Pricing offshore wind power

Offshore wind offers a very large clean power resource, but electricity from the first US offshore wind contracts is costlier than current regional wholesale electricity prices. To better understand the factors that drive these costs, we develop a pro-forma cash flow model to calculate two results: the levelized cost of energy, and the breakeven price required for financial viability. We then determine input values based on our analysis of capital markets and of 35 operating and planned projects in Europe, China, and the United States. The model is run for a range of inputs appropriate to US policies, electricity markets, and capital markets to assess how changes in policy incentives, project inputs, and financial structure affect the breakeven price of offshore wind power. The model and documentation are made publicly available.     

Hydrogen production from offshore wind power in South China

Wind power hydrogen production is the direct conversion of electricity generated by wind power into hydrogen through water electrolysis hydrogen production equipment, which produces hydrogen for convenient long-term storage through water electrolysis. With the development of offshore wind power from offshore projects, construction costs continue to rise. Turning power transmission into hydrogen transmission will help reduce the cost of offshore wind power construction. This paper analyses the methods of producing hydrogen from offshore wind power, including alkaline water electrolysis, proton exchange membrane electrolysis of water, and solid oxide electrolysis of water. In addition, this paper outlines economic and cost analyses of hydrogen production from offshore wind power. In the future, with the development and advancement of water electrolysis hydrogen production technology, hydrogen production from offshore wind power could be more economical and practical.     

The offshore trend: Structural changes in the wind power sector

In recent years, the wind power sector has begun to move offshore, i.e. to use space and good wind speeds on the open sea for large scale electricity generation. Offshore wind power, however, is not just technologically challenging but also a capital intensive and risky business that requires particular financial and organizational resources not all potential investors might have. We therefore address the question, what impact offshore wind power may have on ownership and organizational structures in the wind power sector. We compare on- and offshore wind park ownership in Denmark, the UK and Germany. The analysis shows that offshore wind power in all three countries is dominated by large firms, many of which are from the electricity sector. In Denmark and the UK, also investors from the gas and oil industry play an important role in the offshore wind business. This development represents a major shift for countries such as Germany and Denmark, in which the wind power sector has grown and matured on the basis of investments by individuals, farmers, cooperatives and independent project developers. The structural changes by which offshore wind power is accompanied have consequences for turbine manufacturers, project developers, investors, associations and policy makers in the field.     

Potential role of power authorities in offshore wind power development in the US

This article examines how power authorities could facilitate and manage offshore wind power development in US coastal waters. The power authority structure is an American 20th century institution for managing energy resources—a form of a public authority or public corporation dedicated to creating, operating and maintaining electric generation and transmission infrastructure. Offshore wind power is characterized by high capital costs but no fuel costs and thus low operating costs. Therefore a power authority, by virtue of its access to low-cost capital and managerial flexibility, could facilitate offshore wind power development by reducing financial risk of developing and lowering debt payments, thus improving the risk profile and lowering the cost of electricity production. Additionally, power authorities can be made up of multiple states, thus opening the possibility for joint action by neighboring coastal states. Using primary and secondary data, we undertake an in-depth analysis of the potential benefits and shortcomings of a power authority approach.     

Offshore wind power grid connection—The impact of shallow versus super-shallow charging on the cost-effectiveness of public support

Public support for electricity generation from renewable energy sources is commonly funded by non-voluntary transfers from electricity consumers to producers. Apparently, the cost-effective disposition of funds in terms of induced capacity deployment has to be regarded a key criterion for the success of renewable energy policy.     

