MODELING ECONOMICS OF OFFSHORE WIND IN THE SOUTHEASTERN UNITED STATES By Morgan Browning Eric Burton Tasfia Nayem Yuejiao Wan Dr. Lori Bennear, Advisor April 26, 2019 Master’s project submitted in partial fulfillment of the requirements for the Master of Environmental Management degree in the Nicholas School of the Environment of Duke University. Executive Summary ........................................................................................................................ 5 1. Offshore wind landscape ............................................................................................................. 6 1.1 Offshore wind overview .................................................................................................. 6 What is offshore wind? ........................................................................................................... 6 History of terrestrial wind in the U.S. ..................................................................................... 6 Installation process .................................................................................................................. 7 Distance from shore ................................................................................................................ 8 Depth of water ......................................................................................................................... 8 Floating turbines ...................................................................................................................... 9 1.2 Advantages and disadvantages of offshore wind .......................................................... 10 Benefits of renewables .......................................................................................................... 10 Current benefits of offshore wind ......................................................................................... 10 Potential benefits of offshore wind ....................................................................................... 14 Challenges with offshore wind .............................................................................................. 15 1.3 Offshore wind globally .................................................................................................. 17 Current status ......................................................................................................................... 17 Costs ...................................................................................................................................... 18 Future projections .................................................................................................................. 19 1.4 Offshore wind in the U.S. .............................................................................................. 20 Current status: Block Island Deepwater ................................................................................ 20 Resource potential ................................................................................................................. 20 Future cost projections .......................................................................................................... 23 2. Policies to Build Offshore Wind in the U.S. ............................................................................. 24 2.1 Policy Impacts on Offshore Wind Adoption ....................................................................... 24 Carbon Pricing ....................................................................................................................... 24 Renewable Portfolio Standards ............................................................................................. 25 2.2 Policy incentives for offshore wind in the northeast U.S. ................................................... 25 2.3 Policy incentives for offshore wind in Virginia .................................................................. 26 Wind potential ....................................................................................................................... 26 Renewable energy portfolio .................................................................................................. 27 State activity .......................................................................................................................... 27 Private sector activity ............................................................................................................ 27 Demonstration project ........................................................................................................... 28 2.4 Policy incentives for offshore wind in North Carolina ....................................................... 28 2 Wind potential ....................................................................................................................... 28 Renewable energy portfolio .................................................................................................. 28 State activity .......................................................................................................................... 29 Kitty Hawk, North Carolina offshore lease ........................................................................... 29 2.5 Policy incentives for offshore wind in South Carolina ....................................................... 30 Wind potential ....................................................................................................................... 30 State activity .......................................................................................................................... 30 Current status ......................................................................................................................... 31 3. Model Methods ......................................................................................................................... 32 3.1 Objective ............................................................................................................................. 32 3.2 Model .................................................................................................................................. 32 3.3 Limitations .......................................................................................................................... 33 3.4 Offshore Wind Cost Scenarios ............................................................................................ 33 3.5 Carbon Pricing Scenarios .................................................................................................... 35 3.6 Offshore Mandate ................................................................................................................ 35 4. Model Results and Analysis ...................................................................................................... 36 4.1 Scenarios ............................................................................................................................. 36 4.2 Analysis Methods ................................................................................................................ 36 4.3 Capacity ............................................................................................................................... 36 Objectives .......................................................................................................................... 36 Resources .......................................................................................................................... 37 2040 Capacity Summary ................................................................................................... 37 Resource Trends ................................................................................................................ 39 Offshore Wind ................................................................................................................... 41 4.4 Electricity Prices ................................................................................................................. 42 Objectives .......................................................................................................................... 42 Results ............................................................................................................................... 43 5. Public perception of offshore wind ........................................................................................... 45 5.1 Public Opposition in the U.S. .............................................................................................. 45 Cape Wind, Massachusetts .................................................................................................... 45 Block Island, Rhode Island ................................................................................................... 46 South Fork Wind Farm, New York ....................................................................................... 46 5.2 Public Opposition in Europe ............................................................................................... 47 5.3 Stakeholder Analysis ........................................................................................................... 48 3 Commercial Fishing Industry ................................................................................................ 50 Environmental Groups .........................................................................................................