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HOW DO OFFSHORE WIND FARMS COMPARE TO OTHER RENEWABLE ENERGY SOURCES IN TERMS OF COST

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Offshore wind farms have higher upfront capital costs for development and construction compared to many other renewable technologies due to the associated marine infrastructure requirements such as specialist installation vessels, foundations, underwater cables, and high voltage transmission connections to shore. The specialized heavy-duty turbines also have higher price tags than solar panels or simpler onshore wind turbines. Offshore locations allow the use of larger and more efficient wind turbines that can fully take advantage of the stronger and more consistent winds available out at sea.

A recent report from the International Renewable Energy Agency estimated the levelized cost of energy from offshore wind farms constructed in 2020 to range between $53-84 per MWh compared to just $32-42 per MWh for onshore wind, $36-46 per MWh for solar photovoltaic, $15-30 per MWh for hydropower, and $12-15 per MWh for geothermal energy. The costs of offshore wind have been steadily declining as the technology scales up and larger more efficient turbines are deployed in deeper waters further from shore where wind resources are better. Some recent auctions and power purchase agreements have come in well below $50 per MWh even for projects to be installed in the early 2020s.

As the technology matures and supply chains develop the costs are expected to continue falling significantly. Blooomberg New Energy Finance predicts that by 2030 the costs of electricity from offshore wind could drop below $40 per MWh on average globally and potentially below $30 per MWh in the most competitive markets like parts of Northern Europe and Asia. This would make offshore wind cost competitive even without subsidies in many locations compared to new gas-fired generation. Offshore wind is also projected to decline faster in price than any other major renewable energy source over the next decade according to most analysts.

In addition to lower operating costs over time, offshore wind farms have a major advantage over many other renewables in their more consistent year-round generation profiles with output peaking during winter months when electricity demand is highest. Output is also more predictable than solar due to capacity factors averaging over 40-50% compared to just 15-25% for photovoltaics. The steady offshore winds mean generation matches energy demand profiles better than intermittent solar or seasonal hydropower resources without costly grid-scale battery storage.

Reliable round-the-clock energy from offshore wind coupled with growing abilities to forecast weather patterns days in advance allows power grid operators to effectively integrate significantly larger shares of this clean generation into electricity systems than highly variable solar and maintain higher standards of grid stability and reliability. Offshore sites have fewer space constraints than land-based projects and can potentially be located near heavily populated coastal load centers in markets like Europe and East Asia to minimize transmission expenses.

Offshore wind projects require an extensive multi-year development and construction process unlike the quicker installation timelines for solar farms. This means higher upfront financing costs and risks that get priced into the initial levelized costs per kilowatt-hour calculations compared to less capital-intensive onshore renewables with simpler development procedures. Challenging offshore conditions and geotechnical uncertainties also introduce construction difficulties and greater risks of delays and cost overruns versus land-based facilities. Accessing deepwater locations further from shore for the best wind resources also increases complexities and costs.

Overall while upfront investment costs are higher, offshore wind power is projected to become significantly more cost competitive by the end of this decade as technology improves, supply chains scale, and multi-gigawatt projects are deployed. Key advantages in capacity factors, grid integration, and location attributes position it favorably versus alternatives like utility-scale solar photovoltaic and seasonal hydropower resources especially in coastal markets with strong energy demand like in Europe and parts of East Asia. With power purchase costs likely falling below $50 per MWh at many auctioned projects by 2025, offshore wind will establish itself as one of the lowest-cost renewable energy sources for leveraging oceans to help transition electricity grids to carbon-free systems in the decades ahead.

CAN YOU PROVIDE MORE INFORMATION ON THE ECONOMIC BENEFITS OF OFFSHORE WIND FARMS

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Offshore wind energy development brings numerous economic advantages to local economies. When constructed, operated, and maintained properly, offshore wind farms serve as long-term economic engines that provide widespread benefits.

Job creation is one of the biggest economic advantages of offshore wind. All phases of an offshore wind project – from development and construction to operations and maintenance – require many skilled jobs across various industries. It is estimated that one gigawatt of offshore wind capacity supports over 3,000 jobs. During construction, offshore wind farms employ engineers, electricians, crane operators, steelworkers, vessel crews, and many others. Significant port infrastructure investments are often needed to support manufacturing, assembly, and deployment of offshore wind components. These port upgrades also spur additional local jobs.

Once operational, offshore wind farms rely on specialized technical jobs to carry out maintenance and repairs. Wind turbine technicians and vessel crews are needed to access turbines offshore to perform regular checks and any needed service work. Crew transfer vessel captains and crew are in high demand. Workers are also required in onshore operations and maintenance facilities to manage logistics and coordinate service activities. Over the 25-30 year lifespan of offshore wind projects, these long-term operations and maintenance jobs provide stable employment opportunities for coastal communities.

In addition to jobs, offshore wind energy produces substantial economic output through the local spending of wages by project developers and suppliers. A large portion of the capital costs associated with developing, constructing, and servicing offshore wind farms ends up spurring additional business across many industries. Engineering firms, steel fabricators, heavy manufacturers, vessel operators, and service providers all benefit economically through work on offshore wind projects. Local businesses that provide goods and services to offshore wind workers see an increase in customers and revenues as well. Indirect and induced economic impacts ripple throughout the supply chain.

Communities that host offshore wind energy manufacturing, assembly, operations, and maintenance facilities become magnets for investment and new businesses. Suppliers are drawn to locate near major offshore wind centers to be close to customers and reduce transportation costs. Port upgrades and new energy infrastructure made valuable by offshore wind also increase land and real estate values in strategic coastal locations. Communities gain significant tax revenues over multi-decade project lifetimes from property taxes on new energy infrastructure and taxes on increased economic activity and local spending. Some states have also introduced offshore wind tax credits to support local manufacturing jobs.

Once the turbines are installed, offshore wind farms produce low-cost renewable energy for local consumers and businesses. The long-term price stability of offshore wind power helps provide energy security and protects against fossil fuel price volatility. As more markets adopt ambitious offshore wind energy targets as a means to reduce emissions and strengthen energy independence, growth will continue for many decades to come. From thousands of supply chain jobs and investments in new infrastructure to new tax revenues and affordable clean energy, offshore wind farms deliver transformative economic impacts for coastal communities. With a skilled local workforce and supportive policies and supply chain, the emerging offshore wind industry represents a huge opportunity for long-lasting economic development.

The construction and operation of offshore wind power brings job opportunities, increases in economic output, supply chain investments, real estate growth, tax revenues, and affordable electricity to coastal regions. These direct, indirect, and induced economic advantages serve as engines to diversify coastal economies and open new markets over multi-decade project lifetimes. With costs declining and targets increasing around the world, offshore wind is primed to spur huge economic development along strategic coastlines for many years to come. Communities that prepare their ports, workforce, and businesses will be best positioned to capture this growing offshore wind opportunity.