Wind - Energy Policy Analysis: A Conceptual Framework - page 125

the blades, will be 258 feet tall, and the highest blade tip will be 440 feet above the surface of
the water, visible for up to twenty-six miles. The base of the wind turbine towers will be sixteen
feet in diameter, with a single pole driven eighty feet into the sandy bottom. Estimated capital
costs for the project were about $700 million, or about $1.7 million per MWe of gross generat-
ing capacity (Energy Management Inc. 2011), but have already increased to over $2.6 billion.
Of this amount, it is estimated that federal and state governments will pay about $241 million in
subsidies (Kennedy 2005).
Electric utility managers are not enthusiastic about either the cost or the reliability of offshore
wind developments, as is evident in the reluctance of NStar, the second-largest utility in Mas-
sachusetts, to commit to purchasing electric power from Cape Wind (Associated Press 2011;
Kennedy 2011). Even projecting an overly optimistic capacity factor of 37 percent availability,
this reflects the low reliability and high cost of electric power from offshore wind projects like
Cape Wind, estimated at twenty-four cents per kilowatt-hour (kWh) over fifteen years—about
twice the cost of onshore wind power and considerably more than most conventional alternatives
(Associated Press 2011).
Wind turbines can be built on farms or ranches, thus benefiting the economy in rural areas,
where most of the best onshore wind sites are found. Farmers and ranchers can continue to work
their land because wind turbines use only a fraction of the land. Wind power plant owners make
rent payments to farmers or ranchers for the use of their land. Good wind sites are often located
in remote locations, far from cities where electricity is needed. Transmission lines must be built
to bring electricity from the wind farm to the city, adding dollar costs.
The U.S. Department of Energy in 2008 examined the technical feasibility of using wind
energy to generate 20 percent of the nation's electricity demand by 2030. The agency examined
the costs, major impacts, and challenges associated with producing 300 gigawatts (GW) of wind-
generating capacity by that year (USDOE 2008). About 70.8 billion kWh was actually generated
by wind in the United States in 2009 (USEIA 2011a, Table 8.2c), or about 1.9 percent of net
electricity generation, from about 33.5 GW or 3.4 percent of net summer electrical generating
capacity (USEIA 2011a, Table 8.11c), so this would entail a nearly ninefold increase in generating
capacity in twenty-two years. DOE concluded that generating 20 percent of the nation's electricity
with wind will require building a greatly enhanced transmission infrastructure, streamlined siting
and permitting regimes, improved reliability and operability of wind systems, and increased U.S.
wind manufacturing capacity. This would entail increasing the number of turbine installations
from about 2,000 per year in 2006 to almost 7,000 per year in 2017, requiring a very dramatic
increase in the wind turbine manufacturing industry in a relatively short period of time. It would
also entail resolving transmission challenges, such as controversial corridor site selection issues
and allocation of the costs of new transmission lines, in order to access the best wind resources.
Under current deregulation policy concerning production of bulk electric power, utilities have
few incentives to make large investments in the expensive, new extra-high-voltage transmission
facilities needed for efficient use of wind resources. The DOE report did not provide specifics on
how these ambitious and costly goals might be accomplished. Additional discussion of the costs
of electricity technologies may be found in Chapter 13 below.
No commercial wind turbines have yet been constructed offshore in U.S. waters, and this lack of
experience is viewed as driving up the costs of financing them to the point where finance charges
account for roughly half the estimated costs of offshore wind energy (USDOE 2011a, iii). The
U.S. Department of Energy in 2011 articulated a goal of deploying fifty-four GW of offshore wind
generating capacity by 2030 at a cost of seven cents per kilowatt-hour, with an interim goal of ten
GW of capacity deployed by 2020 at a cost of ten cents per kilowatt-hour (USDOE 2011a, iii).