For what it’s worth, here are my main take-aways from the new LIPA Fact Sheet (attached below with highlights added) on the South Fork Wind Farm:
1. South Fork Wind Farm was the least cost solution to meet increasing electric demand on the South Fork and New York’s renewable energy mandates.
2. LIPA’s share of New York State’s 9,000 MW offshore wind target is over 1,000 MW and SF Wind Farm is the first of many projects to meet the Long Island goal.
3. The South Fork RFP Portfolio (Wind+Storage+Demand Response) will cost the average residential customer on LI between $1.39 and $1.57 per month.
4. The price LIPA pays for the 90 MW SFWF starts at 16 c/kWh; the price for the additional 40 MW (contracted in Nov. ’18) starts at 8.6 c/kWh (this additional energy was the lowest cost renewable energy ever on LI at the time). The combined cost for the 130 MW would be about 13.7c/kWh in the first year. Prices escalate at an average 2% per year for 20 years.
5. Levelized Cost of Energy (LCOE) over 20 years for the combined 130 MW SFWF is 14.1¢/kwh (in 2018 dollars, using a 6.5% discount rate). Cost of other planned projects in the region are projected to be significantly lower but an ‘apple-to-apple’ comparison is difficult because these projects are much larger and benefit from economies of scale. They were also selected later and thus benefitted from lower industry price levels.
6. Prices for offshore wind power have declined rapidly in Europe due to increased investment and improving technology and we are now seeing price declines in the emerging U.S. offshore wind industry.
7. LIPA’s future offshore wind purchases will total over 800 MW, and will cost less as a result of expected price decreases. LIPA will also buy an estimated 90 MW of offshore wind from the recently announced 1,700 MW of New York State projects (by NYSERDA).
8. As a result of procuring offshore wind power spread out over many years (a decade or so) as prices decline, LIPA’s overall offshore wind portfolio cost will be minimized.
9. When comparing costs of renewable energy to conventional sources we also need to account for costs which are typically not accounted for such as the cost of air pollution, climate, unknown fuel price risk, etc.
The bottom line, as I see it, is that all this demonstrates that the South Fork Wind Farm not only provides us with local, renewable and reliable power but does so at an affordable price. And over time we will get more and more offshore wind power at even lower prices. This will result in a very affordable average bill impact and could even provide significant savings over fossil fueled power if natural gas prices turn out to be higher than currently forecast.
I’m attaching a marked-up version of the LIPA Fact Sheet where I highlighted sections discussing some of the above points in context.
Best, Gordian Raacke, Executive Director