Deepwater Wind recently completed construction on the last of five massive, 6 MWe peak capacity wind turbines that make up the 30 MWe Block Island Wind Farm. By the end of 2016, the developer expects that the project will enter commercial operation and begin providing the first electricity from offshore wind turbines to the U.S. electricity grid. It is a development with far-reaching implications and several lessons available to be learned.
This modest-sized installation has been in the works since 2008. Initially, the public utility commission (PUC) rejected the project’s negotiated power purchase agreement (PPA) on the basis of excessive cost. In 2009, the state legislature passed a law supported by Governor Carcieri tasking the PUC to prioritize non-economic project benefits like creating a new industry with local employees and producing clean power.
The project will qualify for the 30% of project cost investment tax credit (ITC) in lieu of the production tax credit (PTC), although, the developer has not yet made it clear how much of those costs will qualify for the credit. Currently, Deepwater Wind’s agreement is with National Grid, which will mix its production with other wholesale power supplies and pass the PPA costs to all of the customers that it serves.
The project has connected the offshore wind turbines to the grid. Block Island will no longer need to generate its electricity by burning high cost, high pollution diesel fuel in locally operated and maintained generators. The new undersea cable allows Block Island Power Company to become a distribution-only utility. It will purchase its power from the New England grid at a much more affordable price than is possible when burning diesel fuel. Once the wind farm is in operation, Deepwater Wind hopes to move on to additional projects, including one that is aiming to serve Long Island, another island with high electricity rates and a power supply system dependent on burning oil.
Wind, and offshore wind probably in particular, is problematic. It is both intermittent and peaky. Further, the peaks tend to be idiosyncratic. Consequently wind needs to be fully backed up… Read more »
Dr. Stram: You voice concern for the external back-up costs of wind power that are not being included in their price. Yet the external costs of fossil fuel electricity is… Read more »
@Dan Miller
Do you have a recommendation for how to set policy that recognizes the long term costs to society of various energy options?
Rod: Yes I do. It’s a carbon pricing policy called Fee and Dividend and I gave a TEDx talk about it: https://www.youtube.com/watch?v=0k2-SzlDGko In a nutshell, with a “Fee and Dividend”… Read more »
Dan – Good answer! (As they used to say on an old game show.) Jim Hansen’s explanation of fee and dividend made sense to me several years ago and makes… Read more »
Fossil fuel energy sources in general have emissions which are substantially regulated and pay significant costs to ameliorate them. I’m dubious that the remaining costs of vastly reduced emissions make… Read more »
Dr. Stram: I’m not aware of fossil fuel companies paying anything to ameliorate the impact of their greenhouse gas emissions, except for the few places that have a price on… Read more »
Virtually all fossil fuel operators in the US pay substantial costs in both capex and operating to control both SOX (if it’s inherent in the fuel), and NOX (all fuels… Read more »
Dr. Stram: SOX and NOX create near-term impacts so it is easier for people to react and take steps to prevent those impacts. The impacts from rising CO2 will be… Read more »
My response was so someone who said they paid nothing, They of course do. They do not, generally pay for carbon in the US thought they do in Europe and… Read more »
Dr. Stram: I believe we discovered that energy miracle in December 1938. It occurred when Otto Hahn and Fritz Strassmann detected barium isotopes when they bombarded uranium with neutrons. Lise… Read more »
Unfortunately whether correctly or not, nuclear has become a very high priced spread with capital costs far exceeding any other source of energy. This more than offsets the low cost… Read more »
Dr. Stram: Human choices, not fundamentals like material requirements or weather dependent limitations on productivity, are the reason that nuclear power plants started at the cost of $100/kw of capacity… Read more »
My friend Richard Wilson, if you recognize the name, explained all this to me years ago. Unfortunately despite our best efforts, this situation shows little likelihood of changing. Our latest… Read more »
I think I may have an answer to what will be the miracle answer to both the climate change problem and to the energy problem. This answer comes from a… Read more »
