POWER January 2020 - 21

2020 INDUSTRY FORECAST
end of September, AWEA said, reaching
46.5 GW-equal to almost half of
today's operational wind turbines. The
group reported 22,651 MW under construction
and an additional 23,844 MW in
advanced development, including 5,792
MW of offshore wind.
" Wind power is growing rapidly, especially
with a major new market opportunity
offshore, " AWEA CEO Tom
Kiernan said in a press release issued
with the report.
The Offshore Wind Handbook-an 86page
document published jointly by K&L
Gates LLP and SNC-Lavalin's Atkins business-echoes
the optimism Kiernan has
for the offshore wind energy industry.
" [W]e now see a project development
landscape of favorable policy and regulatory
programs, advantageous pricing
for proven reliable technology and construction
services, and a pool of specialized
expertise necessary for successful
project development, " David P. Hattery,
partner with K&L Gates, and Úna Brosnan,
business and strategy development
manager with Atkins, wrote in their introduction
to the handbook. " All of these
factors lead to the aggressive pricing we
are now seeing in the power markets,
with a likelihood of further cost compression
to come. The time is now and the
opportunity is before us, " they said.
Among the significant benefits offshore
sites offer wind developers are an
abundance of space; higher and less turbulent
wind resources than on land, resulting
in higher capacity factors; and the
availability of larger turbines. In the early
days of offshore wind development, the
cost was high (typically $215/MWh), the
handbook says, but in recent years offshore
wind costs have tumbled. In 2019,
the UK contract of difference auction
saw strike prices as low as $50.12/MWh.
In Deloitte's " 2020 Renewable Energy
Industry Outlook, " it says U.S.-European
partnerships could be crucial in taking
offshore wind development to the next
level. " U.S. and European entities are
forming joint ventures (JVs) that combine
complementary knowledge and
skillsets. While U.S. firms typically bring
domestic credentials, such as their deep
knowledge of local markets and regulatory
systems, their European partners
often bring a wealth of experience and
expertise in offshore wind technology.
Three of the four bidders on New York
state's first offshore wind project were
JVs between U.S. and European entities, "
the outlook says.
And the possibilities are amazing.
January 2020 | POWER
2. The Block Island Wind Farm off the coast of Rhode Island was the first offshore wind installation
in the U.S. It includes five 6-MW Haliade wind turbines. The facility was recognized as a
POWER Top Plant in 2017. Source: Creative Commons / Ionna22
According to National Renewable Energy
Laboratory estimates, U.S. offshore
wind has a technical resource potential
of more than 2,000 GW of capacity, or
7,200 TWh of annual generation. For
context, that's nearly double the nation's
current electricity use. While enthusiasm
for offshore wind should be tempered
by the fact that only 30 MW of offshore
capacity is currently in operation in the
U.S.-that being the Block Island wind
farm (Figure 2), a 2017 POWER Top
Plant-there have been positive developments
on the policy front and at least
one large project is gaining momentum.
The Connecticut Department of Energy
and Environmental Protection
announced on Dec. 5 that a bid from
developer Vineyard Wind had been selected
to advance to contract negotiations
with the state's electric distribution
companies to provide 804 MW of offshore
wind through the development
of the Park City wind project. In a press
release, DEEP said the Park City project
was offered at a price lower than any
other publicly announced offshore wind
project in North America.
Unsubsidized Costs for
Renewables Are Competitive
According to the Deloitte report, the levelized
cost of offshore wind declined by
24% during the first half of 2019, and
onshore wind dropped 10% during the
period. In November, Lazard's Levelized
Cost of Energy Analysis-Version 13.0
was published. The financial advisory
and asset management firm reported,
" [T]he cost of renewable energy continues
to decline, certain technologies
(e.g., onshore wind and utility-scale
www.powermag.com
solar), which became cost-competitive
with conventional
generation
several
years ago on a new-build basis, continue
to maintain competitiveness with the
marginal cost of existing conventional
generation technologies. "
Specifically, Lazard's unsubsidized
analysis shows the following levelized
cost of energy (LCOE) comparisons:
■ Wind. From $28/MWh to $54/MWh.
■ Solar PV-Thin-film utility-scale. From
$32/MWh to $42/MWh.
■ Gas combined cycle. From $44/MWh
to $68/MWh.
■ Coal. From $66/MWh to $152/MWh.
■ Nuclear. From $118/MWh to $192/
MWh.
■ Gas peaking. From $150/MWh to
$199/MWh.
Lazard's analysis was essentially
echoed by Morgan Stanley Research in
a report it issued on Dec. 5. " From an
LCOE perspective, in certain markets
wind costs can be as low as $20-30/
MWh and solar costs as low as $30-40/
MWh (both including battery storage),
competitive with most coal plants in the
U.S. While the lack of storage options
is sometimes viewed as an inhibitor of
renewable growth, this likely is not an issue
until the later part of the 2020s, and
some corporates expect storage to see
a similar cost curve as wind/solar, with
costs declining [about] 5-10% annually, "
it says.
Nonetheless, Deloitte noted that the
end of the wind production tax credit
(PTC), which expires at the end of 2019,
could slow development of new projects
despite cost decreases. " [A]s the federal
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POWER January 2020

Table of Contents for the Digital Edition of POWER January 2020