Ready Or Not, Here Come The Offshore Wind Turbines
“The Biden administration is launching its 30,000 MW offshore wind effort. That means at least 2,400 offshore wind turbines occupy areas the size of East Coast states, with incalculable costs and higher electricity bills. ”
The Biden administration has launched its initial Green New Deal infrastructure project. It is their plan for building 30,000 megawatts (MW) of offshore wind power over the next decade. The initial effort involves declaring 800,000 acres of offshore area, known as Central Bight that lies between New Jersey and Long Island, as a high priority for wind farm leasing to ensure that developers understand the offshore wind market will receive favorable attention from the government.
Exhibit 16. Biden Target For New Offshore Wind Farm SOURCE: Workboat.com
Additionally, as part of the offshore wind initiative, the Bureau of Offshore Energy Management (BOEM) will begin to prepare an environmental impact statement (EIS) for the Ocean Wind project, a 1,100 MW wind farm to be built by Ørsted US Offshore Wind in conjunction with Public Service Enterprise Group, a New Jersey utility, off the state’s southern coast. We understand from media reports that Ørsted plans to utilize Haliade-X wind turbines made by General Electric in this project, as well as for other offshore wind farms it is planning along the East Coast.
Exhibit 17. Location Of Ocean Wind Farm Project SOURCE: NJ Spotlight News
The Haliade-X is turbine is still in development – there is a test turbine installed at the entrance to the port of Rotterdam in The Netherlands. The GE literature claims the turbine, which will come in 12, 13 and 14 MW versions, can achieve a power output of upwards of 60-64% of its capacity. To date, most popular offshore wind turbines have 6 MW capacities, like the five used at the Block Island wind farm in Rhode Island waters and the two experimental turbines installed offshore Virginia.
Exhibit 18. New Generation Offshore Wind Turbines SOURCE: Vox
Two things we do not know about the Haliade-X are its cost and its performance. On the latter point, Professor Gordon Hughes has reported in his studies of onshore and offshore wind farms in the U.K. and Denmark that initially each new generation of wind turbines experiences significant failures. This inflates the cost of wind farms and often has led to the early removal of turbines, well before their targeted 25-year life spans. At some point we expect to hear positive news about the test performance of the Haliade-X turbine. While we do not know when that news will arrive, we expect it will be soon to enable Ørsted to meet development timelines. As to the turbine’s cost, we have not seen any figures, and there are few details about the projected cost of the wind farms where they will be deployed. Since this is a new product, GE is working hard to create an offshore business to complement its successful onshore wind turbine business. We fully believe Ørsted is receiving a favorable price for this new turbine since they were convinced to switch away from their previously designated wind turbine supplier Siemens.
We also know from Professor Hughes’ studies that the costs of offshore wind farms have not declined as claimed by developers and proponents. Their claims are based primarily on speculative assumptions by developers winning bids for new offshore wind farms in auction. These offshore wind farms may or may not be built depending on future project economics and turbine technology improvements. A reflection of the problem wind turbines in German are having is the number of them that shut down when their government subsidies ended, well before their 25-year life. To offset this trend, Germany is now allowing idled wind turbines to bid for new subsidized contracts to eliminate the cost of building new turbines. This reality speaks volumes about the questionable economics of wind farms.
Some in the media state that the United States operates two offshore wind farms - one off Rhode Island and the other off Virginia. One is commercial while the other is a demonstration project. The estimated cost for the commercial Block Island wind farm (five 6 MW wind turbines) was $300 million. The developer said the project was built on budget. The estimated cost only included the turbines and the infield power transmission system. It excluded the cost of the power cable from Block Island to the Rhode Island mainland for surplus power, which was estimated to at $50 million, but reportedly cost over $100 million when completed. In addition, the landings for both the infield power cable and the line to the mainland continue to be a safety problem. The ocean’s tides and waves unbury the shore landings. As a result, the wind farm is being shut down for a period of months to allow the owners to rebury the cables. The only cost estimate for this work we have seen is National Grid’s comment that it will range around $30 million, which will be assessed to the company’s customers statewide. Ørsted has not disclosed its cost to rebury the infield line, and it will have to absorb the total cost as part of its ongoing repair and maintenance expense.