GHG emissions and energy performance of offshore wind power

This paper presents specific life cycle GHG emissions from wind power generation from six different 5 MW offshore wind turbine conceptual designs. In addition, the energy performance, expressed by the energy indicators Energy Payback Ratio (EPR) Energy Payback Time (EPT), is calculated for each of the concepts.There are currently few LCA studies in existence which analyse offshore wind turbines with rated power as great as 5 MW. The results, therefore, give valuable additional environmental information concerning large offshore wind power. The resulting GHG emissions vary between 18 and 31.4 g CO₂-equivalents per kWh while the energy performance, assessed as EPR and EPT, varies between 7.5 and 12.9, and 1.6 and 2.7 years, respectively. The relatively large ranges in GHG emissions and energy performance are chiefly the result of the differing steel masses required for the analysed platforms. One major conclusion from this study is that specific platform/foundation steel masses are important for the overall GHG emissions relating to offshore wind power. Other parameters of importance when comparing the environmental performance of offshore wind concepts are the lifetime of the turbines, wind conditions, distance to shore, and installation and decommissioning activities.Even though the GHG emissions from wind power vary to a relatively large degree, wind power can fully compete with other low GHG emission electricity technologies, such as nuclear, photovoltaic and hydro power.     

The economics of offshore wind

This paper presents an overview of the main issues associated with the economics of offshore wind. Investment in offshore wind systems has been growing rapidly throughout Europe, and the technology will be essential in meeting EU targets for renewable energy in 2020. Offshore wind suffers from high installation and connection costs, however, making government support essential. We review various support policies used in Europe, concluding that tender-based feed-in tariff schemes, as used in Denmark, may be best for providing adequate support while minimising developers’ rents. It may prove economic to build an international offshore grid connecting wind farms belonging to different countries that are sited close to each other.     

The effect of the 2010 Gulf oil spill on public attitudes toward offshore oil drilling and wind development

In April 2010, the Deepwater Horizon oil well exploded, releasing over four million barrels of oil into the Gulf of Mexico. This paper presents data from two national mail surveys undertaken in 2008 and 2010 that compare public attitudes to both offshore oil drilling and offshore wind development pre- and post-spill. The results show that while there was a drop in support for expanded drilling (from 66% in 2008 to 59% in 2010) the change was not significant. There was, however, a significant decrease in support for offshore drilling among coastal residents. There was a slight, non-significant increase in support for offshore wind development which remained significantly higher than support for offshore oil (80% in 2008 and 82% in 2010). Despite there being no significant change in overall support levels, there was a shift in the strength of feeling regarding offshore oil, with 80% of Americans either less supportive or more opposed to expanded drilling in 2010 than they were in 2008.     

Assessment of offshore liquid hydrogen production from wind power for ship refueling

Green hydrogen from electrolysis has become the most attractive energy carrier for making the transition from fossil fuels to carbon-free energy sources possible. Especially in the naval sector, hydrogen has the potential to address environmental targets due to the lack of low-carbon fuel options. This study aims at investigating an offshore liquefied green hydrogen production plant for ship refueling. The plant comprises a wind farm for renewable electricity generation, an electrolyzer stack for hydrogen production, a water treatment unit for demineralized water production, and a hydrogen liquefaction plant for hydrogen storage and distribution to ships. A pre-feasibility study is addressed to find the optimal capacities of the plant that minimize the payback time. The model results show that the electrolyzer capacity shall be set equal to a value between 80% and 90% of the wind farm capacity to achieve the minimum payback times. Additionally, the wind farm capacity shall be higher than about 150 MW to limit the payback time to values lower than 11 years for a fixed hydrogen price of 6 €/kg. The Levelized Cost of Hydrogen results to be below 4 €/kg for a wide range of plant capacities for a lifetime of the plant of 25 years. Thus, the model shows that this plant is economically feasible and can be reproduced similarly for different locations by rescaling the different selected technologies. In this way, the naval sector can be decarbonized thanks to a new infrastructure for the production and refueling of liquified green hydrogen directly provided on the sea.     

