U.S. Offshore Wind Prices (2018-2021)
Hines, Eric
Kates-Garnick, Barbara
2022
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Executive Summary
With the development of offshore wind (OSW) projects along the East Coast, each project will have a unique cost that its developer will aim to recover by negotiating an energy price, expressed in dollars per megawatt hour ($/MWh) for each year of the project’s commercial operation. This price will be borne by ratepayers and is of primary interest to state decision makers ... read moreevaluating the costs and benefits of competing projects. The “cost” of a project is proprietary information and cannot be known except to entities that plan, finance, and construct offshore wind projects. The “price” of a project, however, is a matter of public interest and can be gleaned directly from public documents.
When reviewed together, offshore wind prices facilitate comparisons between projects and reflect a price signal to which market participants respond. Tracking and comparing these prices assists both the public and private sectors with information relevant to decisions that will impact ratepayers over a period of years. Starting with a set of projects already approved and new projects now in the approval process, prices for offshore wind must be clear, understandable, and presented in a way that enables direct comparison between projects.
The prices discussed herein are from projects procured in Massachusetts, Rhode Island, New York, and New Jersey whose agreements for Power Purchase or Purchase of Offshore Renewable Energy Credits (ORECs) have been archived in the public record. In the paper we attempt to place these projects on a common footing by calculating and reporting their “levelized nominal price” (LNP). While the projects discussed represent approximately half of the U.S. OSW energy procured so far, we believe that their diversity provides useful information and insight regarding the emerging U.S. offshore wind market.
Offshore wind developments are large and sophisticated infrastructure projects with costs exceeding $3 Billion; long-term contracts of 20-25 years; a critical relationship to public infrastructure such as ports and transmission; the simultaneous need for state and federal involvement in permitting, contracting, and regulation; and subsidies like investment tax credits.
Since the historically low prices for Vineyard Wind 1 were published by the Commonwealth of Massachusetts in 2018, state commitments to purchase offshore wind have grown to 40,210 MW and state procurements of offshore wind power have grown by 14,427 MW.2 This report provides a comparison of publicly available offshore wind pricing for nine projects procured from 2018 to 2021 with a total rated capacity of 7458 MW. From this comparison, we estimate the levelized nominal price of U.S. offshore wind energy to be $95/MWh in 2022 dollars.
Offshore Power Research & Education Collaborative Report Number OSPRE-2022-01.read less - Hines, Eric and Barbara Kates-Garnick. (2022).U.S. Offshore Wind Prices (2018-2021). OSPRE-2022-01. Tufts University. Feb 28, 38 pp. https://doi.org/10.60965/wf48-tb73.
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