OFFSHORE WIND ENERGY DEVELOPMENT IN NORTH CAROLINA: IS IT WORTH IT? Public and International Affairs Master of Coastal and Ocean Policy 2015 Johanna Colburn, Lindsey Cole, Jessica Gray, Evan Gruetter, Sara Marriott, Miles Murphy, Michelle Shreve, Bailey Stearns 2 • Background • Implementation Challenges • Environmental Impacts • Economic Analysis • Political Feasibility • Conclusions • Recommendations http://www.2050publications.com/140000-offshore-wind-turbines-enough-to-supply-one-third-of-us-power-needs-study-concludes/ *Please leave questions until the end* NORTH CAROLINA’S POTENTIAL 4 www.arcgis.com 5 Why is this important for North Carolina? Renewable Energy and Energy Efficiency Portfolio Standard (REPS) • Electric Public Utilities: 12.5% of North Carolina retail sales by 2021 must come from a renewable energy resource or by implementing energy efficiency measures Sustainable Energy 6 Legislative Framework Federal • Acts/Regulations Department of the Interior (DOI) • • • Department of Energy (DOE) • Department of Commerce (DOC) • • Bureau of Ocean Energy Management (BOEM) U.S. Fish and Wildlife Service (USFWS) National Oceanic and Atmospheric Administration (NOAA) • National Marine Fisheries Service (NMFS) • Environmental Protection Agency (EPA) • Marine Mammal Commission (MMC) • Department of Defense (DOD) • Army Corps of Engineers (ACOE) • United States Coast Guard (USCG) State • NC Department of Environmental and Natural Resources (NCDENR) • Local Governments: New Hanover County, Dare County, Brunswick County, Currituck County Outer Continental Shelf Lands Act (OCSLA) • Energy Policy Act (EPAct) • Endangered Species Act (ESA) • Marine Mammal Protection Act (MMPA) • Migratory Bird Treaty Act (MBTA) • Magnuson-Stevens Act (MFCMA) • Coastal Zone Management Act (CZMA) & Coastal Area Management Act (CAMA) • National Historic Preservation Act (NHPA) • International Convention for the Prevention of Pollution from Ships (MARPOL) • Clean Water Act (CWA) • Clean Air Act (CAA) • National Environmental Policy Act (NEPA) 7 Historical Context • Energy Policy Act of 2005 (EPAct) • April 2009: Finalized OCS Renewable Energy Program • Fall 2010: “Smart from the Start” • Wind Energy Areas (WEAs) 8 9 Wind Energy Areas • August 11, 2014: WEA’s Announced • Kitty Hawk WEA 122,405 acres 24 nautical miles offshore • Wilmington West WEA 51,595 acres 10 nautical miles offshore • Wilmington East WEA 133,590 acres 15 nautical miles offshore IMPLEMENTATION CHALLENGES 11 12 13 14 15 16 17 18 User Conflicts • Available Wind Resources • Bird and Bird Habitat • Fishery and Fish Habitat • Geological Suitability • Military Uses • Vessel Transportation Routes • Electrical Transmission Infrastructure 19 20 21 BOEM Process 22 Site Assessment • Site Characterization • • Surveying Site Assessment • • Meteorological Towers Buoys 23 Construction Hub stations picture 24 Operation 25 Decommission 26 ENVIRONMENTAL IMPACTS 28 Impacts • Impact Sectors • • • • • • • Benthic Resources Marine Mammals Air & Water Quality Birds and Bats Coastal Habitats Sea Turtles Essential Fish Habitat and Finfish • Impact Factors • • • • • • • Site Surveying Pile Driving Vessel Traffic Vessel Dumping Electric and Magnetic Fields Collisions Turbine Noise Generation 29 North Atlantic Right Whale • Federal Status • • • ESA Endangered MMPA Depleted Concerns • • Noise Vessel Traffic 30 Negligible Minor Moderate Major No measurable impacts. Most impacts on the affected resource could be avoided with proper mitigation. If impacts occur, the affected resource would recover completely without any mitigation once the impacting agent is eliminated. Impacts on the affected resource are unavoidable. The viability of the affected resource is not threatened although some impacts may be irreversible, or the affected resource would recover completely if proper mitigation is applied during the life of the project or proper remedial action is taken once the impacting agent is eliminated. Impacts on the affected resource are unavoidable. The viability of the affected resource may be threatened, and the affects resource would not fully recover even if proper mitigation is applied during the life of the project or remedial action is taken once the impacting agent is eliminated. 