Time’s Ripe for Offshore Wind Projects

World Resources Institute Finds Offshore Wind Projects Offer Reduced Emissions and Higher Returns

At a time when the globe is turning to renewable energy to mitigate climate change and address increasing power demand, offshore wind energy projects can be a gamechanger. A report by the High-Level Panel for a Sustainable Ocean Economy, World Resources Institute, stated that offshore wind energy projects offer the right balance by cutting down emissions as well as providing higher returns over time.

The report takes into account how much it would cost to increase production of offshore wind energy to meet the energy generation potential and estimates the benefits to society from reductions in greenhouse gases and water usage.

The report stated that for every $1 invested in scaling up global offshore wind production a benefit estimated at $2–$17 will be generated depending on the cost of offshore energy production and transmission and the types of generation that would be displaced. The value of the return on investment (ROI) will increase as the costs for offshore wind energy generation fall because of improvement in technologies and actions to reduce integration costs. The benefit-cost ratio estimated for scaling up of global offshore wind production ranges from 2:1 to 17:1.

To assess the impact of an increase in offshore wind installations on greenhouse gases the authors of the report considered a scenario where offshore wind displaced the entire current generation mix. In such an eventuality, emissions would reduce by 0 .3 to 1 .61 gigatons of carbon dioxide per year in 2050.

In the report, levelized cost of electricity (LCOE) has been considered to estimate the cost of additional offshore wind energy generation. It was mentioned that the LCOE for offshore wind power has declined since 2010 due to increased capacity from new installations (the ratio between realized energy output and theoretical maximum output), declining operational and maintenance costs due to improved turbine design (as they are made more robust for the offshore environment), improved capacity factors (linked to an increase in turbine size and hub height) and reduced transmission costs.

The global weighted-average LCOE of offshore wind projects commissioned in 2018 was estimated at $127–$140 per megawatt-hour (MWh) based on the standard cost of capital representing full market risk (7% for developing countries and 7.5% – 8% for developed countries). Improved financing terms could reduce the LCOE of offshore wind, per the report.

Declining recent strike prices of offshore wind projects provide strong market signals of future cost reductions, indicating increased confidence from investors and setting the stage for low-cost financing opportunities for upcoming projects.

The time is ripe for India to tap into its offshore wind potential. Recently, the Government identified eight zones each off the coast of Gujarat and Tamil Nadu as potential offshore wind energy zones. based on mesoscale mapping, it is estimated that, approximately 36 GW offshore wind power potential exists off the coast of Gujarat and 31 GW offshore wind power potential exists off the coast of Tamil Nadu. Offshore wind power requires an offshore grid as well as expanding the onshore transmission grid; work needs to begin soon.

Other than promised higher returns, offshore wind projects also have a positive impact on human health due to very low CO2 emissions and negligible emissions of mercury, nitrogen dioxide and Sulphur dioxide, as well as its zero generation of solid or liquid waste. The report estimated that total avoided damage costs (or discounted health benefits) from transitioning to offshore renewable energy will be $0.15 – $4.4 trillion over 30 years (2020–50).

The report also estimated the benefits (discounted) of achieving offshore energy transformation through water savings alone to be $1.3 billion to $1.4 trillion over 2020–50, due to negligible utilization of water for cooling and cleaning purposes.

For a price-sensitive country like India with huge population where obtaining large tracts for land for onshore projects are a bother, offshore wind can be the gamechanger in attaining target of 450 GW renewable energy capacity by 2030.