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Virginia : Offshore Wind Feasibility Analysis Trevor S. Daubenspeck
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US Offshore Wind Potential
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Virginia Offshore Wind Potential
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Benefits of Chesapeake Bay Location Natural, ice free, bay Proximity to Norfolk / Newport News: – Railroad / Airport / Highway connectivity – Established engineering / construction labor force – Existing Naval / Industrial terminals – Proximity to electrical grid & population center Renewable Energy Standards – Virginia Law : 15% of all electricity must be derived from renewable sources by 2025 – US Navy : 50% of onshore energy must come from renewable sources by 2020
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Couple with Additional Energy Investment Outer Continental Shelf – Estimated contents: 130 to 500 million barrels of oil 1.14 to 2.5 trillion cubic feet of natural gas
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Offshore Location
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Wind Details Class 5 & 6 Wind Installations Potential of 47,900 MW Max Pot. Output 176m MWhrs / yr Specified 25 OCS lease blocks (seen in slide above), can support 3,200 MW – 11m MWhrs / yr (10% of VA’s annual consumption) Efficiency level of 89%
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Wind Details Current Levelized Costs of Energy (LCOE): – Offshore Wind:$105 to $130 per MWh – Coal-fired:$85 to $100 per MWh – CC Gas turbine:$80 to $100 per MWh Assume 600 MW yield Assume no emission capture – Definition of LCOE: the cost of generating electricity including initial capital, return on investment, as well as the costs of continuous operation, fuel, and maintenance. from Virginia Coastal Energy Research Consortium (VCERC)
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Cost Structure of Wind 3 Main components (85% of total cost): – Wind Turbines – Submarine Power Cables – Monopile Foundations VCERC’s Cost model predicts: – $3,000 to $3,600 per kW – Comparison: Scrubbed Coal @ $2,809 per kW Advanced CC @ $991 per kW – Offshore Wind won’t be price competitive until Y2017
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Cost Breakdown Scenarios
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Offshore Wind Electricity Generation Like Onshore Wind, Offshore wind does not produce a constant flow of energy
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On-peak / Off-peak Prices
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Offshore Wind Cost Estimates (Incremental) Submarine Cable Cost Estimate: – $5.54 per km per kilowatt Foundation / Monopile Cost Estimate: – $410 per kilowatt Wind Turbine Cost Estimate: – $2,160 per kilowatt
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Cost Uncertainties Wind Turbine Costs – Rise/fall : supply driven market Steel Prices Exchange Rates Price of Electricity – Prices expected to increase in L-T
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Looking at Past Offshore Wind Projects A PWC / GBI Research survey report on Existing Offshore Wind projects revealed the following: – Post-tax IRRs : 10 ~ 15% (for 85% of respondents) – Weighted Average Cost of Capital (WACC): 10 ~ 15% Suggesting that the IRR of the majority of offshore projects breakeven or are economically profitable
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Actions Federal Government – Investing $50.5m in R&D over next 5 years for additional viability analysis Gamesa (Wind Turbine manufacturer) – Constructing an R&D center in Chesapeake, VA to develop a 5 MW offshore turbine prototype for North America Virginia funding is currently stalled
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