31 Impacts from Site Assessment • Site Surveying • Pile Driving • Vessel Traffic • Vessel Dumping Phase Impacted Sector Site Characterization Site Assessment Benthic Resources Negligible Negligible to Minor Marine Mammals Negligible to Minor Negligible to Moderate Air Quality Minor Minor Water Quality Minor Minor Birds and Bats Negligible Negligible to Minor Coastal Habitats Negligible Negligible Sea Turtles Minor Minor to Moderate Essential Fish Habitat and Finfish Negligible to Minor Negligible 32 Impacts from Construction • Pile Driving • Vessel Traffic • Vessel Dumping Phase Impacted Sector Construction Benthic Resources Negligible to Minor Marine Mammals Minor to Moderate Air Quality Minor Water Quality Minor Birds and Bats Negligible Coastal Habitats Negligible Sea Turtles Negligible Essential Fish Habitat and Finfish Minor 33 Impacts from Operation • Collision • Electric and Magnetic Fields • Turbine Noise Generation • Positive Impacts • • • Food production Habitat utilization Fish Aggregating Devices (FAD) Phase Impacted Sector Operation Benthic Resources Negligible to Minor Marine Mammals Negligible to Moderate Air Quality Negligible Water Quality Negligible Birds and Bats Negligible to Moderate Coastal Habitats Negligible Sea Turtles Negligible to Minor Essential Fish Habitat and Finfish Negligible to Moderate 34 Notes on Decommission Phase • Impacts similar to Construction Phase • • Vessel traffic and dumping Noise from foundation removal • Reduction of collisions • Altered biodiversity 35 Phase Impacted Sector Site Characterization Site Assessment Construction Operation Benthic Resources Negligible Negligible to Minor Negligible to Minor Negligible to Minor Marine Mammals Negligible to Minor Negligible to Moderate Minor to Moderate Negligible to Moderate Air Quality Minor Minor Minor Negligible Water Quality Minor Minor Minor Negligible Birds and Bats Negligible Negligible to Minor Negligible Negligible to Moderate Coastal Habitats Negligible Negligible Negligible Negligible Sea Turtles Minor Minor to Moderate Negligible Negligible to Minor Essential Fish Habitat and Finfish Negligible to Minor Negligible Minor Negligible to Moderate ECONOMIC ANALYSIS 36 37 38 Analysis Details • To evaluate the economic viability of a offshore wind project in North Carolina using two different economic evaluations • Cost-Benefit analysis (CBA) • • An analysis that evaluates the economic outcome of various costs and benefits over a set time period. Cost Effectiveness analysis (CEA) An analysis that evaluates the most cost effective method of achieving a goal. In this case that goal is the efficient production of electricity. • Common in healthcare field • Often utilizes levelized costs • 39 Data and Caveats • Data Sources • • • • • • EIA – Levelized Costs of Electricity Government Agencies Foreign Studies Consultation Reports Professional Articles and Reports Comparison between Cape May New Jersey and Brunswick County Same distance, or further, from shore (6+ miles) • Different populations • Different population density • Different property values • • Lack of reliable monetized, economic data • • • • • • • • • Real Estate Tourism Aesthetics Noise Hurricane Reduction Impact of Region Branding Wildlife Seafloor Damage No proposed project, only extrapolations 40 COST BENEFIT ANALYSIS 41 Costs Direct Indirect Tangible Intangible Tangible Intangible Construction Alternative Use Real Estate Property Values Aesthetics Operation and Maintenance Seafloor Damage Prices (Competition) Noise Grid/Infrastructure Wildlife Taxes Recreation Lost Jobs (Competition) Disaster Tourism 42 Costs included in