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Southern California Offshore Wind: A model-based viabiliy study
Abstract
To mitigate carbon emissions, energy systems around the world are electrified using renewable energy. In California, the leading renewable source is photovoltaic, which is intermittent and requires storage technology not yet deployed on a broad scale to sufficiently meet demand. To utilize its great offshore wind resource potential that can counterbalance solar and thus contribute to a stable and green energy mix in the future, floating turbines deployable in deep waters are needed as the Californian steep shelf falls off quickly. The sector, currently emerging globally, represents a high-risk investment market where costs exceed benefits. The paper finds that direct subsidies as provided through strike prices agreed upon in auction systems between governments of Europe's leading offshore wind countries and developers over the last ten years ensuring fixed rates for future electricity production can support the economic viability of projects offshore the densely populated south.
Evaluating three potential sites, the Southern California Offshore Wind model accounts for location-specific data input as well as findings from analyses conducted by the National Renewable Energy Laboratory. Based on the model, scenario analyses are conducted to consider the impact of technical progress and learning as well as carbon mitigation policies (carbon price and direct subsidy) on costs and benefits calculating the net value for deployment dates in 2022, 2027, and 2032.The results show that all three sites are unprofitable considering direct costs and benefits only although net values develop positively with the advancement of the industry. Supported by the highest carbon price as of April 2020 – Swedish carbon tax: $119/tCO2e – one site becomes profitable from 2027 onward. In contrast, taking adjusted EU strike prices for fixed-bottom systems into account, enables two sites to become economically viable in 2022 and 2027 but not in 2032. As floating systems are more expensive, it can be assumed that prices for this technology would be higher.
The paper concludes that, considering direct government support through an auction system can incentivize investments in a high-risk floating offshore wind sector, helping it to emerge in Southern California over the next ten years. With it, a stable and renewable energy supply for a growing demand can be ensured as offshore wind counterbalances solar as a complementary energy source peaking during different times of the day and providing power more constantly overall.
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