Optimal integration of offshore wind power for a steadier,environmentally friendlier,supply of electricity in China

Demand for electricity in China is concentrated to a significant extent in its coastal provinces. Opportunities for production of electricity by on-shore wind facilities are greatest, however, in the north and west of the country. Using high resolution wind data derived from the GEOS-5 assimilation, this study shows that investments in off-shore wind facilities in these spatially separated regions (Bohai-Bay or BHB, Yangtze-River Delta or YRD, Pearl-River Delta or PRD) could make an important contribution to overall regional demand for electricity in coastal China. An optimization analysis indicates that hour-to-hour variability of outputs from a combined system can be minimized by investing 24% of the power capacity in BHB, 30% in YRD and 47% in PRD. The analysis suggests that about 28% of the overall off-shore wind potential could be deployed as base load power replacing coal-fired system with benefits not only in terms of reductions in CO₂ emissions but also in terms of improvements in regional air quality. The interconnection of off-shore wind resources contemplated here could be facilitated by China's 12th-five-year plan to strengthen inter-connections between regional electric-power grids.     

Continuous spatial modelling to analyse planning and economic consequences of offshore wind energy

Offshore wind resources appear abundant, but technological, economic and planning issues significantly reduce the theoretical potential. While massive investments are anticipated and planners and developers are scouting for viable locations and consider risk and impact, few studies simultaneously address potentials and costs together with the consequences of proposed planning in an analytical and continuous manner and for larger areas at once. Consequences may be investments short of efficiency and equity, and failed planning routines. A spatial resource economic model for the Danish offshore waters is presented, used to analyse area constraints, technological risks, priorities for development and opportunity costs of maintaining competing area uses. The SCREAM-offshore wind model (Spatially Continuous Resource Economic Analysis Model) uses raster-based geographical information systems (GIS) and considers numerous geographical factors, technology and cost data as well as planning information. Novel elements are weighted visibility analysis and geographically recorded shipping movements as variable constraints. A number of scenarios have been described, which include restrictions of using offshore areas, as well as alternative uses such as conservation and tourism. The results comprise maps, tables and cost-supply curves for further resource economic assessment and policy analysis. A discussion of parameter variations exposes uncertainties of technology development, environmental protection as well as competing area uses and illustrates how such models might assist in ameliorating public planning, while procuring decision bases for the political process. The method can be adapted to different research questions, and is largely applicable in other parts of the world.     

From laggard to leader: Explaining offshore wind developments in the UK

Offshore wind technology has recently undergone rapid deployment in the UK. And yet, up until recently, the UK was considered a laggard in terms of deploying renewable energy. How can this burst of offshore wind activity be explained? An economic analysis would seek signs for newfound competitiveness for offshore wind in energy markets. A policy analysis would highlight renewable energy policy developments and assess their contribution to economic prospects of offshore wind. However, neither perspective sheds sufficient light on the advocacy of the actors involved in the development and deployment of the technology. Without an account of technology politics it is hard to explain continuing policy support despite rising costs. By analysing the actor networks and narratives underpinning policy support for offshore wind, we explain how a fairly effective protective space was constructed through the enroling of key political and economic interests.     

Feasibility study of offshore wind turbine substructures for southwest offshore wind farm project in Korea

Korea has huge potential for offshore wind energy and the first Korean offshore wind farm has been initiated off the southwest coast. With increasing water depth, different substructures of the offshore wind turbine, such as the jacket and multipile, are the increasing focus of attention because they appear to be cost-effective. However, these substructures are still in the early stages of development in the offshore wind industry. The aim of the present study was to design a suitable substructure, such as a jacket or multipile, to support a 5 MW wind turbine in 33 m deep water for the Korean Southwest Offshore Wind Farm. This study also aimed to compare the dynamic responses of different substructures including the monopile, jacket and multipile and evaluate their feasibility. We therefore performed an eigenanalysis and a coupled aero-hydro-servo-elastic simulation under deterministic and stochastic conditions in the environmental conditions in Korea. The results showed that the designed jacket and multipile substructures, together with the modified monopile, were well located at soft–stiff intervals, where most modern utility-scale wind turbine support structures are designed. The dynamic responses of the different substructures showed that of the three substructures, the performance of the jacket was very good. In addition, considering the simple configuration of the multipile, which results in lower manufacturing cost, this substructure can provide another possible solution for Korean’s first offshore wind farm. This study provides knowledge that can be applied for the deployment of large-scale offshore wind turbines in intermediate water depths in Korea.     

