Required Reading From Meghan Lapp: The Wind for Offshore Wind Projects Doesn’t Matter

The emperor has no clothes. It’s all a façade.

[Subscribers here will remember Meghan Lapp from her August appearance on The Energy Question podcast, where we discussed the ongoing whale death issues related to offshore wind, along with its negative impacts on the Atlantic fishing and fisheries industries. Meghan was gracious enough to share this well-researched piece with me as she prepares for upcoming congressional testimony in early December. This is a brilliant expose’ that everyone should read and absorb.]

Yes, you read that correctly. Read it again. Despite every governor, “expert”, and legislator for years along the Atlantic seaboard clamoring for “renewable energy” claiming that their state is the “Saudi Arabia of Wind”,[1] the fact is that the actual wind production doesn’t matter.

               Let’s take a look back at the New York NYSERDA RFI process for soliciting and procuring offshore wind contracts. In July 2018, NYSERDA (New York State Energy Research and Development Authority) held a “New York State Offshore Wind Standard Technical Conference and Request for Information” to introduce its methodology for selecting bids from offshore wind developers.[2] As part of the state’s Offshore Wind Standard Scoring Criteria for bids, the weighting was as follows: 70% Bid Price (primarily focused on ORECS), 20% on Economic Benefits, and 10% on Project Viability.[3] Yes, only 10% of the bid focused on Project Viability. In other words, whether or not it works is clearly not the main concern here.

               But it gets better. When you look to see how “Project Viability” is actually defined, the state lists per “The Order” of the New York Public Service Commission of what constitutes Project Viability:

“Permitting Plan and Status

Financing Plan

Developer Experience

Proposed Technology

Development and Logistics Plan

Interconnection Status

Reasonableness of Project Milestones

Community Outreach

Environmental Impact

Wind Resource Assessment”[4]

               So, only 10% of the offshore wind procurement is actually based on the viability of the project, and the very last consideration of “Project Viability” is actually the wind. If those 10 considerations of “Project Viability” were weighted equally, the wind resource would only constitute 1% of what matters to New York state when procuring these projects. But if that list is given in order of importance, the wind resource constitutes less than 1% of what NYSERDA considers important for offshore wind projects. Either way you cut it, the wind doesn’t matter for offshore wind projects, at least in New York.

               But once the Power Purchase Agreements (PPAs) are signed between a developer and a state utility, as a result of RFIs like that of NYSERDA, the fact that the projects don’t have to work is a thought of the distant past. All that matters from that point forward, at least to the federal government, is meeting the PPAs (which effectually makes the US federal government a third party to a private contract - which is an argument to take up at another time). What is important to point out is that once that PPA is signed, the federal government limits its legal and environmental review in order to uphold the state/developer PPA, which is based on nameplate capacity.[5]

In June 2022, BOEM codified what had been its practice to date, which was to reject all potential offshore wind project alternatives or restrictions that wouldn’t allow the PPA to be met, by releasing its “Process for Identifying Alternatives for Environmental Reviews of Offshore Wind Construction and Operations Plans pursuant to the National Environmental Policy Act (NEPA)”[6]- or “NEPA Standardization” document.[7] This document baked the offshore wind developer’s “primary goal(s): awarded contracts for offtake and/or the MW nameplate capacity for the proposed project” into BOEM’s Purpose and Need for federal review of the project.[8] This means that BOEM limits its federal review of the project by a pre-signed speculative contract between the developer and state utility, and refuses to consider anything that would jeopardize this PPA or the nameplate capacity of the project to even enter its scope of federal analysis.

               Let’s take a look at Sunrise Wind, a project off the coast of Rhode Island that has signed a PPA with New York for offtake.[9] BOEM- which is supposed to be critically assessing the project- states in its Purpose and Need for federal review that the project would have the “capacity to generate up to 1,034 MW of power to the New York grid and satisfy Sunrise Wind’s obligation to the New York State Energy Research and Development Authority for providing 924 MW of offshore wind energy for purchase by New York load-serving entities”.[10] Of course, BOEM probably isn’t aware that NYSERDA doesn’t care if the project actually has enough wind to fulfill this “obligation”, but I regress.

