Extremely costly offshore wind farm will start producing expensive electricity late in 2016

The Wall Street Journal reports First Offshore Wind Farm in U.S. Powers Ahead – The first offshore wind turbines in the US will start construction soon and is expected to produce electricity late next year. Located a few miles off Block Island, Rhode Island, the turbines will replace diesel as source of electricity for the 1,000 residents.

The electricity has been purchased under a contract with National Grid with starting prices above market and rates to increase 3.5% each year for the 20 year life of the contract. Cost for the residents of the island will go down because this is replacing expensive diesel that is shipped to the island.

After some background, let’s look at the construction costs per megawatt of theoretical capacity.

Electricity prices for all of the residents of Rhode Island will go up because this is such expensive electricity.

The turbines will be 3 miles off the island and will be 589 feet above the water. Expect to see them from the island.

The project will consist of 5 turbines each having the theoretical capacity of generating 6 mW. Article says the project will cost $338M. Assuming those numbers are correct gives the following costs:

• $338M – total cost as reported
• 5 – number of slice-and-dicer turbines
• $67.6M – cost per turbine
• 6 mW – theoretical capacity
• $11.3M – cost per megawatt to build turbines

In addition, utility will have to build a 20 mile long cable line under the ocean to connect the island to the mainland. Two reasons for this.

First, at those moments when the wind is blowing at the proper speed (not too slow to cut production below what the residents need and not too fast to damage the turbines and thus require the blades to be feathered) output will be more than the island residents need and will be transferred to the mainland for use on shore. Second, when electricity production suddenly stops (wind blowing either below or above acceptable parameters), the cable will be needed to bring electricity to the island.

That new undersea cable will cost $107 million. Since that is directly related to using the new turbines that construction increases the cost of the electricity. Here’s the cost for construction:

• $107 M – cost of undersea cable
• 30 mW – theoretical capacity
• $3.6 M – cost of cable to transfer in or out each mW of theoretical capacity

That puts total construction cost at a rather high amount:

• $11.3 M – cost to build turbines
• $3.6 M – cost of undersea cable
• $14.9 M – construction cost per megawatt of theoretical capacity

That is somewhere in the range of six or nine times higher than an onshore slicer-dicer-decompressor.

Remember those astronomical construction costs are driving the high electricity prices which are on a fixed 20 year contract. Don’t forget the automatic 3.5% annual increases. Consumers will be paying lots of money for a very long time.

If you haven’t yet dropped your jaw at the astronomical costs, redo the above calculations based on the 1,000 residents and estimated 485,000 annual visitors. That would give you the upfront investment per person.

Update: Just a few of the data points I’ve noticed in the last few weeks:

• $2.5M / mW – solar
• $1.6M / mW – wind
• $1.6M / mW – wind