New Modeling Shows Offshore Wind’s Benefits to Climate, Health, and Energy Bills
💡 What’s the story?
New analysis from Resources for the Future (RFF) finds that developing 32 planned or proposed offshore wind farms off the Atlantic and Gulf coasts would reduce emissions, environmental damages from those emissions, deaths, and consumer energy bills. The detailed modeling projects that, because offshore wind farms prevent polluting electricity generation from natural gas and coal, each year of operation would prevent approximately 2,100 premature deaths.
In the face of recent cost increases and project cancellations, governments are deciding how strongly to support offshore wind development. This new study finds that the offshore wind farms would bring net benefits to society, with a projected benefit-to-cost ratio of 14 to 1.
Generation from offshore wind farms is projected to be slightly more costly than the generation they would prevent, and the model finds that this cost would be borne by energy producers and taxpayers. However, the projected cost difference is small because the densely populated coastal areas the offshore wind farms would power will be expensive to serve with electricity regardless of what source is used.
Net Benefits per Megawatt-hour of Offshore Wind Generation
🔎 What are the details?
The analysis details the major benefits and costs associated with a build-out of offshore wind farms.
Generation: The modeled set of offshore wind farms would produce approximately 2.5 percent of US and Canadian electricity generation. The modeling finds that they would disproportionately prevent fossil-fueled generation, because the densely populated coastal areas the offshore wind farms would serve are difficult to supply with non-emitting generation such as land-based wind, solar, and nuclear.
Greenhouse gas emissions: Adding these 32 wind farms to the electricity-generation mix would reduce US and Canadian power sector greenhouse gas emissions by approximately 41 million short tons of CO₂ equivalent (or 5 percent) in 2035. The projected climate benefits that arise from this one year of emission reductions alone are approximately $9.2 billion.
Air-quality benefits: Wind farm build-out reduces nitrogen oxide (NOₓ) emissions by 4 percent, sulfur dioxide (SO₂) emissions by 5 percent, and fine particulate matter smaller than 2.5 micrometers (PM₂.₅) by 6 percent. The most densely populated part of the United States, the New York City area, would see some of the largest air-quality improvements. This contributes to the finding that the offshore wind farms would reduce premature deaths particularly among Black, Hispanic, and low-income Americans.
Capacity: More offshore wind means that less nonvariable generation capacity is needed to maintain grid reliability. It also means a shift from capacity with higher fixed costs to types with lower fixed costs, reducing the net cost of the offshore wind farms.
Nonenvironmental considerations: The offshore wind farms decrease electricity bills by about $19 and natural gas bills by about $17 per megawatt-hour of offshore wind generation. This is because offshore wind farms cause a net reduction of natural gas demand and net increase of the electricity supply at most times of the year. This reduces prices and, by extension, the average profit margins for energy producers. A smaller effect is that the US government also loses some revenue because of the investment tax credit that supports offshore wind.
🔑 How do we know?
To estimate the effects of the 32 offshore wind farms, the team modeled two possible futures for the US electricity system in 2035: one in which these offshore wind farms are built, and another scenario in which there are no offshore wind farms operating in the United States.
The analysis used the Engineering, Economic, and Environmental Electricity Simulation Tool (E4ST), a detailed model of the grid and electricity sector that captures the complex interactions between costs, policies, and technical requirements for power generators. The model projected the retirement and construction of generators between 2024 and 2035 and their operation in 2035. The model includes existing policies such as the Inflation Reduction Act and the Regional Greenhouse Gas Initiative. The analysis also used the detailed InMAP air-pollution model and a multi-region model of natural gas supply and demand.
The team analyzed the results under three projections for the wind farms’ cost: a low-cost scenario, a mid-cost scenario, and a high-cost scenario. Under all cost scenarios, the offshore wind projects create net benefits for society.
Author Perspective
“Offshore wind is a promising option for the US electricity mix. But it’s a huge undertaking, and policymakers and energy providers are in need of analyses like this that model the benefits and costs of offshore wind. What these findings show is that there are enormous benefits to society associated with offshore wind farms, even if they cost more than expected. As the country works to decarbonize, this energy source presents an interesting option to reduce emissions, reduce energy bills, and benefit disadvantaged communities.”
—Daniel Shawhan, RFF Fellow
📚 Where can I learn more?
For more, see the full study, “Offshore Wind Power Examined: Effects, Benefits, and Costs of Offshore Wind Farms Along the US Atlantic and Gulf Coasts,” by RFF scholars Daniel Shawhan, Sally Robson, and Ethan Russell.
Resources for the Future (RFF) is an independent, nonprofit research institution in Washington, DC. Its mission is to improve environmental, energy, and natural resource decisions through impartial economic research and policy engagement. RFF is committed to being the most widely trusted source of research insights and policy solutions leading to a healthy environment and a thriving economy.
Unless otherwise stated, the views expressed here are those of the individual authors and may differ from those of other RFF experts, its officers, or its directors. RFF does not take positions on specific legislative proposals.
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