The Long Island Power Authority (LIPA) has released a study prepared by Pace Global Energy Services that evaluates the economics of LIPA's proposed 140 MW offshore wind farm. Pace estimates that the project's cost could reach $811 million, which includes construction, financing and transmission costs.
When compared with the cost of a Long Island-based combined cycle natural gas-fired generating plant, the Pace study concludes that the levelized green premium for wind power, if spread out over a 20-year period, would come to about $66 million per year, or about $2.50 per month for the typical residential consumer.
The Pace study found that the costs for the proposed offshore wind project are in line with market expectations for North American offshore projects given the early stage development of such a market and the overall lack of a well-defined national energy policy to support these kinds of projects.
LIPA says it requested the study after FPL Energy had given LIPA an updated cost estimate for the project of $697 million – not including the financing and transmission cable costs.
‘Obviously, there is a premium for building an offshore wind project when compared to conventional energy projects,’ says Richard Kessel, president and CEO of LIPA. ‘Long Island must decide where it wants to go with its energy future. Should we continue on as we have in the past by adding more and more fossil fuel power plants or do we give a large-scale renewable energy project a chance to help break the grip of oil and natural gas as the primary fuels used to keep our lights on?’
LIPA says its board of trustees will discuss the proposed offshore wind project and possible alternatives at a meeting on Sept. 25. The Pace study can be downloaded at lipower.org.