Earlier this year, the California Coastal Commission released a report titled “Statewide Strategy for the Coexistence of California Fishing Communities and Offshore Wind Energy.” In addition to providing a “guiding framework” to protect California’s fishing communities, it “presents a roadmap for proposed offshore wind projects to become consistent with California’s relevant Coastal Act policies that recognize and protect marine resources.”
Before considering the immensity of that challenge, let’s review the projected total financing cost per kilowatt-hour for floating offshore wind installations.
According to the National Renewable Energy Laboratory, the cost to procure and install floating offshore wind is $7,349 per kilowatt of capacity. It is cited on pages 7, 40, and 43 in the NREL publication “NREL Cost of Wind Energy Review: 2024 Edition.” This cost is based on economies of scale, insofar as the NREL report is specifically evaluating costs for the “Pacific Coast floating project,” assuming 12 megawatt turbines.
California’s official state goal for floating offshore wind is to develop 25 gigawatts of capacity. That equals a construction cost of $184 billion dollars. Add to that the California Energy Commission’s estimate of $12 billion to construct and upgrade ports and staging areas, and, from the California Independent System Operator, $36.5 billion to install the required new transmission lines, substations, and grid interconnections. Finally, an absolute best case scenario for the necessary battery storage to achieve baseload power, based on NREL data, is another $16 billion.
Altogether, the total project cost for California’s planned offshore wind developments is $248 billion, or not quite $10 billion per gigawatt of capacity. The financing cost for this sum at 4 percent interest and a 20 year term is $18.3 billion per year. If we assume a 40 percent yield for these intermittent sources of energy (that’s optimistic, when onshore wind farm yields are closer to 25 percent), the completed project will produce 10 gigawatts of baseload power, which is equal to 87,600 gigawatt-hours per year. That is 87.6 billion kilowatt-hours, generated at an annual project financing cost of $18.3 billion, and that’s equal to $0.21 per kilowatt-hour. This is a best case wholesale price, before construction cost overruns, ongoing costs for operations and maintenance, and retail markups (adding about $0.20/kWh) to cover distribution, utility overhead, and regulatory charges.
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