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| Fig. 1: Chart highlighting trends of global average offshore wind LCOE using both historic data and estimates. [2] )Image Source: R. Bendekgey) |
As the demand increases for carbon-neutral energy sources, offshore wind provides an attractive solution to meet energy needs while addressing the challenges of land use and variability in wind availability. With increasing urgency to cut carbon emissions due to rising temperatures, ocean acidification and habitat loss, utility electricity generation must eliminate its dependence on fossil fuels. In capitalist markets, affordability of carbon neutral options is necessary to implement such changes. Renewable energy provides an attractive alternative to stock resources, as the harvested energy from the sun and kinetic energy from the wind are free in fuel cost. Wind energy, however, has faced its own challenges in implementation for its large land usage and noise pollution, constrained by the "Not in My Backyard" (NIMBY) phenomenon. Offshore wind enables alternative siting that can still be relatively close to metropolitan centers with high energy demand while avoiding previously stated siting constraints. A study off the southeast coast of China showed that not only were maximum wind speeds higher at 10m and 80m elevation offshore than on shore, the offshore wind variation in wind intensity was opposite that of the onshore wind. [1] Therefore, utilizing both could mitigate the issue of variability in the availability of wind energy. This article explores the economic efficiency of such a powerful yet underutilized energy source in the form of the levelized cost of energy of offshore wind, which measures the net present cost per unit of energy over the lifetime of a generator. Another metric used to explore the feasibility of offshore wind is Energy Payback Time, which is the amount of time the generator must be running to produce the amount of energy required to build it. These two metrics can provide the economic efficiency of investing in offshore wind.
Due to the lack of fuel cost, the cost of offshore wind energy relies on installation and maintenance expenses, which vary based on site-specific factors such as water depth and distance from shore. Depth of the water at the site location influences the price and design of the turbines foundation, and distance from the shore influences transmission cost. The International Renewable Energy Association (IRENA) recognizes five main components to the cost to install offshore wind. [2] The first comprises turbine costs, including rotor blades, gearbox, generator, nacelle, power converter, transformer and tower. This is usually responsible for about 30-50% of total installation costs. The second component relates to structural costs. This includes construction and tower costs. The third component is foundation, which can have a wide range of costs depending on the depth of the water where the turbine is sited. The fourth is the costs of connecting to the grid, which includes transformers, substations and would range largely depending on the existing transmission infrastructure. The last component accounts for cost of land as well as project planning.
The levelized cost of energy (LCOE) and energy payback time are critical metrics in assessing the economic and energetic viability of offshore wind power compared to onshore options, highlighting necessary trade-offs in the pursuit of sustainable energy generation. Fig. 1 illustrates the average global levelized cost of energy (LCOE) from offshore wind with historic data provided by IRENA until 2016, and estimates for 2017 and 2020. The global LCOE from historic data in 2016 was 0.15 2016 USD/kWh. However, estimating LCOE for offshore wind can pose its own challenges due to market and policy variability, as well as variability in cost calculations of such a rapidly changing technology, and therefore must be considered with caution. In an analysis done by Lawrence Berkeley National Laboratory in 2015, the LCOE in the United States of fixed bottom 4.14 MW offshore wind turbines was 0.181 USD/kWh, while floating 4.14 MW offshore wind had an LCOE of 0.229 USD/kWh, as compared to onshore 2 MW which, which the nation laboratory calculated to have an LCOE of 0.081 USD/kWh. [3] According to this data, offshore wind proves to still be a more expensive option to generate electricity than onshore wind. However, this does not account for the externalities of noise, land use, and intermittency that may not exist for offshore or offshore in conjunction with onshore wind. Using the metric of energy payback time, analysis shows that with regards to six different 5 MW offshore wind turbine designs found an energy payback time between 1.6 and 2.7 years. [4] These two metrics highlight two different investments important when installing energy generating infrastructure: energy and money. It is important to consider the amount of money needed to profit and pay back the monetary investment of capital costs and operation and maintenance costs, but it is also important to consider the amount of time necessary to run this generation technology to receive the amount of energy put into building it. If a generator makes more energy but also required far more energy to build, the net gain of energy services to the market may not be larger.
Out of many metrics chosen to find the feasibility of implementing offshore wind, LCOE was chosen to show pricing efficiency and energy payback time was chosen to show energy investment efficiency. While these metrics may not always produce the most attractive technology to investors, investing upfront in emerging technology could result in future advances that cause improved efficiency. This shows the importance of exploring offshore wind as an opportunity, so as to go beyond the limitations of conventional wind as a necessary step in the transition to a carbon neutral energy system.
© Rose Bendekgey. The author warrants that the work is the author's own and that Stanford University provided no input other than typesetting and referencing guidelines. The author grants permission to copy, distribute and display this work in unaltered form, with attribution to the author, for noncommercial purposes only. All other rights, including commercial rights, are reserved to the author.
[1] Y. Li, et al., "Comparative Study of Onshore and Offshore Wind Characteristics and Wind Energy Potentials: A Case Study for Southeast Coastal Region of China," Sustain. Energy Technol. Assess. 39, 100711 (2020).
[2] B. Johnston, et al., "Levelised Cost of Energy: A Challenge for Offshore Wind," Renew. Energy 160, 876 (2020).
[3] C. Mone, et al., "2015 Cost of Wind Energy Review," U.S. National Renewable Energy Laboratory, NREL/TP-6A20-66861, May 2017.
[4] H. L. Raadal, et al., "GHG Emissions and Energy Performance of Offshore Wind Power," Renew. Energy 66, 314 (2014).