Northeast offshore wind power — feast or famine?

Lower costs of offshore wind energy in Europe have led to renewed interest in adapting the same technology in the United States, particularly in the Northeast region. But buyer beware — real-world offshore wind power performance and reliability may fall short of expectations.

Europe seems to have taken the lead in offshore wind development. Last year, Danish and Dutch governments contracted for offshore wind at prices between $55 and $80 per MWh with subsidies — a new low pricing paradigm for offshore wind. In April 2017, three out of four projects in Germany's clean energy auction bid $0 prices. Implying no requirement of subsidies, this is equivalent to US markets experiencing renewable energy certificate (REC) prices of $0 per MWh.

Driven by learning curve effects, financing and the industrialization of the supply chain, these cost reductions have raised interest in North American offshore wind projects, particularly in the US Northeast region (New York and New England). Since August 2016, multiple offshore wind projects have been announced in Massachusetts, Rhode Island and New York. This is also supported by state procurement targets and revenue support. While promising, our analysis forewarns states and wind developers that real-world offshore wind power performance and reliability may fall short of expectations.

Will Northeast offshore wind capacity factors be lower than expected?

Offshore wind's summer reliability and therefore capacity value is a roll of the dice. In ISO-New England, onshore wind projects show summer capacity values from 13% to 16%, with winter ranging from 25% to 28%. Given that there is little to no operating history for Northeast offshore wind farms, are the high values used in Northeast reliability planning overly optimistic of actual performance?

Although annual average performance looks good, an obvious insight from the above figure is that NYISO's assumption of high offshore wind performance during the summer is invalid. While winter months might see capacity factors of 50% or higher, the NYH average capacity factors from May through September are estimated to be well below the 38% reliability value. New York wind farms east of Long Island would average 28% in July and August. Therefore, even before looking at hourly data, it's obvious that NYISO should revise the summer offshore wind reliability value downward.

Our analysis deepens into looking at the estimated hourly capacity factors and incorporating lessons learned from March 2017's Winter Storm Stella.