𝑜𝑟 𝑉> 𝑉 𝑐𝑜𝑢𝑡 𝑃 𝑟𝑎𝑡𝑒 & 𝑉 𝑟𝑎𝑡𝑒 < 𝑉< 𝑉 𝑐𝑜𝑢𝑡 (𝑉 𝑚 − 𝑉 𝑖𝑛 𝑚 )/( 𝑉 𝑟𝑎𝑡𝑒 𝑚 − 𝑉 𝑖𝑛 𝑚 ), & 𝑉 𝑐𝑖𝑛 ≤ 𝑉≤ 𝑉 𝑟𝑎𝑡𝑒 Wind Speed Power Density Turbine Info Energy Generated Cables and Grid Info Valuation Model Net Present Value Equipment costs 𝐶𝐴𝑃= .91𝑘𝑚 𝑡𝑢𝑟𝑏𝑖𝑛𝑒 $.26 𝑘𝑚 # 𝑜𝑓 𝑡𝑢𝑟𝑏𝑖𝑛𝑒𝑠 + $2.0+$8.0 # 𝑜𝑓 𝑡𝑢𝑟𝑏𝑖𝑛𝑒𝑠 , 𝑖𝑓 𝑆𝑖𝑒𝑚𝑒𝑛𝑠 3.6𝑀𝑊 $2.6+$14.0 # 𝑜𝑓 𝑡𝑢𝑟𝑏𝑖𝑛𝑒𝑠 , 𝑖𝑓 𝐴𝑅𝐸𝑉𝐴 5.0𝑀𝑊 + .81∗𝑀𝑊+1.36∗𝐶𝑎𝑏𝑙𝑒, 𝑖𝑓 𝐶𝑎𝑏𝑙𝑒≤60𝑘𝑚 (𝐴𝐶) 1.09∗𝑀𝑊+ .89∗𝐶𝑎𝑏𝑙𝑒, 𝑖𝑓 𝐶𝑎𝑏𝑙𝑒 >60𝑘𝑚 (𝐷𝐶) Capital expenditures 𝐶𝐴𝑃𝐸𝑋=𝐶𝐴𝑃/(1−.2−.05) Net present value 𝑁𝑃𝑉= 𝑡=1 𝑇 𝑅𝑒𝑣 𝑡 −.035∗𝐶𝐴𝑃𝐸𝑋 1+𝑖 𝑡 − .037∗𝐶𝐴𝑃𝐸𝑋 1+𝑖 𝑇 −𝐶𝐴𝑃𝐸𝑋 Levelized Cost of Energy Financial Parameters

Wind energy generation Conventional modeling approach - Default inputs - Global Marine - East Coast (res) - Great Lakes (coming) - Simplified large dataset - Transformed data - Extrapolated to hub height - Wind speed  Power - Polynomial approximation - Flexible to turbine design

Wind energy valuation Costs Capital expenditure Other costs - Farm components - Installation and misc - Transmission - Operations and management TC = f(MW, cable length) - Decommissioning Revenue - Energy generated - User entered price/kWh - Discount rate or WACC O&M

Cost model validation

New England example 80 Turbine Farm 3.6 MW Turbines 7% Discount Rate 3m Min / 60m Max Depth $.18/kWh 20 year horizon Farm Size

RI/MA Wind Energy Area RI/MA MA

RI/MA example Farm Size

Integrated analysis Heuristic example of quantitative approach Location: New England Task: Wind Energy Area Siting Concerns: - Efficient location of Wind - Ocean uses Data: - Sample of uses from Northeast Data Portal (http://northeastoceandata.org/) - Wind energy model NPV output

Nuts and bolts Overlap Analysis and Wind Energy model

Nuts and bolts – Energy generation Power density 𝑃= 1 2 𝜌 𝑗=1 𝑐 𝑓 𝑉 𝑗 𝑉 𝑗 3 Weibull 𝑓 𝑉 𝑗 = 𝑘 𝜆 𝑉 𝑗 𝜆 𝑘−1 𝑒 − 𝑉 𝑗 𝜆 𝑘 Profile power law 𝑉 𝑍 𝑟 = 𝑍 𝑍 𝑟 α Output power 𝑃(𝑉)= 0 &𝑉< 𝑉 𝑐𝑖𝑛 𝑜𝑟 𝑉> 𝑉 𝑐𝑜𝑢𝑡 𝑃 𝑟𝑎𝑡𝑒 & 𝑉 𝑟𝑎𝑡𝑒 < 𝑉< 𝑉 𝑐𝑜𝑢𝑡 (𝑉 𝑚 − 𝑉 𝑖𝑛 𝑚 )/( 𝑉 𝑟𝑎𝑡𝑒 𝑚 − 𝑉 𝑖𝑛 𝑚 ), & 𝑉 𝑐𝑖𝑛 ≤ 𝑉≤ 𝑉 𝑟𝑎𝑡𝑒

Nuts and bolts – Wind energy valuation Equipment costs 𝐶𝐴𝑃= .91𝑘𝑚 𝑡𝑢𝑟𝑏𝑖𝑛𝑒 $.26 𝑘𝑚 # 𝑜𝑓 𝑡𝑢𝑟𝑏𝑖𝑛𝑒𝑠 + $2.0+$8.0 # 𝑜𝑓 𝑡𝑢𝑟𝑏𝑖𝑛𝑒𝑠 , 𝑖𝑓 𝑆𝑖𝑒𝑚𝑒𝑛𝑠 3.6𝑀𝑊 $2.6+$14.0 # 𝑜𝑓 𝑡𝑢𝑟𝑏𝑖𝑛𝑒𝑠 , 𝑖𝑓 𝐴𝑅𝐸𝑉𝐴 5.0𝑀𝑊 + .81∗𝑀𝑊+1.36∗𝐶𝑎𝑏𝑙𝑒, 𝑖𝑓 𝐶𝑎𝑏𝑙𝑒≤60𝑘𝑚 (𝐴𝐶) 1.09∗𝑀𝑊+ .89∗𝐶𝑎𝑏𝑙𝑒, 𝑖𝑓 𝐶𝑎𝑏𝑙𝑒 >60𝑘𝑚 (𝐷𝐶) Capital expenditures 𝐶𝐴𝑃𝐸𝑋=𝐶𝐴𝑃/(1−.2−.05) Net present value 𝑁𝑃𝑉= 𝑡=1 𝑇 𝑅𝑒𝑣 𝑡 −.035∗𝐶𝐴𝑃𝐸𝑋 1+𝑖 𝑡 − .037∗𝐶𝐴𝑃𝐸𝑋 1+𝑖 𝑇 −𝐶𝐴𝑃𝐸𝑋