WEMO24-Compiled Report-Interactive compressed (002) 4154-7882-8116 v.1 - Flipbook - Page 13
Global
Outlook
President Biden's objective is to have 30 GW of offshore wind
power in 2030 (It compares to a 60 GW target in the EU).
However, because of the above-mentioned issues, the present
forecast is only at 15GW.
39 This 472-foot vessel will be able to transport wind turbine components domestically and avoid
unnecessary costs and delays
Intermittent renewable costs are increasing with their
penetration rate
Additional costs linked to grid balancing issues must be added
to the LCOE41 to make a fair comparison between intermittent
renewable generation costs and dispatchable generation costs.
According to Lazard 2024 report42 after an increase between
2021 and 2023, wind and solar LCOE43 averages in the USA
remained stable in 2024.
However, with higher penetration rates in the electricity mix the
timing imbalance between customer demand and renewable
electricity production is increased. As such, the optimal grid
balancing solution is to complement new renewable energy
technologies with a “firming” resource such as energy storage
or dispatchable generation technologies. The renewable costs
must include this externality, more precisely the “firming”
resource generation cost.
40 https://eneken.ieej.or.jp/en/chairmans-message/chairmans-message_202401.html
41 LCOE: Levelized Cost of Electricity. See definition: https://corporatefinanceinstitute.com/
resources/valuation/levelized-cost-of-energy-lcoe/
42 https://www.lazard.com/research-insights/levelized-cost-of-energyplus/
43 LCOE: Levelized Cost Of Electricity
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While in Europe, the nuclear generation (which is dispatchable
technology with no GHG emissions) helps to balance the missing
renewable generation, in the USA Combined Cycle Gas Turbine
is the most used firming generation source despite its GHG
emissions.
The incremental cost of firming intermittent electricity
varies regionally depending on the rate of renewable source
penetration and the grid operating rules. According to Lazard
report, this additional cost varies in the USA from 56% of the
LCOE (PJM TSO44) where renewable penetration is 7% to 200%
of the LCOE (CAISO45) where renewable penetration is 52%
WEMO 2024
Remediation measures are underway in the USA, which should
make the projects more attractive. Thus, the new contracts will
allow price renegotiations, the regulatory process should be
streamlined, and the IRA provides for federal incentives in the
form of tax credits.In addition, companies, as Dominion Energy
of Virginia, are constructing their own American ship.39
Intermittent renewables impact on the grid:
The power grid plays a fundamental role to a successful energy
transition.
As recently pointed out by Tatsuya Terazawa, Chairman and
CEO of the Institute of Energy Economics of Japan “Without
transmission, No transition"
44 PJM Interconnection coordinates the movement of electricity through all or parts of Delaware,
Illinois, Indiana, Kentucky, Maryland, Michigan, New Jersey, North Carolina, Ohio, Pennsylvania,
Tennessee, Virginia, West Virginia and the District of Columbia.
45 CAISO: California ISO
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• In addition, an old American legislation from 1920 “the Jones
Act” prevents ships to operate in USA waters unless they
are built, operated, and staffed by American companies. In
the USA, there are presently no Wind Turbine Installation
Vessel able to ship turbines of around 250m length. Hence,
wind turbine manufacturers, had to use barges which
are expansive.
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