[Scott] Next on "Energy Switch," we'll continue our fascinating discussion about offshore wind.

- Offshore wind, where it's being located right now makes a hell of a lot of sense because they're so close to the load centers.

There are so many people living in the Northeast.

[Scott] Right.

- And producing that power for those people makes sense.

- There is no other form of subsidy for electric generation equivalent to that.

They're paying the grid operator to take the energy because they make the money from the subsidy.

The subsidy covers up to 65% of a wind project onshore.

[Scott] Who pays for that?

- We do.

[Scott] Next on "Energy Switch," we'll continue our fascinating discussion about offshore wind.

[Narrator] Funding for "Energy Switch" was provided in part by, The University of Texas at Austin, leading research in energy and the environment for a better tomorrow.

What starts here changes the world.

[upbeat music] - I'm Scott Tinker, and I'm an energy scientist.

I work in the field, lead research, speak around the world, write articles, and make films about energy.

This show brings together leading experts on vital topics in energy and climate.

They may have different perspectives, but my goal is to learn, and illuminate, and bring diverging views together towards solutions.

Welcome to the "Energy Switch."

In part one of this episode, we talked about the size of planned offshore wind farms, which could occupy two million acres off the New England coast and potential impacts to fisheries, marine mammals, tourism, and property values.

Now we'll talk about the cost to build offshore wind farms and the role of subsidies to do so.

How to integrate new wind farms into the grid, and how much these projects may or may not reduce U.S. CO2 emissions.

Joining me again are Peder Hansen.

He's the president of PH Consulting with 30 years of wind experience in many companies across the industry.

His father and grandfather worked in the wind industry as well.

Lisa Linowes.

For almost 20 years, she's been the executive director of Industrial Wind Action, which provides nonpartisan information about renewable energy projects to all stakeholders.

Next on "Energy Switch," different perspectives on offshore wind, Part Two.

Well, welcome back.

Let's talk about cost.

Let's look at the economics of some of these things.

What does it cost to build one of these big 6, 7, 8, 9, 10 megawatt wind turbines offshore?

Maybe I'll start over here.

Peder, it's your business, right [laughing] [Peder laughing] - So onshore, a megawatt can be put in place for like one million, $1.2 million.

[Scott] Right.

- Offshore, we're talking $3.5 to $4 million per megawatt.

- Okay.

- Yeah, so it's significantly more expensive.

- So you mentioned a 10 megawatt turbine plus or minus.

So you're looking at $30 million or something to put- - You are $30, $35 million.

[Scott] Okay.

[Peder] Per turbine.

Once they're there, once they've been permitted and put up, they're also very efficient.

- Just writing down 30 million per 10 megawatt.

We talked about the number of megawatts, 30,000, I think we said in the first episode.

Thirty million times 3,000 would be $90 billion to build.

- We're talking 80 to 90 billion, yeah.

- That's a lot money.

You good with those costs?

You see 'em working that way at least?

- Yeah, yes.

When we look at some of the projects that, for instance, Vineyard Wind, again, we are estimating that project's costing around $5 billion to build.

A 2,600 megawatt project off the coast of Virginia, $10 billion to build.

And we're talking power plants that are weather-dependent.

So it's not like a nuclear power plant where it's producing all the time.

And in terms of the reliability of it, I think this is interesting.

The ISO New England, which manages the grid in the New England six states, found that on our highest load days, so the periods of time, those days where we have the most demand for electricity, they found that the wind resource any one hour to the next will be producing 97% production are down to 2%.

- Hour to hour?

- Hour to hour.

So the ability to manage that kind of fluctuation is pretty intense.

- Right, on the grid operator.

- I just have a quick comment to that.

- Sure, sure.

- We have pretty good wind data analysis both 10 days in advance, five, one, and then minutes in advance of what's hitting our rotors.

And as we can see that there's gonna be a wind event that may shut these turbines off, we actually start shutting some of them off sooner and we feather some of them back even sooner.

So you don't see a thousand megawatts just dropping off all of a sudden.

- Right, kind of a shoulder.

- We shoulder it and we didn't start throttling back turbines until they have to shut down.

So that gas, and predominantly gas, is standby power on shore.

So they have time to ramp up.

- Yeah.

- So we work hand in hand with that.