BOEM’s review of Sunrise Wind lists various “Alternatives Considered but Not Analyzed in Detail” any alternatives that are “not considered reasonable.”[11]  Reasonable is defined as ““technically and economically practical or feasible and meet the purpose and need of the proposed action.”[12]In other words, these “Alternatives Considered but Not Analyzed in Detail” were alternatives that got “screened out” by BOEM’s “NEPA Standardization” document. And any “economically feasible” alternative by definition has to meet the state/developer PPA.

One alternative that was “screened out” was to consider multiple substation locations to reduce socioeconomic impacts- but BOEM ruled it out because it would “constitute a potential breach of the agreement [NYSERDA PPA], which would be economically infeasible”.[13] Another “screened out” alternative was designed to reduce impacts to marine resources, but would create “significant increases in capital expenditures (CAPEX) and operational expenditures (OPEX)”, making the project not “economically feasible,”[14] since the PPA was already signed. Nobody told these guys that true feasibility, i.e. wind resource, doesn’t actually matter.

But this constriction of federal review to uphold developer/state PPAs isn’t new for BOEM. It has merely been BOEM’s MO ever since Vineyard Wind, its first federally approved offshore wind project. When a transit lane for navigational safety was proposed as an alternative for that project, BOEM rejected it because “Vineyard Wind stated that the combination of the technical complexities and project delay would preclude its ability to meet the current contractual obligations with Massachusetts distribution companies and, therefore, Alternative F [the transit lane] would not meet the project purpose and need”.[15]

Legality of this aside (that is a discussion for another time), let’s recap- the wind doesn’t matter to state offshore wind project procurements. But somehow those procurements define federal “feasibility” and determines federal review. Is this real life? Yes. Brought to you by U.S. state and federal governments. But wait, there’s more.

Because the wind resource doesn’t matter- and is uncontrollable- performance guarantees for offshore wind aren’t feasible either. The nameplate capacity of the projects (you know, that the PPAs are based on, and BOEM review is based on) is just another fallacy. But so is reliable output. Back in 2022, Virginia tried creating a performance guarantee for its Coastal Virginia Offshore Wind Project, owned by Dominion Energy.[16] Dominion had touted its project would operate at a 42% capacity factor of nameplate capacity. So the Virginia State Corporation Commission tried requiring a performance guarantee in which ratepayers would be held harmless if Dominion’s project fell below 42% capacity factor on a rolling three year average- from which Dominion quickly backtracked, stating the performance guarantee was “untenable” and would “prevent the project from moving forward, and the company will be forced to terminate all development and construction activities”.[17]

So, Virginia backed down. Oops.

Sweden just proved what happens you actually have performance guarantees for wind. Markbygden Ett is the largest onshore wind farm in Europe, located in Sweden and owned by China. Its electricity contract with Norwegian Hydro Energi requires that Markbygden  provide a fixed amount of electricity at a fixed price for 19 years.[18] When the wind doesn’t blow, they still have to provide the contracted amount of power, at the contracted cost, regardless of the price they pay on the electricity market to cover the shortfall. The result is that Markbygden’s forecasted expenses far exceed revenues, and the company has been experiencing large losses for several years.[19] So, nobody in the U.S. since Virginia has bothered to waste time with performance guarantees. Who needs those?

The Levelized Cost of Electricity (LCOE), while used by the US Energy Information Administration to compare and contrast the cost of various types of energy, doesn’t take the intermittency of wind into account. Obviously, the intermittency is a problem and causes rates to skyrocket if utilities are forced to continually purchase electricity on the market at any given time to make up for wind farm shortfalls- as Sweden has proven. But even without that reality factored in, the cost of offshore wind is still astronomically higher than conventional energy sources.