Analysis Direct Indirect Tangible Intangible Tangible Intangible Construction Alternative Use Real Estate Property Values Aesthetics Operation and Maintenance Seafloor Damage Prices (Competition) Noise Grid/Infrastructure Wildlife Taxes Recreation Lost Jobs (Competition) Disaster Tourism 43 Benefits Direct Indirect Tangible Intangible Tangible Intangible Renewable NRG Pollution Reduction Price (Competition) Hurricane Reduction Fish Habitat Hurricane Reduction Econ Growth Jobs/Econ Growth Diversify NRG Decommission Coal Tourism Business Attraction Real Estate Property Values Health 44 Benefits included in Analysis Direct Indirect Tangible Intangible Tangible Intangible Renewable NRG Pollution Reduction Price (Competition) Hurricane Reduction Fish Habitat Hurricane Reduction Econ Growth Jobs/Econ Growth Diversify NRG Decommission Coal Tourism Business Attraction Real Estate Property Values Health 45 Costs and Benefits Examined Costs Direct Tangible Intangible Construction Operation and Maintenance Grid/ Infrastructure Benefits Indirect Tangible Intangible Real Estate Property Values Prices Seafloor Damage (Competition) Alternative Use Direct Tangible Intangible Aesthetics Renewable NRG Noise Fish Habitat Pollution Reduction Hurricane Reduction Taxes Jobs/ Econ Growth Diversify NRG Recreation Lost Jobs (Competition) Tourism Business Attraction Disaster Tourism Health Wildlife Indirect Tangible Intangible Price (Competition) Econ Growth Decommission Coal Real Estate Property Values Hurricane Reduction 46 Cost Benefit Analyses Conducted CBA Iteration Discount Rate Growth Rate Disaster Turbines CBA 1 3.0% 1.0% No 100 CBA 2 7.0% 1.0% No 100 CBA 3 3.0% 1.0% No 200 CBA 4 3.0% 1.0% No 340 CBA 5 3.0% 1.0% Yes 100 CBA 6 3.0% 1.0% Yes 200 CBA 7 3.0% 1.0% Yes 340 47 Costs - Monetized Costs (Million of dollars) Turbine Construction Cost One-Time Grid Integration Cost Property Value Loss Tourism Revenue Loss Disaster On-Going Turbine Maintenance 100 Turbines 200 Turbines 340 Turbines Year $1,085 $2,169 $3,688 0 $21 $42 $71 0 $549 $549 $549 0 $4 $4 $4 1 $731 $1,462 $2,485 15 $35 $70 $119 1 48 Benefits - Monetized Benefits (Millions of dollars) One-Time 100 Turbines 200 Turbines 340 Turbines $478 $956 $1,625 0 $1 $1 $2 1 Energy Generated $65 $130 $220 1 O/M Jobs $20 $40 $68 1 $6 $6 $6 2 Construction Jobs CO2 Reduction On-Going Tourism Revenue Gain Year 49 CBA Results CBA Iteration Description Disaster Total Costs (Millions) Total Benefits (Millions) NPV (Millions) BCR CBA 1 100 Turbines No 2,878 3,638 58 1.26 CBA 2 100 Turbines (7%) No 2,878 3,638 (419) 1.26 CBA 3 200 Turbines No 5,202 7,090 552 1.36 CBA 4 340 Turbines No 8,457 11,922 1,244 1.41 CBA 5 100 Turbines Yes 3,508 3,638 (346) 1.01 CBA 6 200 Turbines Yes 6,462 7,090 (256) 1.06 CBA 7 340 Turbines Yes 10,597 11,922 (130) 1.09 50 COST EFFECTIVENESS ANALYSIS 51 CEA: Capacity Factor Energy Source MWh/Year Natural Gas 28,704,000 Coal 47,676,000 Nuclear 39,132,000 Hydro Electric 3,720,000 Solar 59,616 Wind 1,752,000 Capacity Factor (%) Levelized Capital Cost ($/MWh) O&M, Fuel, Misc ($/MWh) Total Cost ($/MWh) 87 85 90 30.3 97.8 71.4 59.8 48.4 23.6 91.3 147.4 96.1 53 25 40 72.0 114.5 175.4 10.5 11.4 22.8 84.5 130.0 204.1 52 CEA: Levelized Capital Cost Energy Source MWh/Year Natural Gas 28,704,000 Coal 47,676,000 Nuclear 39,132,000 Hydro Electric 3,720,000 Solar 59,616 Wind 1,752,000 Capacity Factor (%) Levelized Capital Cost ($/MWh) O&M, Fuel, Misc ($/MWh) Total Cost ($/MWh) 87 85 90 30.3 97.8 71.4 59.8 48.4 23.6 91.3 147.4 96.1 53 25 40 72.0 114.5 175.4 10.5 11.4 22.8 84.5 130.0 204.1 53 CEA: O&M, Fuel, Miscellaneous Energy Source MWh/Year Natural Gas 28,704,000 Coal 47,676,000 Nuclear 39,132,000 Hydro Electric 3,720,000 Solar 59,616 Wind 1,752,000 Capacity Factor (%) Levelized Capital Cost ($/MWh) O&M, Fuel, Misc ($/MWh) Total Cost ($/MWh) 87 85 90 30.3 97.8 71.4 59.8 48.4 23.6 91.3 147.4 96.1 53 25 40 72.0 114.5 175.4 10.5 11.4 22.8 84.5 130.0 204.1 54 CEA: