Cost of Offshore Wind Energy

How does offshore wind compare in price to other primary sources of energy?

Offshore wind is anticipated to be more expensive than geothermal, combined cycle-gas, onshore wind, and solar when it is introduced. By 2040, it is expected to reach parity with combined cycle-gas. [1]

What kinds of prices are projected for floating offshore wind? 

Estimates for floating offshore wind depend on calculating the levelized cost of energy. A 2021 estimate finds that offshore wind coming online in 2030 might range from $57 per megawatt-hour to $68 per MWh. [2]  Floating offshore wind will be initially more expensive than fixed-bottom offshore because of technical challenges and a less established supply chain. These prices are expected to reduce over 7-10 years. The California Public Utilities Commission (CPUC) who approves rates for electricity in California has updated these numbers for its own “integrated resource planning” using the National Renewable Energy Lab’s 2023 Annual Technology Baseline report which factors in increases in commodity prices since 2020. [3] CPUC anticipates that the first available year for offshore wind in the Morro Bay Call Area will be 2032 and 2034 for Humboldt Bay.  The CPUC predicts that energy in 2030 from the Morro Bay Wind Area in 2022 dollars will be $86/MWh. These numbers will decrease to $74/Mwh by 2040. [4]  

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Table showing offshore wind resource cost assumptions by build year
Will California be buying offshore wind for its electricity grid?

The California Public Utilities Commission who is responsible for  regulating privately owned utilities made an initial need determination under Assembly Bill 1373 (AB 1373), which gave the CPUC the ability to request the Department of Water Resources to conduct centralized procurement of renewable energy resources from a variety of long lead-time resources for California energy customers. (5) 

What incentives are there for building floating offshore wind

The Inflation Reduction Act provides for investment tax credits of 30% until at least 2032  dependent on wind developments meeting certain requirements such as providing apprenticeships. Bonus credits are also available for having domestic content as part of wind infrastructure and locating facilities in fossil-fuel powered communities or on brownfield sites. Additional per-watt manufacturing credits are available for manufacturing wind turbine blades, nacelles [central body of the turbine containing motor components], towers, foundations, and purpose-built offshore wind vessels. 

References
  1.  California Energy Commission, SB 100 Joint Agency Report: Charting a Path to a 100% Clean Energy Future (2021)
  2. Belter, P.; Musial, W.; Duffy, P. et al. The Cost of Floating Offshore Wind Energy in California between 2019 and 2032, National Renewable Energy Laboratory. https://www.nrel.gov/docs/fy21osti/77384.pdf
  3. NREL 2023 Annual Technology Baseline https://atb.nrel.gov
  4. California Public Utilities Commission, Inputs & Assumptions, 2022-2023 Integrated Resource Planning (October 2023) See Table 42, p. 66 Costs of other renewables are generally lower including the Humboldt Bay Offshore Wind that will range in 2030 from $68 MW/h in 2022 dollars to $59 MW/h in 2040.
  5. California Public Utility Commission, Proposed Decision Determining Need for Centralized Procurement of Long Lead-time Resources, https://docs.cpuc.ca.gov/PublishedDocs/Efile/G000/M536/K273/536273174.PDF