The levelised price of US offshore wind could fall to $60-$70/MWh by the late 2020s, says Bloomberg New Energy Finance, as the market reaches a critical mass of installed capacity and the local supply chain comes into its own.
Until the late 2020s, US offshore wind farms will come at a significant premium to projects of similar scale in Europe, BNEF associate Tom Harries said Thursday at the US Offshore Wind conference in Boston.
In 2022, when the first wave of large projects is coming on line in Massachusetts and Maryland, US offshore wind costs will be around $125/MWh (in 2016 dollars), Harries predicts. A couple of years later, as big projects are commissioned in New Jersey and New York, the price will fall to around $100/MWh.
But by 2028 things get really interesting, with BNEF predicting a downward step-change in US prices as the market crosses around 4GW of cumulative installed capacity.
Based on current state ambitions, BNEF expects New Jersey and New York to dominate the US offshore market in the late 2020s, although the picture could change if states like Massachusetts increase their targets or other states set ambitious targets of their own.
In the $60-$70/MWh range, offshore wind farms may “really start to cut into the power price forecast we’re seeing” for electric markets in the northeastern US, Harries told the conference.
The northeast suffers through electricity price spikes, particularly in the winter, and offshore wind “can shave off some of those peaks”, he says.
One positive sign for the US offshore market, Harries says, is the early involvement of institutional capital, in the form of Copenhagen Infrastructure Partners, winner of Massachusetts' first offshore tender through its half-ownership of Vineyard Wind.
"This is very early for a new market ... it took a long time in Europe [to bring in institutional capital]," Harries says.
"Having attractive institutional capital at such an early stage will be key in reducing the price of offshore wind in the US."