Total Cost Energy Source MWh/Year Natural Gas 28,704,000 Coal 47,676,000 Nuclear 39,132,000 Hydro Electric 3,720,000 Solar 59,616 Wind 1,752,000 Capacity Factor (%) Levelized Capital Cost ($/MWh) O&M, Fuel, Misc ($/MWh) Total Cost ($/MWh) 87 85 90 30.3 97.8 71.4 59.8 48.4 23.6 91.3 147.4 96.1 53 25 40 72.0 114.5 175.4 10.5 11.4 22.8 84.5 130.0 204.1 55 CEA: Summary Table Energy Source MWh/Year Natural Gas 28,704,000 Coal 47,676,000 Nuclear 39,132,000 Hydro Electric 3,720,000 Solar 59,616 Wind 1,752,000 Capacity Factor (%) Levelized Capital Cost ($/MWh) O&M, Fuel, Misc ($/MWh) Total Cost ($/MWh) 87 85 90 30.3 97.8 71.4 59.8 48.4 23.6 91.3 147.4 96.1 53 25 40 72.0 114.5 175.4 10.5 11.4 22.8 84.5 130.0 204.1 56 Offshore Wind vs Natural Gas/Coal Energy Source Coal Natural Gas Wind 147.4 91.3 204.1 47.7 28.7 1.8 35,040 35,040 - 1,361 819 - Total Cost (Billions of dollars) $ 7.03 $ 2.62 $ 0.36 Wind Adapted Cost (Billions of dollars) $ 9.73 $ 5.86 - Total Cost ($/MWh) MWh (Million) Offshore MWh (5MW turbine) Turbines Required POLITICAL FEASIBILITY 58 Data Sources • Public Comments • • • • • BOEM public workshops WWAY News Newspaper articles Comments to BOEM • Public Survey • • North Carolina residents Political officials Political Climate • • • • • NC Executive Office U.S. Senators (NC) U.S. Representatives (NC) State Senators State Representatives http://mediad.publicbroadcasting.net/p/michigan/files/201406/wind_farm_Middelgrunder_KimHansen.jpg 59 Political Climate • Concerns: • • • • • Development costs Effects on tourism and coastal economies Political viability Legal Framework DOI Secretary Sally Jewell NC House Rep. Susi Hamilton (D-18th District) NC Governor Pat McCrory NCDENR Secretary Donald van der Vaart Federal and State Stakeholders 60 Elected Official Yes NC Governor Pat McCrory (R) U.S. Senator Richard Burr (R) Congressman Walter Jones, Jr. (R) – 3rd District X State Senator William “Bill” Peter Rabon (R) – 8th District: Bladen, Brunswick, New Hanover X X State Senator Michael Lee (R) – 9th District: New Hanover State Senator Jane Smith (D) 13th District: Columbus & Robeson State Representative Susi Hamilton (D) – 18th District: New Hanover & Brunswick State Representative Chris Millis (R) – 16th District: Pender & Onslow State Representative Frank Ller (R) – 17th District: Brunswick State Representative Ted Davis, Jr. (R) – 19th District – New Hanover State Representative Rick Catlin (R) – 20th District – New Hanover State Representative Paul Tine (Unaffiliated) – District 6: Beaufort, Dare, Hyde, Washington Unsure X X X X U.S. Senator Thom Tillis (R) Congressman David Rouzer (R) – 7th District No X X X X X X X 61 Public Comments • Areas of concern: • • • • North Atlantic Right Whale Environmental impacts Economic impacts to coastal communities Aesthetics • NC residents show support for offshore wind development • No direct opposition Brian Skerry 62 Visualization Study Currituck Lighthouse Holden Beach Bald Head Island C U R R I T U C K 63 L I G H T H O U S E B A L D H E A D 64 O A K I S L A N D 65 H O L D E N B E A C H 66 67 Survey • Respondents • • Coastal residents Associations Real Estate Development Environmental • • Elected officials Five Question Categories • • • • • Political Viability Implementation Challenges Economic Analysis Environmental Impacts General household questions • Demographics • 82 Respondents • 35 respondents own property on the beach • Split evenly between male and female • 60% have at least a Bachelor’s Degree • Majority over 45 years of age 68 All 82 Respondents 35 Beach Property Owners 69 35 Beach Property Owners 70 Comparison Data • Narragansett Beaches Clean Energy Survey • Fishermen’s Energy LLC. Survey • The general attitude toward offshore wind power is very positive. • The majority of respondents: • • • thought it was very important to move away from fossil fuels and use more clean energy. are very likely to frequent a local beach with a visible wind