An Assessment of the Economic Potential of Offshore Wind in the U.S. from 2015 to 2030

Source/Sponsor: 
U.S. Department of Energy, National Renewable Energy Laboratory
Creator/Author: 
Philipp Bieter, Walter Musial, Levi Kilcher, Michael Maness, and Aaron Smith
Description: 
This study describes an assessment of the site-specific variation of levelized cost of energy (LCOE) and levelized avoided cost of energy (LACE) to understand the economic potential of fixed-bottom and floating offshore wind technologies in major U.S. coastal areas between 2015 and 2030.
 
LCOE alone is not sufficient to assess economic viability because it does not capture the electric system value that can be attributed to a generation source. Therefore, this analysis draws on a “simplified” version of LACE as a metric to capture the system value of a generation technology.
 
LACE varies by location because of differences in the system value of new electricity, which is determined by a range of factors, including the cost of competing generation technologies, the resource mix, demand patterns, and transmission constraints. The difference between LCOE and LACE at a given location (denoted in this report by “net value”) can help inform an initial understanding of the economic potential of a new offshore wind project at a high geospatial resolution.
 
Some general observations include:
  • Offshore wind sites with economic potential are located predominantly in the Northeast and eastern shore of Virginia
  • Across all regions, the number of sites with a positive net value (or a value close to a positive net value) increase over the time period considered
  • State policies have driven offshore wind development recently (e.g., in New York and Massachusetts); these policies may play a key role when assessing the economic viability of offshore wind but are not considered in this analysis
  • Further technology improvements are needed to achieve the cost reductions of this assessment
  • Some regions will likely require unique technology solutions (e.g., to address low wind speeds in the Gulf, icing in Great Lakes, and deep-water floating solutions in the Pacific and Hawaii)
  • The value of offshore wind to the electric grid system under some high-penetration renewable energy scenarios may not be fully represented by net value as calculated in this study. 
 
 
pdf
6 MB
Publication Date: 
Wednesday, March 1, 2017
Resource Type: 
Document
Multi-State: