H/T to Charles the Moderator for updating my “No Schist Sherlock” image!
Guest “No Schist Sherlock” by David Middleton
First offshore wind auction in Gulf of Mexico attracts one winning bid
Lease sale results show meager interest in wind energy development in US GoM.
Aug. 29, 2023
Offshore staff
WASHINGTON, DC & NEW ORLEANS – The Biden administration’s first-ever auction of offshore wind development rights in the Gulf of Mexico ended with a single $5.6-million winning bid on Tuesday, reflecting meager demand for the clean energy source in a region known for its oil and gas production.
Germany’s RWE won rights to 102,480 acres (41,472 hectares) off Louisiana for $5.6 million…
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The company said that the lease area has the potential to host up to 2 GW of new capacity…
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RWE said the Louisiana lease was attractive because the state has strong existing coastal port and supply chain infrastructure and a goal to install 5 gigawatts of offshore wind capacity by 2035.
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The Gulf’s lower wind speeds, soft soils and hurricanes are potential challenges to the industry. The Southeast also has low power prices that could make it harder for higher-cost offshore wind generation to compete for electricity contracts.
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Power Density: Offshore Wind Loses
The company said that the lease area has the potential to host up to 2 GW of new capacity…
2 GW on 102,480 acres… 51,240 acres per GW.
Entergy Louisiana’s Lake Charles Power Station is a 994 MW (~1 GW) combined-cycle power plant in Westlake, Calcasieu Parish, near Lake Charles. The power plant occupies an area of about 100 acres.
- Lake Charles Power Station: 100 acres per GW
- Lake Charles Offshore Wind: 51,240 acres per GW
Capacity Factor: Offshore Wind Loses
The Lake Charles Power Station is almost brand new. It went into operation in March 2020. It cost $872 million ($0.87/MW), including transmission and other related costs. Since entering service, it’s operational capacity factor has averaged 62% (30-40% during low demand periods and 75-85% during high demand periods).
The generic capacity factor for offshore wind is estimated to be 44%. Of course, this isn’t driven by demand. It’s literally driven by the wind. In the Gulf of Mexico there are generally two types of wind: 1) light breezes and 2) hurricanes. 44% might not be achievable in the Gulf.
Cost to Consumers: Offshore Wind SUCKS!
The total levelized cost (including subsidies) for offshore wind is estimated to be $105.38/MWh, almost triple that of natural gas combined cycle.
Since commencing operations in March 2020 the Lake Charles Power Station has generated 17,460,512 MWh (March 2020 through May 2023). After three years of service, the capital cost is already down to $50/MWh and it is expected to remain in operation for 27 more years. On the other hand, the levelized capital cost of an offshore wind farm is expected to be over $100/MWh… at the end of its anticipated 30-yr lifespan, assuming it averages a 44% capacity factor.
And people are surprised that the Gulf of Mexico wind power lease sale failed to generate much interest? I wasn’t surprised: The Texas Offshore Wind Fable.