The same with the ramp up.

[Scott] Right.

- Excuse me, Peder, who is the we in this case?

Are you working directly with us?

- I mean just operators, the wind farm operators are the we.

- Is that all negotiated with the ISO or the grid operator in that?

- Typically, yes.

- Okay.

- I don't think a lot of people fully understand that partnership that is needed and really with some very specific fuels.

Do you see it that way?

- I completely agree.

And unfortunately, as I mentioned, there's such aggressive climate policies that have been put in place in states that it's not acknowledging the impacts on reliability as they should be.

- There's a cost of reliability.

- There is a cost of reliability that's there.

- That's right.

- And United States grid is one of the most reliable grids in the world.

It's also getting old.

- Yeah.

- There are going to have to be some pretty serious upgrades that we're gonna have to face.

Adding more wind to the mix is good.

Overpowering the grid with wind is not good.

[Scott] Yeah.

- Right, it has to be a balance.

We don't have to have coal.

[laughs] I'm also an environmentalist, but we have to have nuclear, solar, wind, battery storage, we have to have all of these sort of things in our mix.

But offshore wind where it's being located right now makes a hell of a lot of sense because they're so close to the load centers.

There are so many people living in the northeast.

- Right.

- And producing that power for those people makes sense.

[Scott] Yeah, that's interesting.

- It'll cost more to get it from the Midwestern than traveling it over.

- Yeah, and more and more dollars and more power lines, more infrastructure.

- More dollars, yeah.

- How does it line up cost-wise?

Wind to, and I know it depends on the price of gas and can we do any kind of general comparisons that way?

- The idea that offshore, that wind energy is cheaper than traditional source of generation, that's by and large born out of the idea that the wind itself, you don't have a fuel cost, right?

There's no cost for the wind, but you do have a very high cost to translate that wind into electricity, very high capital cost to get there.

And then when you're talking about a product that has, is capped in terms of its capacity factor, 30%, 35%, maybe 40 if you're lucky, the projects do not make enough money to earn a profit.

We've been talking to the government forever about when are you going to get rid of the subsidies for wind energy.

They've been there since 1992.

And there was a point in 2011, 12, 13 timeframe where the wind industry was saying, "We are reaching the point where we can be without subsidies, just give us an off ramp."

[Scott] Right.

- Which they did, Congress passed a law that progressively dropped the level of subsidy right from the federal government beginning in 2016.

And then the industry turned around and now it says they can't live without it.

- Is that right or [laughs] it's not right or wrong.

- It's not right or wrong, but it is true, right?

It's that anybody who starts a business with a subsidy also gets somewhat dependent on it, right?

- Yeah, yeah.

- A subsidy for wind sounds so bad because it's actually not a direct subsidy for wind.

It is what we call a production tax credit.

That means that investors that go and invest in this wind project who are private investors, they will go invest in the wind project, put up the wind turbines, and once they start operating and producing power, you get a tax credit on the production.

Now there's what's called an investment tax credit, right?

So I think it's 30% or so.

That means you can subtract having to pay that taxes basically.

But it means, it still means that the investment has to be a sound upfront investment for the full capital cost of everything.

- Can I comment on that?

Because that's not [chuckles] exactly my understanding of it.

There is no other form of subsidy for electric generation equivalent to that.

It has no cap on it.

It's for the first 10 years of operation, every kilowatt hour of generation, you get money back.

And when energy prices were lower in the, you know, a decade ago or less, the subsidy was greater than the price of the electricity it was producing.

They're paying the grid operator to take the energy because they make the money from the subsidy.

The subsidy covers up to 65% of a wind project on shore.

[Scott] Who pays for that?

- We do.

- The energy industry's relationships with state and federal governments is really complex.

- Yes, it is.

[Scott] Across the board.

- Yeah.

[Scott] Because we need the energy.

- We do need the energy.

[Scott] Country needs it and governments are trying to figure that out.

- And it may not be you and me that suffers if we have to pay the real price, but it would be the lowest income- - That's right.

- People in the United States and percentage wise of their income.

Then energy prices would become simply unsustainable if it wasn't for these subsidies, direct or indirect.

- Let's kind of get into the permitting and grid integration.

Lots of stakeholders competing public waterways and how does permitting work in that kind of environment?