What I have a difficult time understanding is why we choose to pay exorbitant PPA prices for offshore wind energy when their are other less expensive clean energy alternatives available… Read more »
Richard: You make some excellent points and raise some interesting questions. One of the topics that rarely gets enough discussion is the location based dependence of all energy prices. Wind… Read more »
Rod: You raise an important question about our goals. Which is more important, more renewable energy or reducing the releases of greenhouse gases (GHG) as rapidly and as economically as… Read more »
Rod, You very ably articulate the principal question that I have long advocated: “Are we installing as much renewable generation as possible or is the goal to do as much… Read more »
According to the Department of Interior’s Bureau of Ocean Energy Management, ” In the United States, 53% of the nation’s population lives in coastal areas, where energy costs and demands… Read more »
The problem as I see it is that offshore wind is not going to do one bit to lower that high cost of electricity in the NE. If anything, it… Read more »
It’s pretty clear that renewables need so-called “backup”, and that it must be capable of providing as much as peak demand because of the times (especially seasonally) when renewables are… Read more »
If we could get back to low cost nukes that would be great. The initial idea was “too cheap to meter.” One concern with the Far East and other who… Read more »
Since nuclear power will continue to spread to many nations, the solution will be to build inherently safe reactors like MSRs, while at the same time making every effort to… Read more »
The phrase “too cheap to meter” has often been used to condemn nuclear technologists as failures because they promised too much and did not deliver it. Here is the full… Read more »
Very interesting posting and I agree with most of the responses received by this posting. But questions come out for sustainability in terms of benefit cost analysis. If clean atmosphere… Read more »
To Mr. Bishwa, the problem is not in the investing that is a result the problem is as it always is in asking the right questions. All of the present… Read more »
Offshore wind has great potential if the costs are low enough to be economic (or at least economic with the PTC). Offshore wind has substantial advantages over most onshore wind… Read more »
First, the potential for offshore wind is extensive, especially on the East Coast where the continental shelf is exceptionally wide and shallow, perfect for wind farms. Scott mentioned the potential… Read more »
Jane: Thank you for all of your references, but I am not convinced that the price will fall very much, even as the industry expands. There are numerous components to… Read more »
OK sailor. I won’t put up the NOAA wind map. East Coast Offshore is some of the best in the country. Please take a look at Willet Kempton’s thoughts and… Read more »
What is missing in this discussion is what poor Rhode Islander’s have to pay for the ability of Block Island to get cheaper than diesel powered electricity. The negotiated rate… Read more »
Andy: My original piece in Forbes (http://www.forbes.com/sites/rodadams/2016/08/17/is-offshore-wind-finally-ready-to-serve-us-power-needs/#5122f55d5468) — that was abbreviated to initiate a discussion here — included the details of the PPA, which begins at $244/MWh and escalates at… Read more »
I suggest we take a different approach to energy economics than some have done here. I believe there is considerable agreement that there could be enormous economic “damage” from climate… Read more »
Herschel: I agree with you that the costs of building carbon free energy systems are a bargain compared to the costs of the impacts of climate change. But the challenge… Read more »
Herschel, Dan: I agree with the critical need to address the highly complex issue of how best to address the global warming problem in a comprehensive, systematic approach. I think… Read more »
Henry: I agree with you that high-level climate policy should be a separate discussion on OurEnergyPolicy and that OurEnergyPolicy can and should play an important role in presenting major climate… Read more »
Dan: As you noted, Mark Jacobson’s work is specifically aimed at “modeling optimal deployment of renewables“. By purposely avoiding nuclear energy, his models are far from an optimal energy system for… Read more »
Rod: You are correct. But I believe Mark was trying to avoid the controversy of nuclear in order to show the world that we can started right now moving to… Read more »
Dan: Thanks for pointing out the Mark Jacobson/Stanford modeling work for converting the energy system to renewables. I am aware of that work but have not studied it. I think… Read more »