Limitations of Offshore Wind

by Ellen R. Wald, Ph.D.

Key takeaways

  • Despite ambitious goals, renewable energies like offshore wind cannot fully replace the baseload power provided by fossil fuels due to inherent limitations in reliability and energy output.

  • The economic viability of offshore wind projects is under scrutiny, with significant projects being abandoned due to insurmountable costs, rising interest rates, and regulatory challenges, highlighting the financial risks associated with transitioning to renewable energy sources.

  • Large offshore wind turbines, in particular, face high failure rates and maintenance challenges, undermining these projects' efficiency and long-term sustainability.

  • There is a disconnect between the optimistic promotion of offshore wind power and its practical capabilities, leading to policy decisions and investments that may not align with realistic energy production and economic outcomes.

  • There is a real need for a more balanced approach to energy policy that acknowledges the role of renewables without overlooking the reliability and economic advantages of traditional energy sources.

Energy transition is rooted in the idea that renewable energy will replace fossil fuels as a source of baseload power. The benefits of renewables are often touted to the public in ways that obfuscate the drawbacks or presume technological strides that haven’t come to fruition and might never. The truth is that renewable energy, even when paired with battery storage, cannot meet the energy demand currently met by fossil fuels.

Renewables have a place in our energy ecosystem, but we must be realistic about the power they can and cannot deliver and deploy them where they best fit the energy mix and make financial sense. A prime example of this is the case of offshore wind power.

Governors up and down the Atlantic coast have been promoting offshore wind farms as the key to replacing fossil fuel-generated power with renewables. The Biden administration has set a goal of building 30 gigawatts (GW) of offshore wind capacity along the Atlantic coast by 2030, is approving permits for windfarms at a record pace, and has made $72 million in federal funding available for various wind energy projects.

There are currently 17 proposed wind farms in various stages of development on the outer continental shelf of the Atlantic Ocean that have secured wind energy leases from the Bureau of Ocean Energy Management (BOEM). The state governments of Massachusetts, Connecticut, Rhode Island, New York, New Jersey, Maryland, and North Carolina have all promoted these wind farms as “pivotal” to replacing fossil fuels and nuclear power with renewable energy.

But the reality is that none of these projects, if ever built, will be able to replace even a megawatt (MW) of energy from natural gas, coal, or nuclear power plants.

Offshore wind looks promising on paper. European countries have already installed miles and miles of wind turbines in their continental waters. In some countries, offshore wind power capacity is a noteworthy contribution to the overall power capacity mix.

The United Kingdom, for example, has particularly good geography and atmospheric conditions for offshore wind and currently has the capacity to generate up to 13 GW of energy from 50 wind farms.

It is the world leader in offshore wind power generation and is home to the world’s largest offshore wind farm. A 2022 analysis boasted that UK offshore wind power hit a record-low price and was nine times cheaper than gas. The National Grid website touts that offshore wind power is critical to “achieving net zero greenhouse gas emissions.” Yet this select example is deceptive.

Cherry-picked headlines and data points like this paint a rosy picture for offshore wind and feed consumer hopes that offshore wind farms can reduce greenhouse gas emissions and replace legacy fuels with comparable costs and reliability.

However, offshore wind energy rarely delivers to its maximum designed capacity, is especially unreliable, requires significant maintenance, and is much more costly than advertised.

As states along the Atlantic seaboard embark on offshore wind projects, consumers and policymakers should understand that these projects will not deliver the amount of electricity at the promised prices. Offshore wind farms in the Atlantic have been billed as better than onshore wind farms because they do not disturb residential or commercial life. The wind offshore is stronger and more consistent than the wind on land. Offshore wind turbines can be much larger than those on land and, in theory, generate power more efficiently, so even though the upfront installation costs are much higher, power generation costs can be lower.

Other costs do exist at sea. It is true that offshore windfarms, especially those far out at sea, do not disturb life on land, but they do disrupt the fishing industry and could disrupt marine life. Offshore wind farms must be connected to the power grid. This requires longer and more extensive transmission lines for offshore wind farms that are far enough out in the Atlantic that they will not present a visual disturbance to those on land. These lines are more expensive to install and require more extensive maintenance.

The offshore wind farms in the Atlantic are being built using the largest wind turbines to date—with the capacity to generate 12 or more MW of energy. Theoretically, these wind turbines should be more efficient power producers.

However, a recent study of wind turbines in Denmark revealed that bigger wind turbines are not better. Offshore wind turbines with capacities between two and eight megawatts break down and experience much higher failure rates than smaller turbines (1-2 MW capacity).

Approximately 80% of offshore wind turbines failed or suffered a serious breakdown within the first eight years of operation. Onshore wind turbines, which are necessarily smaller, only break down at a rate of 20%. Larger turbines, like the 12+ MW turbines that are to be installed in wind farms in the Atlantic, are expected to break down at higher rates and, because they are far out at sea and extremely large, will cost more and take longer to repair or replace.

Looking at long timelines reveals further problems. By its sixteenth year of operation, an offshore wind farm can only provide 50% of the power it had the capacity to generate in its first year of operation. At this point, it becomes economically unfeasible to maintain the wind farm.