- For the offshore wind projects, all the permitting is driven entirely by the Bureau of Ocean Energy Management.

- Okay, so they're the regulating permitter, if you will.

- Correct.

And sitting as advisory to the BOEM is NOAA, which is responsible for the environmental impacts and then also Fish and Wildlife Service, which is an other agency that is engaged on birds and bats and other wildlife that's not in the water.

- Okay, and the government, I would say is pretty favorable to wind right now, U.S. government.

Does this smooth the permitting process?

Does it help it along?

- Yes, it does.

[Peder] I would say so, yeah.

[Scott] Yes.

How do the big offshore wind farms integrate with the existing grid generation?

- It's as tough as it is for any energy integration that's new.

If it wasn't for the wind farms that are being put up now, we would probably likely have to put up some other form of power and it would also have to be integrated into the infrastructure.

So it's a matter of making load flow analysis studies on the grid and figuring out if I put 1,000 megawatts onto the grid here, how does that work?

And where do things need to be upgraded?

Technically speaking, it's no different than putting up a coal fire power plant or nuclear power plant.

- Wouldn't you have to include sort of the reality of the intermittency though, as if you're a grid operator in that or?

- But they do that anyway.

[Scott] Yeah.

- It's a big- [Scott] It's a planning - It's a big part of their job.

- Yeah.

- Also with being able to predict the wind coming up and down, you have these measuring points that you can send out to grid operations and say, "Hey, in two hours, be ready for us to start to ramp from 500 megawatts to 1,000 megawatts."

- Yeah.

- Or vice versa.

And so that they can get things ready to start back up again.

And that's where I think if we start talking long term, this is where distributed battery storage is going to save our grid, honestly, because you can load follow instantaneously and when there's an overcapacity instead of just shedding load while you're putting that power into batteries.

- Yep.

- Scott, if I could comment on the transmission question.

The idea that our transmission system is antiquated is really, it's really saying it's not designed for the level of distributed generation where the renewable energies have to go.

You have to build a renewable energy project where the fuel is, you can't transport the wind to the turbine.

You can't transport the sun to the solar panel.

You have to build the power plant at the source of the fuel.

Consequently, we're building in the middle of nowhere.

Texas is an example, the CREZ system.

It's like $7.5 billion, maybe more, to build transmission that you never needed before.

- Yeah, we didn't need the transmission.

We were gonna need the electricity because a lot of people are moving here, so it would've had to come in some other form, whether it's more nuclear power plants or lignite.

- Yep.

[Scott] So the argument could be, well, wind helped there, but what you're saying I think is, it's the structure of the source that it isn't always there and you have to have the lines and so we're doing something with our grid that we didn't have to do before.

- Absolutely right.

And there's no real plan other than, oh, we just have to build a lot of transmission, because our system is antiquated.

I don't think it's antiquated.

I think it just doesn't match how it was originally designed.

- Interesting.

- I think it is getting antiquated and we have to start doing something anyway.

And why not integrate wind and solar into that as we are upgrading and make it clean and more options.

- If I could comment on New England, I mean you'll find an environmentalist who will embrace a wind project onshore offshore, but you will also find that environmentalist despises transmission, okay [laughing] - Correct, yes.

- They don't wanna see transmission built.

If we're gonna get to the point where we're gonna run all of New England or all the East Coast on wind, solar, and battery, that means a lot of transmission in areas that people won't tolerate.

And so I don't know what the answer is, but that's where the policies are driving us.

- General numbers.

We talked, let's just go back to the two million acres in the offshore northeast.

The 30,000 megawatts.

Thirty gigawatts, if you will, equivalent to, with capacity factors, about 10 nuclear power plants.

Okay.

Will it make a meaningful difference in CO2 emissions reduction?

- Do you wanna try, go at that?

[Lisa and Scott laughing] [Scott] Who wants to go first?

- I have the numbers.

I'll see if I can remember 'em.

If these 30 gigawatts of wind is deployed and this just the new wind that we're talking coming in from offshore is equivalent to roughly 78 million metric tons of CO2 offset on an annual basis.

- Seventy-eight million.

And the U.S. produces about five billion tons of CO2 a year now, all in, everything.

- Yes.

- So 78 million, let's call it 100 to make the math easy.