Off Virginia, Ørsted and Dominion Energy have installed two 6 MW turbines as a demonstration project to gather data to support development of a wind farm with up to a 2,000 MW capacity. Dominion Energy was awarded $4 million in 2012 and $47 million in 2014 by the U.S. Department of Energy to help fund the project. Because the single bid construction cost estimate was too high and funding targets were not met, the project was withdrawn from the government program. Reports are that installing these two turbines, along with the 27-mile power cable, cost $300 million. We have no idea how that bill would have been allocated between the turbines and the cable.
The Biden administration has ambitious targets for its offshore wind program. Some numbers will put the magnitude of the effort into perspective. First, “2035 The Report” from the Goldman School of Public Policy at the University of California at Berkeley claims that the United States needs to build 70,000 MW of wind and solar power per year to achieve net zero carbon emission by 2035, the date the Biden administration expects the electricity grid to be at net zero. Therefore, the Biden plan for 30,000 MW of offshore wind over ten years would meet a small share of that goal.
To build 30,000 MW of offshore wind, assuming all the turbines are Haliade-X with 12.5 MW capacity (what was reported as the initial turbine size), would require 2,400 turbines. Based on the latest spacing proposed for the Vineyard Wind project off Massachusetts, which allows for the operation of commercial fishing vessels in the field, turbines are spaced one nautical mile apart. While a nautical mile is longer than a land mile, we used the latter for calculation purposes. A one-by-one mile square represent 640 acres. Therefore, 2,400 turbines will occupy 1.536 million acres of space, equivalent to the size of Delaware.
The Biden administration claims these turbines will create 44,000 green jobs, or 18 per turbine. We were surprised that they said those offshore jobs would only support 33,000 onshore jobs. Traditionally, the ratio of support workers to industry workers is greater than one. President Biden has claimed that the green jobs created by his energy plan will pay more than fossil fuel jobs. According to its web site, “ZipRecruiter is seeing annual salaries as high as $160,000 and as low as $22,500, the majority of Oil Gas Industry salaries currently range between $41,500 (25th percentile) to $96,000 (75th percentile) with top earners (90th percentile) making $137,000 annually across the United States.” Furthermore, ZipRecruiter says: “As of March 23, 2021, the average annual pay for an Oil Gas Industry [job] in the United States is $76,883 a year.”
To be conservative, we assumed the comparable oil and gas job only earned $60,000 a year. At that rate, the offshore green jobs created would result in an annual payroll of $2.64 billion. We really wonder whether the industry needs 18 permanent workers per turbine – or are these jobs merely temporary construction positions, something President Biden said about the Keystone XL pipeline workers whose jobs he ended with his rejection of the cross-border operating permit. The Block Island wind farm reportedly hired five permanent workers for five turbines when the project was finished construction. The support companies working at the wind farm have hired more workers, such as those hired to operate the maintenance vessel needed for servicing the turbines. We suspect the Biden administration’s jobs created number conflates construction workers with permanent employees. We addressed this phenomenon recently when discussing a study of employment in the German wind industry for 2008-2018. It showed that construction jobs declined by 50% between 2011 and 2018, although there was a small increase in permanent employment related to maintenance and operations as the number of active turbines increased. That employment gain did not prevent a nearly 40% decline in total wind turbine employment.
Offshore wind power is coming. Putting wind turbines offshore is preferable for most people living on the coast, although the fishing industry will be impacted with unknown outcomes. Offshore wind remains one of the most expensive sources of power, and especially green electricity. Customers have yet to face that reality, although higher renewable energy prices are becoming the focus of ratepayers in counties who have led the charge for green energy. Although offshore wind tends to be stronger and steadier, it remains an intermittent source of power. That reality is why our electricity grids are becoming less stable and increasingly subject to blackouts. Whenever we think about offshore wind, words of a Peter, Paul, and Mary song play in our head:
Puff, the Magic Dragon lived by the sea
And frolicked in the autumn mist in a land called Honahlee