Assessing offshore wind resources: An accessible methodology

This paper describes a method for assessing the electric production and value of wind resources, specifically for the offshore environment. Three steps constitute our method. First, we map the available area, delimiting bathymetric areas based on turbine tower technology, then assess competing uses of the ocean to establish exclusion zones. From exclusion zones, bathymetry, and turbine tower water depth limitations, the water sheet area available for wind turbines is calculated. The second step is calculation of power production starting from available area, which determines the location and count of turbines. Then existing wind data are extrapolated to turbine height and, along with the turbine power output curve, they are used to establish the expected electric power production on an hourly basis. The third step calculates market value based on the hourly electric market at the nearest electric grid node.To illustrate these methods, we assess the offshore wind resource of the US state of Delaware. We find year-round average output of over 5200 MW, or about four times the average electrical consumption of the state. On local wholesale electricity markets, this would produce just over $2 billion/year in revenue.Because the methods described here do not rely on constructing meteorological towers nor on proprietary software, they are more accessible to a local government, state college, or other organization. For example, these methods can be carried out as an initial assessment of resources, or by a government or public entity as a check on claims by private applicants.     

Offshore wind power policy and planning in Sweden

The main objective of this paper is to analyze the role of policy support schemes and planning systems for inducing offshore wind power development in Sweden. Specifically, it highlights the different types of economic, political and planning-related conditions that face offshore wind power investors in Sweden, and provides brief comparisons to the corresponding investment conditions in Denmark, Norway and the UK. The analysis shows that in Sweden existing policy incentives are generally too weak to promote a significant development of offshore wind power, and the paper provides a discussion about a number of political and economic aspects on the choice between different support schemes for offshore wind in the country. Swedish permitting and planning procedures, though, appear favorable to such a development, not the least in comparison to the corresponding processes in the other major offshore wind countries in Europe (e.g., the UK). On a general level the paper illustrates that the success and failure stories of national offshore wind policies and institutions cannot be easily transferred across country borders, and the analysis shows that both the political and the legal frameworks governing the investment situation for offshore wind farms in Denmark, Norway, Sweden and the UK differ significantly.     

A comparison of offshore wind power development in europe and the U.S.: Patterns and drivers of development

Since the turn of the 21^st century, the onshore wind industry has seen significant growth due to the falling cost of wind generated electricity. This growth has coincided with an interest in the development of offshore wind farms. In Europe, governments and developers have begun establishing small to medium sized wind farms offshore to take advantage of stronger and more constant winds and the relative lack of landowner conflicts. In the U.S., several developers are in the planning and resource evaluation phases of offshore wind farm development, but no wind farms are currently operational or under construction. In this paper, we analyze the patterns of development in Europe and compare them to the U.S. We find significant differences in the patterns of development in Europe and the U.S. which may impact the viability of the industry in the U.S. We also discuss the policies used by European nations to stimulate offshore wind development and we discuss the potential impacts of similar policies in the U.S.     

Feasibility of large scale offshore wind power for Hong Kong — a preliminary study

This paper investigates the potential and the feasibility of offshore wind energy for Hong Kong. The 1998 wind data taken from an island were analysed. The wind resource yields an annual mean wind speed of 6.6 m/s and mean wind power density of 310 W/m². With commercially available 1.65 MW wind turbines placed on the whole of Hong Kong’s territorial waters, the maximum electricity generating potential from offshore wind is estimated to be 25 TWh which is about 72% of the total 1998 annual electricity consumption. However, potential is significantly reduced if other usages of the sea such as shipping are considered. A hypothetical offshore wind farm of 1038 MW capacity is then sited on the East-side waters. The extreme wind and wave climates, as well as the seasonal variation of wind power and demand are examined. The electricity generation costs are estimated and compared with the local retail tariff. Initial results indicate the wind farm is economically viable and technically feasible.     

