USA - Seven Policies to Tap U.S. Offshore Wind’s $166 Billion Economic Growth and Emissions Reduction Potential
As the COVID-19 recession trudges on, governments looking for economic recovery are embracing clean energy’s potential to create near-term jobs and long-term growth – especially when pairing economic recovery goals with climate goals.
New York State, among the hardest hit by COVID-19, has doubled down on its climate commitments, announcing America’s largest-ever combined renewable energy solicitation. Offshore wind was the announcement’s centerpiece—2.5 gigawatts (GW) of 4 GW total capacity solicited. The state also committed $400 million in public and private funding for port infrastructure to support the burgeoning industry and create local jobs.
Analysts estimate offshore wind could generate $166 billion in new investment and $1.7 billion in U.S. Treasury revenue by 2022, while supporting 80,000 jobs annually by 2035. Energy Innovation research outlines how offshore wind could tap that potential to become an abundant, low-cost, zero-emission way to meet midcentury climate goals. Policymakers should strongly consider including offshore wind policies and investments in their COVID-19 recovery plans.
Offshore wind as a low-cost renewable resource
Offshore wind technology costs have dramatically declined in recent years, and the trend is expected to continue. In the U.S., power purchase agreement prices for projects commencing operation in 2020 were $224 per megawatt-hour (MWh), declining to $58/MWh for projects fully installed and operational in 2025 (note these figures include the federal investment tax credit).
Looking ahead, National Renewable Energy Laboratory analysis forecasts offshore wind’s U.S. levelized cost of energy (LCOE) will plunge to $20-$30/MWh by 2050 – a nearly 90% cost decline over 30 years!
These cost declines are driven by a gradual transition from fixed subsidy to competitive procurement, financing opportunities with the certainty of power purchase agreements and offshore renewable energy credits, supply chain improvements, and larger turbine sizes that significantly increase capacity factor.