The energy reliability and economic disparity are stark when compared with the reliability of nuclear power and the cost and availability of natural gas. A nuclear power plant, once operational, provides power at a consistent rate at all times of the day. A fossil fuel power plant (coal, oil, or natural gas) can be scaled up or down depending on the availability of fuel or the demand for electricity.

Offshore wind farms cannot provide consistent power, nor can the power they provide be scaled up or down based on demand. Nuclear and fossil fuel power plants are also financially feasible to maintain for much longer than 16 years, even with regular repair.

Several prominent offshore wind companies that bid for and won contracts to build offshore wind farms in the Atlantic recently withdrew from their contracts because they’ve calculated the projects are not financially feasible. Orsted, a Danish company with a great deal of experience building and operating offshore wind farms, pulled out of two large offshore wind projects in New Jersey, claiming the projects were no longer viable due to rising costs and higher interest rates.

BP and Equinor also pulled out of their contracts to build a wind farm off the coast of Long Island, New York, after the state denied the companies’ request to raise the rate they would be paid for the power produced. These companies calculated that the offshore wind project was so financially untenable that it was worth losing the $6.3 million in “contract security” they paid New York state and the time and money they already devoted to securing federal leases and permits.

An Orsted offshore wind farm near Nysted, Denmark. Source Tom Little/Reuters, via New York Times

These developments reveal that although policymakers and consumers may be unaware or unwilling to admit that offshore wind is financially untenable, the companies involved understand these projects cannot achieve economic viability.

If 3 GW of offshore wind capacity cannot even get off the ground on the east coast of the United States, it is even more unlikely that offshore wind can play a role in reducing fossil fuel demand. Even if New Jersey and New York managed to find new companies to build the 3 GW of offshore wind capacity, the wind farms would only provide an average of 1.5 GW of electricity. This is only enough power to satisfy the demand from 1.3 million households, assuming the wind farms continuously produce 1.5 GW of electricity, which they will not.

To put this in perspective, the entire East Coast of the United States consumes about 1,264,000 gigawatt hours (GWh) of electricity annually. In other words, these offshore wind projects might be able to satisfy 0.00012% of the electricity demand of the entire East Coast.

Still, had material and labor costs and interest rates not increased, large-scale offshore wind farms would still face insolvency past the 16-year mark. Now that inflation has increased material and labor costs and higher interest rates have made it harder and less financially attractive to access capital, companies cannot justify building offshore wind farms that will not be financially viable, even though it means losing money already spent on the projects.

Consumers and policymakers should not vilify these companies or malign their “credibility and competence” as New Jersey Governor Phil Murphy did after Orsted canceled Ocean Wind I and Ocean Wind II. Policymakers should understand that these projects are not efficient energy producers and are not financially viable for taxpayers.

There are instances where offshore wind power does make sense. For example, the first offshore wind farm in the United States was constructed off of Block Island, Rhode Island. This project includes five wind turbines that can produce 6 MW each. The power purchase agreement with the utility company specified that the utility company would purchase the electricity generated for $245/MWh the first year, and the price would increase by 3.5% each year after that. These rates are significantly higher than New England's average wholesale price of electricity.

However, offshore wind power made sense for Block Island residents at these prices because they had previously depended on five diesel generators for power and paid exorbitant prices for diesel fuel.

Even now, Block Island doesn’t rely exclusively on offshore wind for electricity. The 10-mile island also built a connection to the mainland, so when the wind farm doesn’t produce enough power, the island can access electricity produced from onshore energy sources like nuclear and natural gas plants. Likewise, any excess power from the wind farm flows into the mainland’s electrical grid.

When the alternative is costly diesel fuel, offshore wind makes sense. When the alternatives are nuclear and natural gas, offshore wind is a losing proposition.

The case of offshore wind power on the East Coast illustrates the limitations of renewable power. It simply cannot reliably produce enough power to replace legacy sources of power like nuclear and fossil fuels. Even with favorable tax exemptions and government grants and loans, companies cannot make offshore wind power financially feasible at rates that are affordable for consumers.

However, policymakers and consumers appear to be pressured into supporting projects that don’t make sense because they are presented with incorrect information about offshore wind farm performance. They mistakenly believe that an offshore wind farm will produce to its capacity continuously.

But even if the wind blew continuously, at consistent speeds, the wind turbines would break down and require total replacement in less than a decade. This is expensive and wasteful, especially in comparison to other sources of power. Renewables have a place in our energy mix, but they can never replace the reliability of nuclear and fossil fuels.

Ellen R. Wald, Ph.D., is a historian, policy expert, and business consultant. Dr. Wald is a fellow at the Canadian Global Affairs Institute, a Senior Fellow at the Atlantic Council’s Global Energy Center, the President of Transversal Consulting, and a co-founder of Washington Ivy Advisors. She is the author of “Saudi, Inc.: The Arabian Kingdom’s Pursuit of Profit and Power,” a book on the history and strategy of Aramco and Saudi Arabia.

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