Technological learning in offshore wind energy: Different roles of the government

Offshore wind energy is a promising source of renewable electricity, even though its current costs prevent large-scale implementation. Technological learning has improved the technology and its economic performance already, and could result in significant further improvements. This study investigates how technological learning takes place in offshore wind energy and how technological learning is related to different policy regimes. Offshore wind energy developments in Denmark and the United Kingdom have been analysed with a technology-specific innovation systems approach. The results reveal that the dominant forms of learning are learning by doing and learning by using. At the same time, learning by interacting is crucial to achieve the necessary binding elements in the technology-specific innovation system. Generally, most learning processes were performed by self-organizing entities. However, sometimes cultural and technical barriers occurred, excluding component suppliers and knowledge institutes from the innovation system. Danish policies successfully anticipated these barriers and removed them; therefore, the Danish policies can be characterized as pro-active. British policies shaped stable conditions for learning only; therefore, they can be characterized as active. In the future, barriers could hinder learning by interacting between the oil and gas industry, the offshore wind industry and academia. Based on this study, we suggest national and international policy makers to design long-term policies to anticipate these barriers, in order to contribute to technological learning.     

Optimizing hybrid offshore wind farms for cost-competitive hydrogen production in Germany

Nearly 96% of the world's current hydrogen production comes from fossil-fuel-based sources, contributing to global greenhouse gas emissions. Hydrogen is often discussed as a critical lever in decarbonizing future power systems. Producing hydrogen using unsold offshore wind electricity may offer a low-carbon production pathway and emerging business model. This study investigates whether participating in an ancillary service market is cost competitive for offshore wind-based hydrogen production. It also determines the optimal size of a hydrogen electrolyser relative to an offshore wind farm. Two flexibility strategies for offshore wind farms are developed in this study: an optimal bidding strategy into ancillary service markets for offshore wind farms that build hydrogen production facilities and optimal sizing of Power-to-Hydrogen (PtH) facilities at wind farms. Using empirical European power market and wind generation data, the study finds that offshore-wind based hydrogen must participate in ancillary service markets to generate net positive revenues at current levels of wind generation to become cost competitive in Germany. The estimated carbon abatement cost of “green” hydrogen ranges between 187 EUR/tonCO₂e and 265 EUR/tonCO₂e. Allowing hydrogen producers to receive similar subsidies as offshore wind farms that produce only electricity could facilitate further cost reduction. Utilizing excess and intermittent offshore wind highlights one possible pathway that could achieve increasing returns on greenhouse gas emission reductions due to technological learning in hydrogen production, even under conditions where low power prices make offshore wind less competitive in the European electricity market.     

Visual impact assessment of offshore wind farms and prior experience

Energy planners have shifted their attention towards offshore wind power generation and the decision is supported by the public in general, which in the literature has a positive attitude towards offshore wind generation. However, globally only a few offshore wind farms are operating. As more wind farms start operating and more people become experienced with especially the visual impacts from offshore wind farms, the public positive attitude could change if the experienced impacts are different from the initially perceived visual interference. Using a binary logit model, the present paper investigates the relation between different levels of prior experience with visual disamenities from offshore wind farms and perception of visual impacts from offshore wind farms. The differences in prior experience are systematically controlled for sampling respondents living in the areas close to the large scale offshore wind farms Nysted and Horns Rev and by sampling the a group of respondents representing the Danish population, which has little experience with offshore wind farms. Compared to previous results in the literature, the present paper finds that perception of wind power generation is influenced by prior experience. More specifically, the results show that people with experience from offshore wind farms located far from the coast have a significant more positive perception of the visual impacts from offshore wind farms than people with experience from wind farms located closer to the coast. These results are noteworthy on two levels. First of all, the results show that perceptions of offshore wind generation are systematically significantly influenced by prior experience with offshore wind farms. Secondly, and in a policy context, the results indicate that the future acceptance of future offshore wind farms is not independent of the location of existing and new offshore wind farms. This poses for caution in relation to locating offshore wind farms too close to the coast.