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The Cost of Offshore Wind vs. Carbon Sequestration

Edward Ring

Director, Water and Energy Policy

Edward Ring
March 27, 2024

The Cost of Offshore Wind vs. Carbon Sequestration

The California Energy Commission (CEC) has set planning goals for floating offshore wind turbines, calling for between 2 and 5 gigawatts of “nameplate capacity” operating by 2030, and 25 gigawatts by 2045. Note “floating.” Unlike off the East Coast, or the North Sea, deep waters in California lie immediately offshore. So offshore wind in California aims to do at scale what has never been done before – deploy floating wind turbines 20 miles offshore, in 4,000 feet of water, to generate these gigawatts of electricity and send it ashore.

How much will this cost?

Don’t expect much from the CEC’s 65 page, 26,000 word report, “Offshore Wind Energy Development off the California Coast,” issued in August 2022. Searching this PDF file for dollar signs turned up just 27 hits. In the Executive Summary, regarding costs, we get this: “Resource portfolio modeling completed for the 2021 SB 100 Joint Agency Report included a range of scenarios and technologies… The estimated total resource cost of the Core Scenario in 2045 is $66 billion.”

Turning to the “2021 SB 100 Joint Agency Report, Achieving 100 Percent Clean Electricity in California,” the diligent sleuth is invited to peruse the voluminous full report, or the summary, to track down any straightforward disclosure of construction cost to build this stuff. But never mind, because herewith is evidence that constructing 25 gigawatts of capacity will cost far more than $66 billion.

To estimate the cost for this project, we may turn to a document produced in 2021 by a consortium of some of the biggest offshore wind developers in the world titled “Guide to a Floating Offshore Wind Farm.” Within this report there is a chart of “Wind Farm Costs” with over 70 line items specifically called out, each one showing construction costs per megawatt.

To assess the credibility of this report, let’s consider a few facts before going further. The report is produced by BVG Associates, with offices in London, Glasgow, and Trondheim. They are renewable energy consultants with clients around the world. It is unlikely they will be overstating their cost estimates. We also know that since 2021, costs for offshore wind have gone up considerably. And we know that in California, not only are the challenges of floating offshore wind greater than usual because of the plan to float them in waters 4,000 feet deep and 20 miles offshore, but also because in California everything costs more to construct.

So based on BVG’s cost data, here is what is likely to be a best case estimate of what it would cost to install floating offshore wind turbines with 25 gigawatts of nameplate capacity. The construction costs per megawatt of capacity (in 2023 dollars) summarize as follows: $231,953 for “development and project management,” $2,010,261 for the wind turbine, $2,628,802 for the “balance of plant,” and $572,151 for installation and commissioning. That’s $5,443,167 per megawatt. Accordingly, to construct 25,000 megawatts (25 gigawatts) of offshore wind nameplate capacity, Californians will have to spend $136 billion. Add to that price estimate the billions necessary to build massive new transmission lines and gigawatts of new battery storage. A total project cost of “only” $150 billion would be an extraordinary achievement. Recent industry experience is not promising.

In just the last year, offshore wind developers have experienced cost overruns and had to abandon or resubmit bids on major projects along the U.S. East Coast as well as in the North Sea. Headlines from late last year and so far in 2024 tell a dismal story: “Wind Warning: Equinor, BP seek 54% hike in US offshore wind power price,” “U.S. Offshore Wind Projects Hit by Surging Costs,” “Another Offshore Wind Project Terminated Off Coast of New Jersey and New York,” “Offshore Wind in U.S. Is Fundamentally Broken,” “Equinor Abandons Offshore Wind Projects in Ireland,” and “Equinor calls halt to North Sea Trollvind project.”

If anyone, anywhere, wants to bet that 25 gigawatts of generating capacity can be realized in California — through the construction of giant floating wind turbines, onshore battery farms, and thousands of miles of high-voltage transmission lines both underwater and on land—for a total project construction cost of $150 billion, I’ll take that bet and give you odds. It is more likely the total project cost will soar beyond $300 billion. This is California, after all.

As for the amount of electricity we can expect from currently planned floating offshore wind in California, bear in mind “nameplate capacity” is not the same as “yield.” Even out in the windy open ocean these turbines are only expected to be turning 40-45 percent of the time. Also taking into account occasional downtime for maintenance, a 25 gigawatt capacity will only equate to 10 gigawatts of total power input to California’s grid, or 87,600 gigawatt-hours per year. For comparison, in 2022, Californians consumed a reported 287,220 gigawatt-hours of electricity. If California goes all-electric, which is the plan, electricity consumption will need to triple.

Here’s a prediction: Because floating offshore wind energy will prove to be prohibitively expensive, it will never provide more than a minute fraction of California’s electricity needs, but not before what does get built will make a grotesque mess of a coastline and coastal waters that state regulators have heretofore considered sacred.

Instead, why not just retrofit California’s natural gas powered electricity generating plants to capture and store their CO2 emissions underground? Based on data from the U.S. Dept. of Energy, these conversions would cost $44 billion (ref. WC #35). As it is, these plants produced 96,457 gigawatt-hours in 2022, fully 50 percent of California’s total in-state production. But for the most part, because of their allegedly dangerous emissions, they were only operated at 28 percent of their capacity, and only ran when solar and wind generated electricity was not available. If these plants were permitted to run at full capacity, they could have generated 345,573 gigawatt-hours, an increase of 249,116 gigawatt-hours.

If you were responsible for California’s economic health, which option would you choose?

(1) Retrofit California’s entire fleet of natural gas powered electricity generating plants to sequester their CO2 at a cost of $44 billion, in order to increase California’s in-state electricity generating capacity by 249,116 gigawatt-hours ($176,625 per gigawatt-hour), or,

(2) Install thousands of floating offshore wind turbines at a cost of $150 billion, plus the requisite new transmission lines and battery farms, in order to increase California’s in-state electricity generating capacity by 87,600 gigawatt-hours ($1,712,329 per gigawatt-hour).

While pondering this choice, think about which option is more likely to experience cost-overruns. It’s fair to expect both of these projects to end up with unanticipated costs. After all, this is California. But the engineering challenges inherent in CO2 sequestration are far better understood. And as it is, these baseline estimates of construction cost per gigawatt-hour show powerplant retrofits will cost less than one-tenth as much as floating offshore wind, which hasn’t even been prototyped at the scale and under the conditions being planned for California.

We may think whatever we wish regarding the necessity to engage in carbon sequestration schemes, but like offshore wind, it addresses the concerns of the climate lobby. California’s energy strategists need to think carefully before they take even one step further on offshore wind’s voyage into environmental desecration and financial oblivion.

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