[Peder] Yes.

- Well, that's some.

- It's some.

- It's several percent.

- Yes.

- Yeah.

So on a CO2 driver-only, it's worth it you think or?

[Peder] I think it's worth for the clean power, right?

I'm a clean power guy.

[Scott] Well, clean meaning CO2.

- Clean meaning no CO2, but it's not just the CO2.

- Okay.

- It's the mercury, it's the lead, it's the arsenic.

- SOx, the NOx.

- All of those sort of things.

And they do inevitably end up in our ocean.

[Scott] Yeah, particulates.

- Particulates.

- You use clean in a broader sense.

[Peder] I do.

[Scott] Not just a CO2 sense.

- Not just CO2.

No, 'cause CO2 in and of itself is okay.

There's a lot of other very harmful particulate matter coming out of coal and gas plants.

[Scott] Coal more than gas [chuckles] - Gas is almost benign comparatively.

But coal, a lot.

And we have so many old coal fire power plants that are grandfathered in under old, old schemes.

What I would like to see is, is that we take old coal out and we just replace it with wind and then we go from there, right, slowly.

- Wind and it's partner, whether it's a battery or gas plant.

- Yeah, well, it's wind or solar or anything like that, you know, fusion, you name it.

- Your thoughts on the CO2 side.

- Yeah, so I went directly to the BOEM environmental impact statements for the projects and they wrote that the reduction in greenhouse gas emissions resulting from the project would have "a long-term negligible beneficial impact on the health and safety of environmental justice populations."

That's what they said about that.

When they talked about the habitat and invertebrate, so we're talking now about the wildlife and the water.

It said that "The project could contribute to a long-term net decrease in greenhouse gas emissions.

However, this difference may not be measurable, but would be expected to help reduce climate change impacts."

So we are talking about industrializing our ocean at a level we've never seen before.

The impacts on wildlife, the impacts on the fishing industry and it was sold to all of the policy makers on two fronts.

Economic opportunity because of jobs.

So the unions would benefit from it, and of course, the environmentalists and everyone else, it's about greenhouse gas emissions.

The reality is this is not just Revolution Wind.

This is also Vineyard Wind, South Park wind.

All of these EISs say the same thing.

[Scott] Environmental impact statements.

- Correct, I'm sorry, the impact statements.

And what they do say though, when you look at the purpose section of the Revolution Wind project, and it's the same for Vineyard Wind, it says that these projects will help Connecticut and Rhode Island meet their climate goals.

But the reality is, the greenhouse gas emission is going to be negligible benefit.

New England, New York, New Jersey, these states have had experienced precipitous declines in greenhouse gases in the last 10, 12 years.

CO2 has been the slowest to come down because it's very hard to take outta the air.

But a lot has been dropped.

NOx and SOx is essentially nitric oxide, silver dioxide are essentially very little.

We've gone to natural gas.

We have barely any coal, barely any oil.

Been around a lot of hydro.

You have some wind and solar, not a lot, nuclear power.

So, maybe it makes sense to build a wind project in Wyoming, but it's not going to help the East Coast and if the goal is to reduce emissions, we have better options.

[Scott] Interesting.

- I think when you look at it, you know, a lot of these statistics here are also saying, well, if we put in 780 megawatts off the coast on Nantucket, it's only gonna benefit the country by 2%, but it's gonna lower the CO2 emissions in Nantucket significantly.

- Well, we've already looked at the numbers.

New England saw precipitous declines in CO2 and never had to spend a dime to get there because it was all done by merchant developers.

They built their gas plants.

- Yeah, and that's a good thing.

- And now we're talking about billions of dollars that are gonna come outta the pockets in terms of not just subsidies from the federal government.

All these projects have high value contracts that are being paid for by rate payers in the states.

They're gonna pay for that.

We're gonna put a price on a carbon ton.

I like to know what that comes out to.

[Scott] Yeah, interesting.

- Well, first of all, I would like to know what it comes out to, but I'd also like to see a price on a carbon ton.

[Scott and Lisa laughing] - Yeah, there's a chicken and egg here.

Wonderful discussion, really wonderful.

You can do a yes no here if you'd like to, but I'm guessing you won't.

Should we build offshore wind farms?

- Yes.

