Offshore Wind Energy:How much will it cost, CAN it cost?

Offshore Wind Energy:How much will it cost, CAN it cost?

George Hagerman

VCERC Director of Research Virginia Tech Advanced Research Institute900 North Glebe RoadArlington, VA 22203

Email: hagerman@vt.eduPhone: 703-387-6030

Opening Plenary Session

Virginia Offshore Wind Conference 2011

Virginia Beach, VA

22 June 2011

How much will offshore wind energy cost?

How much will offshore wind energy cost?

Is offshore wind reallythis far off the chart?

Industrialrates

U.S. Energy Information Administration Estimates Disagree with U.S. Wind Market Trends

VCERC Modeled Capital Costs Comparedwith European Project Data for Major Cost Centers

London Array I630 MW

Siemens SWT-3.6-120 Global Tech I

400 MW

Multibrid M5000

Thanet300 MW

if fabricated in Hampton Roads

Lincs270 MW

Based on MTH announced

contract value in March 2010

Lincs270 MW

Based on MTH max steel weights if

fabricated in Hampton Roads

US Projects Racing to be First are Disadvantagedby Higher Manufacturing Labor Costs in Europe

Manufacturing wage data published by U.S. Bureau of Labor Statistics on 22 Oct 2009(www.bls.gov/fls/prodsupptabletoc.htm, Table 8. Hourly compensation, U.S. dollar basis)

Cost breakdown and labor / material ratios from Dong Energy presentation dated 11 Aug 2009 (www.energirike.no/pub/56/filer/Dong%20-%20EnergiRikekonferancen%20perhp%202009.pdf)

VCERC Results Compared withRecent National Academy of Sciences Study

VCERC: ~06-07 ¢/kWh

VCERC: ~11 ¢/kWh

VCERC: ~13 ¢/kWh

VCERC: ~10-12 ¢/kWh

Coal costs now increasing; offshore wind would increase price stability of Virginia’s energy supply portfolio; see backup slides

Ratepayers Must Consider Price Stabilityand the Potential for Future Fuel Price Increases

Coal is No Longer Stably Priced

Thank You!

Any questions?

Email: hagerman@vt.edu

VCERC Offshore Wind Studies Final Report:www.vcerc.org/report.htm