In a recent filing of Revolution Wind 2 with the RI Public Utilities Commission, ^[20] the developer’s own information showed that compared to a combined cycle gas plant capital cost of $1,115 per kW, the corresponding offshore wind cost of its project would be $6,249 per kW (courtesy of Allen Brooks at Energy Musings^[21]).^[22] The corresponding fixed O&M costs for natural gas were listed $64 per kW/year, and for offshore wind $129 per kW/year.^[23] Have fun with that, ratepayers.

The U.S. EIA itself estimates the total system LCOE for combined cycle natural gas plants entering service in 2027 at $39.94 per MWhr, and offshore wind at $136.51 per MWhr, except it makes this assumption for offshore wind based on a 44% capacity factor.[24] Since Dominion said a 42% capacity factor performance guarantee is “untenable” and threatened to walk away from its project if that was required, the EIA estimate is probably wrong. And think about adding intermittency costs to all that- not knowing when extra electricity will have to be purchased, how much extra, and at what price.

Another fun fact is that the bigger the wind farms get, and the more offshore wind farms are built, the less wind there is and the worse they perform. It’s called the wind wake effect. Any sailor is well familiar with this- a sailboat in front of you will steal your wind, and make your sailboat go slower if you stay behind it. It’s not rocket science.

But somehow, this escaped wind farm productivity analysis for years. In 2018, Harvard University flagged this and found that the average power density of a wind farm was up to 100 times lower than estimates by some leading energy experts because previous estimates failed to account for the wind wake effect.[25]

They found a transition to wind power would require 5 to 20 times more land than previously thought, require one third of the continental U.S. to be covered by windmills in order to meet present day U.S. electricity demand, and that since the wind would get sucked out of the air surface temperatures would rise by about 0.24 degrees Celsius, with an up to 1.5 degree Celsius increase at night.[26] (But didn’t the government say we had to transition to wind and ”renewables” to prevent a 1 degree Celsius change a hundred and fifty years from now and save us from “dangerous climate impacts”? Oh wait, they did.)[27]

When wind developer Orsted finally had to admit in 2019 that the wind wake effect reduced its estimated project outputs, its stock crashed over 7% immediately.^[28]A more recent 2022 report by ArcVera Renewables entitled “Estimating Long-Range External Wake Losses in Energy Yield and Operational Performance Assessments Using the WRF Wind Farm Parameterization” specifically analyzed the potential for large project to project wake impacts for offshore wind leases off NY and NJ, resulting in simulations depicting wind speed deficits of 7% up to 100 km away from the wind facility, with a 28.9% loss of wind at the wind farm itself.[29]

Good thing that doesn’t stop BOEM from leasing more and more offshore wind areas. And good thing there are no performance guarantees since the more giant projects get built next to each other the worse each project’s performance will get. And did I forget to mention that at least one analysis has come to the conclusion that an offshore wind project’s output decreases by an average of 4.5% every year anyway?^[30]

Yeah, there’s that.

To put in perspective the reality of how much real estate in the ocean we are talking about and would be required to do what the state governments and BOEM are “mandating” through state offshore wind goals/legislation and Executive Orders/Administration goals, combine all of the above with what’s already going on.

Currently, BOEM has leased an area off the coasts of Massachusetts and Rhode Island that covers an area bigger than the state of Rhode Island itself. [31] There are over 25 leases/projects off the East Coast.[32] New York has said that even though its current minimum “mandate” is to have 9 GW of offshore wind by 2035, that to fully achieve its self-imposed Climate Act mandate, it will need up to 18 GW of offshore wind and is now looking to acquire leases from an area covering from off the coast of NJ to off of Cape Cod, out to well over 100 miles from shore, for itself alone.[33]

Just about every state on the East Coast has set their own corresponding “offshore wind energy goals” – NJ wants 11 GW,[34] MA/RI/CT are jointly seeking proposals for up to 6 GW in 2024 although state goals are higher (MA alone legislatively mandated itself to achieve 5.6 GW),[35] the Biden Administration is pushing for 30 GW by 2030, etc.[36] If you think about how NY just came to the realization that its 9 GW goal really won’t achieve the legislation it passed, for which it actually needs double that amount, the area required for each state’s mandated offshore wind gets bigger and bigger, and the power output would get less and less. (Not that the actual power output matters).

