Offshore wind energy menu
Photo by Evan Krape April 08, 2022
Report lays out offshore wind development options for Delaware
Coastal states up and down the East Coast from North Carolina to Massachusetts have begun purchasing offshore wind power with one notable exception: the state of Delaware. But now, thanks to a new report on Offshore Wind Procurement Options for Delaware, published by the Special Initiative on Offshore Wind (SIOW) at the University of Delaware, the state is equipped with an analysis of the anticipated price of electricity from offshore wind, as well as options and guidance if government officials choose to move forward with utility purchase of offshore wind energy.
The report was put together by Willett Kempton, professor in the School of Marine Science and Policy; Lillian E. Peterson, a senior at UD in the Honors College studying environmental engineering; Amy Bosteels, a master’s-level student in UD’s College of Earth, Ocean and Environment; and Kris Ohleth, director of SIOW.
Having previously put together similar reports for New York state and the Commonwealth of Massachusetts, SIOW learned from their experiences with those states so they could provide new analysis for the report for Delaware.
They examined the laws that enabled the wind energy process in those states, as well as state agencies’ requests for proposals asking developers to bid on offshore wind energy leases. They also looked at the contracts that resulted between the developers selling electricity and the state utilities that are buying the electricity.
Kempton said the Delaware report is basically an offshore wind energy menu that will allow the state to pick and choose which state options for offshore wind procurement would work best in the First State.
“We’re giving the legislature and the state government a menu that has prices on it,” said Kempton. “Other people have given a menu and said, ‘If you get the whole meal, here’s what it costs,’ but what we’re doing is giving prices on the individual items. Then the state can pick and choose what they want to do.”
While the offshore wind energy industry could once be seen as a niche, recent events have indicated that it is ready to take off in a major way. In February 2022, six companies bid a combined $4.37 billion for the right to leases to build wind energy projects on the ocean floor off New York and New Jersey. Once the sites are fully developed, these projects will be able to power an estimated 2 million homes.
In addition, Massachusetts is set to provide its residents with offshore wind energy to their state’s power grid as soon as 2023.
“Those auctions show that there are big companies who are saying, ‘We believe that we can spend $4 billion on rights to build in the ocean, then spend more money to build offshore wind turbines and sell the electricity competitively,’” said Kempton. “I think that constitutes a large industry. This is no longer a backyard industry.”
There were a few key findings in the report that have implications for how offshore wind energy could be utilized in Delaware.
The first was that the cost of electricity from offshore wind, using a hypothetical 800-megawatt project off the coast of Delaware, would be within the same range as what Delawareans are currently paying for wholesale power from other electrical sources.
This finding bucks traditional wisdom that often assumes green or renewable energy is a more expensive energy option.
As most of today’s commercial offshore wind projects are 800- to 1200-megawatt capacity — about the same size as a nuclear power plant or large coal power plant — the report recommends designing a project of this size for a Delaware offshore wind project. Kempton pointed out that three 800-megawatt projects would produce enough electricity for the entire state of Delaware.
The report shows that the state of Delaware has policy options it can take to reduce the price of offshore wind electricity even further, potentially making it less expensive than traditional energy from fossil fuels. These include having a utility buy renewable energy credits (REC) — which act as an accounting or tracking mechanism for any renewable energy that flows to the power grid — from the offshore wind developer, and making clarifications to state permitting and guidance from the Delaware Department of Natural Resources and Environmental Control (DNREC) to avoid costly development delays.
The report also found that in order to have a successful offshore wind project in Delaware, lawmakers may have to review the way that utilities buy wholesale power in the state.
In Delaware, much of the sale and distribution of electricity is regulated by the Public Service Commission, but the way the commission has regulated that utilities manage these purchases doesn’t make sense for wind energy. For instance, utilities are asked to solicit short-term power contracts, typically supplied by natural gas, because the price of gas fluctuates on a monthly basis. This is not the case for wind energy, however, because the price of wind won’t fluctuate.
“The whole system is geared for fossil fuel or a nuclear supplier, not for wind power or any big, renewable energy project,” said Kempton. Plus, there are cost savings if some of the rules are better adapted to offshore wind power. “So adjustments to rules and law would make this happen in the most cost-effective way.”
Because Delaware’s largest fuel for electricity is natural gas, that also means that, as soon as new offshore wind starts running, more natural gas will be freed up for other uses such as suppliers exporting it. Longer term, the report shows that the offshore wind resource is so large that it can cost-effectively meet electricity needs plus have more energy for hydrogen production, which in turn can be converted into carbon-neutral liquid fuels and chemical feedstocks.
Lastly, the report found that in taking on these offshore wind energy projects, the state will be able to create jobs — in the construction of the offshore wind energy projects and in the maintenance of the projects, and in new industries.
From a University educational perspective, the project also gave coauthor Peterson a valuable hands-on research experience. Peterson said that working on this project and connecting with Kempton helped her realize that she wants to work in the wind energy sector in the future.
“Because of this research with Dr. Kempton I fell in love with wind energy,” said Peterson. “I’m a senior right now — I’m graduating in 3 months — and this process has shown me what I want to do in my future career, where I want to fit in the industry, and what day-to-day job I want to have.”
Peterson has been accepted into a wind energy engineering graduate program that she will begin next year. She said that she would not have found that program or even thought about pursuing wind energy engineering if it hadn’t been for this experience.
In addition, helping to write and edit the paper allowed Peterson to work on her technical writing and science communication skills, which is something she is interested in exploring for a future career.
“Having to translate information about wind energy to the common reader, for someone who isn’t very knowledgeable about wind energy, was a really good exercise,” said Peterson. “I enjoy writing, understanding the engineering and being able to communicate that. I can see myself going into that field in the future, and I don’t think I would’ve found it if I didn’t have that role in this paper.”
Even though working on the project sparked a personal passion for Peterson, she and the other authors stressed that the report is a nonpartisan, factually-based study.
“My own personal interest in wind energy is separate from our overall goal to provide an impartial analysis,” said Peterson. “We wanted to give clear cost estimates, in whatever way that relates to the current market price, and to give estimates to the state in the interest of the ratepayer.”