Offshore wind represents economic opportunity for California
As offshore wind activity heats up on the East Coast, there’s also growing interest in developing floating offshore wind projects off the West Coast. While there are currently no federal wind energy leases on the West Coast, the federal government recently received interest from 14 companies to develop off California’s coast, and the Bureau of Ocean Energy Management (BOEM) plans to auction California lease areas sometime next year.
Just like the on the East Coast, developing this new ocean energy resource out West could create thousands of jobs and new manufacturing opportunities, and now a new study by Energy + Environmental Economics (E3) finds offshore wind could save Californians money as well. The report, The Economic Value of Offshore Wind Power in California, evaluates the economic opportunity of offshore wind in California, and found that building 7 to 9 gigawatts (GW) of floating offshore wind off the coast of California could save ratepayers up to $2 billion on a net present value basis by 2040.
California has some of the country’s most ambitious clean energy goals, making it a large potential market for offshore wind. The state recently committed to powering 60 percent of its electricity from renewable energy by 2030 and 100 percent from zero-emission energy sources by 2045.
Offshore wind can help California achieve its climate goals because it can deliver power directly to coastal load centers; the projects can be larger than land-based renewable energy installations; and offshore wind generates more energy in evening hours after the sun goes down.
E3 modeled various scenarios of renewable energy build out to meet California’s goals, and found that the least-cost portfolio for meeting the state’s clean energy goals would include 7,000 MW to 9,000 MW of offshore wind by 2040, with at least 3,500 MW by 2035. For reference, 7,000 MW of offshore wind is equal to roughly 10 percent of the state’s electricity needs, or enough energy to power over 4 million homes.
E3’s analysis also found that including offshore wind in the state’s energy mix would lead to ratepayer savings of approximately $1 to $2 billion on a net present value basis. The potential savings from offshore wind increase over time, with floating offshore wind becoming part of the least-cost portfolio by 2030 and growing as California’s clean energy goals ratchet up. By 2040, savings would reach approximately $150 to $190 million per year. The cost savings from offshore wind are primarily driven by offshore wind directly offsetting the need for additional solar and battery storage capacity in California (as seen in Figure 13), with each megawatt of offshore wind replacing the need for approximately 1.7 MW of solar and 1.1 MW of storage.
Ultimately, offshore wind can help diversify California’s energy mix while providing large amounts of clean energy to meet the state’s climate and clean energy goals. That’s a win-win for California families and businesses.