Eventually, you run out of ocean space.

Nobody has yet calculated how many thousands of square miles would be needed to achieve all the various governmental mandates/goals, but millions of acres have already been leased and continue to be leased. If you actually had to factor power output and wind wake effect into the equation, say goodbye to the entire U.S. Atlantic.

The point of all this is- the wind doesn’t matter because it CAN’T matter. If the states and feds and developers actually had to be accountable for the fact that the projects don’t work because the wind doesn’t always blow or that the more they build the less they produce- offshore wind wouldn’t get built.

Bottom line is- offshore wind doesn’t work. It’s not designed to work, or to be economically feasible in real life. It’s a giant Ponzi scheme wholly dependent on government subsidies and political “climate change” brownie points.

The idea is- build and get massive subsidies. Then sell off the wind farms via “farmdowns” and build again to get more subsidies. When all these subsidies aren’t enough, we see the  likes of what happened recently with Sunrise Wind, Empire Wind, and Beacon Wind asking for a revision of their PPAs,[37] multiple developers complaining that the Inflation Reduction Act tax credits- which can allow for up to 50% of the capital cost of a wind project to be covered by investable tax credits from the U.S. government (above the standard 30% ITC)-[38] aren’t enough, and the governors with their hands out to Washington begging for more support to make their pet projects happen.[39]

But when you don’t have an actual product that works, and therefore has intrinsic value, to sell, eventually the road ends.

The emperor has no clothes. It’s all a façade. That is all.

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[1] See Offshore wind has arrived in Massachusetts (wcvb.com), Climate change: Finding common ground for fishing, wind industries (southcoasttoday.com); RI CRMC Wind Energy; Revolution Wind offshore wind project construction starts in Port of Providence (providencejournal.com); Connecticut can be the Saudi Arabia of wind power. (governing.com); A big win to come with big wind port | Letters - nj.com; East Coast is Saudi Arabia of wind power | Cape Gazette; New York Harbor and Wind Energy: Back to the Future | Crain's New York Business (crainsnewyork.com); (hey not to mention North Dakota : 'Saudi Arabia of Wind' Has Trouble Figuring Out How to Get the Power Out - NYTimes.com and the UK: UK can be 'Saudi Arabia of wind power' - PM - BBC News – don’t want to leave anyone out, you know).

[2] Announcements and Events - NYSERDA.

[3] https://www.nyserda.ny.gov/-/media/Project/Nyserda/Files/Programs/Offshore-Wind/OSW-RFI-Tech-Conference.pdf,  Slide 9.

[4] https://www.nyserda.ny.gov/-/media/Project/Nyserda/Files/Programs/Offshore-Wind/OSW-RFI-Tech-Conference.pdf , Slide 50.

[5] 10617250 (comacloud.net), Page 5.

[6]  https://www.boem.gov/sites/default/files/documents/renewable-energy/BOEM%20COP%20EIS%20Alternatives-2022-06-22.pdf.

[7] https://www.boem.gov/newsroom/notes-stakeholders/boem-standardizes-process-environmental-reviews-offshore-wind.

[8] https://www.boem.gov/sites/default/files/documents/renewable-energy/BOEM%20COP%20EIS%20Alternatives-2022-06-22.pdf, Page 3.

[9] About the Project | Sunrise Wind (sunrisewindny.com) and Sunrise Wind | Bureau of Ocean Energy Management (boem.gov).