[all laughing] - When I look at the benefit costs, it's very difficult to see a justification for it.

- In New England or just in general?

- Certainly along the East Coast.

- Okay, what do you think?

- Yes, but we have to make sure that we stay friends with everybody who is involved, at least to a certain extent, right, we can't just say, "I'm gonna put a wind turbine on here, come hell or high water."

That doesn't make sense either.

So I appreciate these kinds of conversations.

- Yeah.

- I do think we need an all of energy sources approach to our energy mix in the United States.

One of them is offshore and we've been, wind industry has been told you can go put 'em out there and that's what we're aiming to do.

And so I think it's an all of the above approach.

[Scott] Right.

- But let's just try to conserve the environment.

- Where would you build offshore wind first in the U.S.?

What's the best place every all in considerations?

- Well, I'm kind of learning a lot about floating offshore platforms and I think they bring with them an enormous opportunity to put wind farms where they otherwise wouldn't have been.

And to build them in a central place and make them less expensive.

And then if we need to fix one of them, I mean really fix it, and more, drag it back to site.

- Float it in, that's interesting.

- So I like that sort of thing.

So let's make offshore floating platforms and build even bigger than these.

Let's build 30 megawatt wind turbines and let's float 'em out where people don't freak out about where they are.

- Yeah.

- I do like being close to load centers and I know we will differ on why to put them there and so on.

But that is the north, the northeast.

[Scott] Yeah.

- And it is California and it's where it would practically work.

- Yeah, I mean it is the Northeast and California mostly that are resistant to other sources.

- Yes.

- Maybe California should be the first to test some of these things and generate their own electricity with floating platforms offshore.

See how that goes.

You can't not like everything.

[chuckles] Right?

- No.

And you can't just go do everything either.

There's a gray squiggly line here that's called compromise and we all have to sort of find our way into that and where we can live together.

- Final thoughts, if you'd like to leave kind of three main points with our listeners, our viewers, what would those be?

- I'd say, yeah, look at your energy mix.

Where does the power come from that you use on an everyday basis?

And does it make sense to you to keep burning fossil fuels or looking in a different direction?

The looking in the different direction can be offshore wind, but I think really take a good look at how much power you use.

Where does it come from?

And learn what impacts the various energy forms have on you that you consume.

- I think that's a very balanced statement and I appreciate that actually, very much.

Yeah, Lisa?

- Yeah, so my thought is I think that the public needs to engage more.

They need to understand, but have a better understanding of where our policies are taking us.

But more importantly, we need to have a policy that is not based on ideology.

We have to get back to a point where the environment matters.

'Cause I believe that the environment in this situation has taken a second place to the climate change alarmism.

And that is one thing I am not a climate denier, although, you know, you may, I might get accused of that, but I wanna make it really clear we have time to make good decisions around our energy sources and we're being rushed out of fear over climate change.

And that's a big worry.

- Yeah, well, quite the opposite.

I got the feeling you're quite an environmentalist actually.

You're very concerned about the ocean environment.

- Absolutely.

- And that resource.

And I think we might have created some neat partnerships here.

- I think so.

- Lisa, thank you very much.

- Thank you so much.

- For all your good thoughts.

- Thank you.

- Peder, the same.

Really terrific, thank you.

Scott Tinker, "Energy Switch."

My guests agreed it would cost about $90 billion for the proposed New England offshore wind projects.

Some of this will be subsidized through various tax credits, which allow investors and operators to reduce their taxes based on wind energy generated.

Permitting of offshore wind farms is overseen by several government agencies.

But guests agreed that federal and some state governments are favorable to offshore wind.

Lisa felt that integrating new offshore wind projects onto the grid will be a challenge.

Peder said this could be helped by better wind farm management, filling in the shortfalls with natural gas power generation and perhaps one day grid level battery storage.

Proponents say offshore wind will reduce U.S. CO2 emissions to some degree, but Lisa found studies from government agencies that suggest it will be negligible.

Both guests wanted to ensure that environmental protection was not sacrificed for climate goals.

♪ ♪ ♪ ♪ ♪ ♪ [Narrator] Funding for "Energy Switch" was provided in part by The University of Texas at Austin, leading research in energy and the environment for a better tomorrow.

What starts here changes the world.