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How much would the Humboldt offshore wind project cost to develop, build, and operate? Who would pay/is paying for it?

We don’t know exactly how much the proposed Humboldt offshore wind project would cost. Offshore wind, and particularly floating offshore wind, is a relatively new technology with higher costs than some other more established energy sources — as much as $133 per megawatt hour (MWh), according to a recent federal analysis (1), compared to $78 per MWh for fixed-bottom offshore wind, and $34 per MWh for land-based wind.

According to a 2022 California Offshore Wind Industry Report (2), “costs for floating offshore wind farms are on a trajectory—similar to fixed-bottom offshore wind—to continue declining, driven by advances in technology and economies of scale. Industry analysts estimate the Levelized Cost of Energy (LCOE) (3) for floating wind will drop globally below $100 per MWh by 2025 and reach a cost-competitive $40 per MWh or lower by 2050. The Department of Energy now estimates that the LCOE for offshore wind will fall to $53 per MWh (4) by 2035. In September 2022, the White House’s new Floating Offshore Wind Shot [Summit] (5) set a goal to deploy 15 [gigawatts (GW)] of floating offshore wind and accelerate cost reductions for floating technologies by more than 70% by 2035.”

A graph of U.S. Floating Offshore Wind Levelized Cost of Energy Trends, 2020-2035.

U.S. Floating Offshore Wind Levelized Cost of Energy Trends, 2020-2035.
Source: Offshore Wind California (2)

A 2023 CalMatters analysis (6) shows that the cost California’s offshore wind projects carry a host of implications and uncertainties:

  • Energy companies would need hundreds of millions of dollars in state subsidies or bonds to assist with the extreme costs of construction and operation. Each wind farm could cost about $5 billion to develop, construct and assemble.

  • Wind farms require an unprecedented industrialization of the coast, with millions in public funds to expand and upgrade ports, harbors and support facilities which would have environmental impacts.

  • Local communities would bear social costs and strains on infrastructure, such as higher housing costs and utility upgrades. 

The developers would pay for the projects with assistance from both private investments and Federal and State grants, funded by taxes and other government revenue. For example, the Humboldt Wind Energy Area (WEA) (9) lease holders (RWE [10] and Copenhagen Infrastructure Partners [11]) paid a combined $331.5 million to the U.S. Department of the Treasury through the U.S. Bureau of Ocean Energy Management (BOEM)’s December 2022 lease auction (12). And in January 2024, the Humboldt Bay Harbor, Recreation & Conservation District (Harbor District) received a $426 million INFRA grant (13) from the U.S. Department of Transportation to help develop the proposed Humboldt Bay Heavy Lift Marine Terminal Project (14) on Wigi/Humboldt Bay’s Samoa Peninsula, which is contingent (15) on raising a 50% match in funding that still must be generated. That grant estimated that the heavy lift marine terminal would cost $853,439,620 (16).
Additionally, government and philanthropic funding are supporting significant environmental studies, and developers, government funding and philanthropy are supporting Tribal and community capacities.

 

Some people are concerned that a transition to offshore wind would result in higher energy costs for ratepayers. While studies (17) have shown that the cost of offshore wind transmission could actually result in substantial savings to ratepayers, now and in the coming years, it will be important for our communities, Tribal Nations, and local governments to work with Federal and State governments to develop policy solutions that ensure savings for our local communities.

References

  1. Stehly, T. and Duffy, P. (2022, December). 2021 Cost of Wind Energy Review. National Renewable Energy Laboratory. www.nrel.gov/docs/fy23osti/84774.pdf

  2. Offshore Wind California. (2022, November). California Offshore Wind Industry Report. https://static1.squarespace.com/static/5d87dc688ef6cb38a6767f97/t/6376839f7a4e8658b412821c/1668711341831/CA+Offshore+Wind+Industries+Report+17Nov2022.pdf

  3. U.S. Department of Energy Office of Indian Energy. (2015, August). Levelized Cost of Energy (LCOE). www.energy.gov/sites/prod/files/2015/08/f25/LCOE.pdf 

  4. Energy Innovation Policy & Technology LLC. (2023, July). 2035 Offshore Wind Technical Report. https://2035report.com/offshorewind/wp-content/uploads/2023/07/GridLab_2035-Offshore-Wind-Technical-Report.pdf 

  5. U.S. Department of Energy Office of Energy Efficiency & Renewable Energy. (n.d.). Floating Offshore Wind Shot™ Summit. www.energy.gov/eere/wind/events/floating-offshore-wind-shottm-summit 

  6. Cart, J. (2023, October 16). ‘A massive enterprise’: California’s offshore wind farms are on a fast track. CalMatters. https://calmatters.org/environment/2023/10/california-offshore-wind-humboldt/ 

  7. California Independent System Operator. (2022, January 31). Draft 20-Year Transmission Outlook. www.caiso.com/InitiativeDocuments/Draft20-YearTransmissionOutlook.pdf 

  8. Gridlab. (2024). 2035 Report. www.2035report.com 

  9. U.S. Bureau of Ocean Energy Management. (n.d.). Humboldt Wind Energy Area. www.boem.gov/renewable-energy/state-activities/humboldt-wind-energy-area

  10. RWE. (2024). https://americas.rwe.com/our-energy/offshore-wind/ 

  11. Copenhagen Infrastructure Partners. (n.d.). www.cip.com/ 

  12. U.S. Department of the Interior. (2022, December 7). Biden-Harris Administration Announces Winners of California Offshore Wind Energy Auction. www.doi.gov/pressreleases/biden-harris-administration-announces-winners-california-offshore-wind-energy-auction

  13. Sims, H. (2024, January 24). (PHOTOS) The Biggest Federal Grant in Humboldt History? Huffman, Assorted Worthies Gather on Woodley Island to Celebrate $426 Million in Infrastructure Funding for Offshore Wind. Lost Coast Outpost. https://lostcoastoutpost.com/2024/jan/24/a-half-billion-for-humboldt/ 

  14. Humboldt Bay Harbor, Recreation, and Conservation District. (2024). Humboldt Bay Offshore Wind Heavy Lift Marine Terminal Project. https://humboldtbay.org/humboldt-bay-offshore-wind-heavy-lift-marine-terminal-project-3 

  15. Margaronis, S. (2024, May 17). California ports gear up to build offshore wind ports. American Journal of Transportation. www.ajot.com/insights/full/ai-california-ports-gear-up-to-build-offshore-wind-ports 

  16. Humboldt Bay Harbor, Recreation, and Conservation District. (2023, August 21). Application to Multimodal Project Discretionary Grant Opportunity (MPDG) Program Humboldt Bay Offshore Wind MVP (Minimum Viable Port) Project Description. https://humboldtbay.org/sites/humboldtbay.org/files/FY%202023-24%20MPDG%20Humboldt%20Bay%20Offshore%20Wind%20MVP%20Proposal%20Package_reducedfilesize.pdf

  17. Schatz Energy Research Center. (2024, January). Northern California and Southern Oregon Offshore Wind Transmission Study Volume 1 (Revised). https://schatzcenter.org/pubs/2023-OSW-R2.pdf

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