[10] Draft Environmental Impact Statement for the Sunrise Wind Project; Volume 1 (boem.gov), page ES-ii.

[11] Draft Environmental Impact Statement for the Sunrise Wind Project; Volume 1 (boem.gov), Page 2-36.

[12] Ibid.

[13] Draft Environmental Impact Statement for the Sunrise Wind Project; Volume 1 (boem.gov), Page 2-38.

[14] Draft Environmental Impact Statement for the Sunrise Wind Project; Volume 1 (boem.gov), 2-39.

[15] Record of Decision for Vineyard Wind 1 Signed (boem.gov), Page 25.

[16] https://www.virginiamercury.com/2022/10/10/dominion-wants-offshore-wind-profits-but-performance-metrics-not-so-much/.

[17] https://www.utilitydive.com/news/dominion-offshore-wind-performance-standard/630397/.

[18] Markbygden Ett applies for reconstruction (di.se).

[19] Markbygden Ett applies for reconstruction (di.se)

[20] Docket No. 23-32-EL | RIPUC

[21]

[22] 2332-RIEnergy-OSW-Ord24973_11-2-23.pdf, p. 898.

[23] ^[23] 2332-RIEnergy-OSW-Ord24973_11-2-23.pdf, p. 898.

[24] Levelized Costs of New Generation Resources in the Annual Energy Outlook 2022 (eia.gov), Table 1b, Page 9.

[25] https://news.harvard.edu/gazette/story/2018/10/large-scale-wind-power-has-its-down-side/.

[26] https://news.harvard.edu/gazette/story/2018/10/large-scale-wind-power-has-its-down-side/.

[27] https://www.climate.gov/news-features/climate-qa/global-warming-18%C2%B0-f-1%C2%B0-c-seems-small-so-why-change-global-temperature; FACT SHEET: President Biden’s Executive Actions on Climate to Address Extreme Heat and Boost Offshore Wind | The White House.

[28] https://www.greentechmedia.com/articles/read/orsted-warns-industry-not-to-ignore-forecast-downgrades; https://www.power-technology.com/features/will-blockage-and-wake-effects-hinder-the-uks-offshore-wind-target/?cf-view.

[29] Stoelinga et. al., “Estimating Long-Range External Wake Losses in Energy Yield and Operational Performance Assessments Using the WRF Wind Farm Parameterization”, ArcVera Renewables, 2022. 

[30] https://manhattan.institute/article/out-to-sea-the-dismal-economics-of-offshore-wind.

[31] https://www.boem.gov/sites/default/files/documents/renewable-energy/Outer%20Continental%20Shelf%20Renewable%20Energy%20Leases%20January%202023b.pdf.

[32] https://www.boem.gov/sites/default/files/documents/renewable-energy/Outer%20Continental%20Shelf%20Renewable%20Energy%20Leases%20January%202023b.pdf.

[33] https://static1.squarespace.com/static/511cdc7fe4b00307a2628ac6/t/651c3e0ae231ab07e66c3f4e/1696349709206/6b-wind-NYSERDA.pdf.

[34] https://www.nj.gov/bpu/newsroom/2022/approved/20221206.html

[35] https://renewablesnow.com/news/massachusetts-adopts-56-gw-offshore-wind-goal-with-new-law-794698/; https://renewablesnow.com/news/rhode-island-launches-12-gw-solicitation-for-offshore-wind-836776/.

[36] https://www.whitehouse.gov/briefing-room/statements-releases/2021/03/29/fact-sheet-biden-administration-jumpstarts-offshore-wind-energy-projects-to-create-jobs/.

[37] New York's contracted offshore wind projects seek 48% higher price (renewablesnow.com)

[38] 14,700 miles of coastal energy communities: A tax credit boon for offshore wind | S&P Global Market Intelligence (spglobal.com).

[39] Governors-Offshore-Wind-Letter_ACP.pdf (cleanpower.org).