1. NS4960 Spring Term 2018 U.S. Offshore-Wind Projects
Oxford Analytica, United States: Offshore Wind Projects Will Boom, August 18, 2017

2. Overview
Offshore wind has been mostly uncharted frontier for the US renewable energy industry
Started to change in 2016 when the first offshore wind farm started up off Rhode Island
Now project developers looking to build on this success with billions of dollars’ worth of new projects being proposed along US shores
Expansion has been aided by
Falling costs
Improving technology
Increasing state-level support for new projects and
Entrance of well-financed project developers

3. Wind Farm Growth I
Hundreds of wind farms have been built across the U.S. over the past 15 years.
Many of most recent additions coming in
Texas
Oklahoma and
Kansas
However the U.S. has lagged far behind Europe in developing offshore wind projects
Floating wind projects have taken a back seat to onshore projects in the U.S. because
Offshore development has historically been costlier
U.S. project developers do not face the same sort of land availability issues as in Europe

4. Wind Farm Growth II
U.S. offshore wind sector hit important milestone in December 2016 when the Block Island project off Rhode Island started operating
First offshore wind farm in U.S.
Project consists of five floating turbines
Can generate 30 megawatts of power
Enough to power 17,000 homes.

5. Wind Farm Growth III Future Projects
Now proposals covering 28 projects could generate more than 24,000 megawatts of power
Enough to supply 7.5 million homes
By comparison the U.S. has built around 85,000 megawatts of onshore capacity to date.
Not all 28 projects will be completed successfully
18 projects with nearly 15,000 megawatts in generating potential have secured use of their proposed sites.

6. Wind Farm Considerations I
Price Considerations
U.S. projects have benefitted from falling costs in European developments
Sites in Europe are often awarded through auctions
Winner being project that can deliver electricity at the lowest price”
Known as the “strike price”.
That price averaged around $200 per megawatt hour (MWh) for projects starting up in
Not particularly competitive with cheap US natural gas or even onshore wind and solar projects.

7. Wind Farm Considerations II
However
More recent awarded projects with a delivery date in have seen average strike prices fall to around $70 per MWh – competitive with other energy sources
Offshore wind industry confident similar price reductions will be seen in the U.S.
A recent proposal for a 120 megawatt project in Maryland is targeting a strike price of around $130 MWh to be delivered by 2022.
Clear that additional sharp cost reductions ae possible in U.S.
Enough to make floating offshore wind potentially competitive with natural gas in many areas.

8. Wind Farm Considerations III
Cost Reductions
Several factors are enabling the offshore industry to drive costs lower
Turbine Size
Offshore projects moving towards larger turbines
Helps reduce capex per megawatt generated
Average offshore turbine is rated at between 6 and 8 megawatts today
Compared to 2 megawatts for onshore
Project developers are also moving further offshore.
These sites will have to use costlier floating turbines, rather than turbines that can be fixed to the seabed in shallower waters
However wind speed far greater and more consistent in deeper waters – makes projects more economic

9. Wind Farm Considerations IV
Economies of scale
Offshore wind industry also starting to benefit from growing size
The supply chain is expanding and maturing
Manufacturers will start to see benefits from economies of scale.
State support
With offshore wind looking more viable, US states looking to meet carbon reduction goals while boosting a potentially lucrative industry are stepping in with supportive policies
New York has committed producing 2,400 megawatts of offshore wind by Part of state’s program to lift renewables to 50% of power generation
Similar programs in other coastal states with similar renewable targets

10. Wind Farm Considerations V
Hydrocarbon crossover
Unlike onshore wind and solar, offshore wind offers an opportunity for oil and gas companies
Can transfer directly the knowledge and skills they have developed at their own deep-water oil and gas projects
Statoil Norway’s national oil company has long record of involvement in offshore wind
Major floating windfarm off Scotland
Shell has taken a 50% stake in a Dutch offshore wind farm and has big plans in the sector

11. Assessment
U.S. offshore wind projects likely to be market competitive without subsidies by the middle of the 2020s
Development of floating platforms for wind turbines will allow the industry to access greater and more reliable wind resources further from shore.
Early development will focus aroung the North-east where state support is strong and thee is ample wind
California and Hawaii will also see new developments