turbine. feel that offshore wind facilities would benefit job creation, air quality and electricity rates. CONCLUSIONS 72 Environmental Impacts: Conclusion • Most impacted sector: • • • • • Marine Mammals Birds Finfish & Essential Fish Habitat Sea Turtles Factors with most impact: • • Site surveying Pile driving • Proper mitigation will reduce impacts • Most harmful impacts are temporary 73 Economic Analysis: Conclusion • Renewable and Clean VS. Efficient and Fossil Fuel • BCRs were above 1, but below USACE standard of 3.2 for new projects • Project will require subsidies • Minimal impact on tourism and real estate • Further investigation: • • • • Fisheries Recreational water sports Electricity provider competition Cost of electricity 74 Political Feasibility: Conclusion • Political Climate • • • Varied opinions among elected officials Many elected officials have no public stance Concerns: • Development costs • Effects on tourism and coastal economies • Political viability • Legal Framework • Public Opinion • Areas of concern: North Atlantic Right Whale • Environmental impacts • Economic impacts to coastal communities and tourism • Aesthetics • • Survey • Larger sample size needed OFFSHORE WIND ENERGY DEVELOPMENT IN NORTH CAROLINA: IS IT WORTH IT? 76 Acknowledgements Many thanks to the faculty and staff that support the Master of Coastal and Ocean Policy program at the University of North Carolina at Wilmington. Their participation, advise, and input was crucial for the completion of this Capstone. We, as the first graduating class of the MCOP program, appreciate all the support received from the University and the community. 77 QUESTIONS? 78 79 BOEM Process 80 Phase Impacted Sector Site Characterization Site Assessment Construction Operation Benthic Resources Negligible Negligible to Minor Negligible to Minor Negligible to Minor Marine Mammals Negligible to Minor Negligible to Moderate Minor to Moderate Negligible to Moderate Air Quality Minor Minor Minor Negligible Water Quality Minor Minor Minor Negligible Birds and Bats Negligible Negligible to Minor Negligible Negligible to Moderate Coastal Habitats Negligible Negligible Negligible Negligible Sea Turtles Minor Minor to Moderate Negligible Negligible to Minor Essential Fish Habitat and Finfish Negligible to Minor Negligible Minor Negligible to Moderate 81 CBA Results CBA Iteration Description Disaster Total Costs (Millions) Total Benefits (Millions) NPV (Millions) BCR CBA 1 100 Turbines No 2,878 3,638 58 1.26 CBA 2 100 Turbines (7%) No 2,878 3,638 (419) 1.26 CBA 3 200 Turbines No 5,202 7,090 552 1.36 CBA 4 340 Turbines No 8,457 11,922 1,244 1.41 CBA 5 100 Turbines Yes 3,508 3,638 (346) 1.01 CBA 6 200 Turbines Yes 6,462 7,090 (256) 1.06 CBA 7 340 Turbines Yes 10,597 11,922 (130) 1.09 82 CEA: Summary Table Energy Source MWh/Year Natural Gas 28,704,000 Coal 47,676,000 Nuclear 39,132,000 Hydro Electric 3,720,000 Solar 59,616 Wind 1,752,000 Capacity Factor* Levelized Capital Cost ($/MWh) O&M, Fuel, Misc ($/MWh) Total Cost ($/MWh) 87 85 90 30.3 97.8 71.4 59.8 48.4 23.6 91.3 147.4 96.1 53 25 40 72 114.5 175.4 10.5 11.4 22.8 84.5 130 204.1 83 Elected Official Yes NC Governor Pat McCrory (R) U.S. Senator Richard Burr (R) Congressman Walter Jones, Jr. (R) – 3rd District X State Senator William “Bill” Peter Rabon (R) – 8th District: Bladen, Brunswick, New Hanover X X State Senator Michael Lee (R) – 9th District: New Hanover State Senator Jane Smith (D) 13th District: Columbus & Robeson State Representative Susi Hamilton (D) – 18th District: New Hanover & Brunswick State Representative Chris Millis (R) – 16th District: Pender & Onslow State Representative Frank Ller (R) – 17th District: Brunswick State Representative Ted Davis, Jr. (R) – 19th District – New Hanover State Representative Rick Catlin (R) – 20th District – New Hanover State Representative Paul Tine (Unaffiliated) – District 6: Beaufort, Dare, Hyde, Washington Unsure X X X X U.S. Senator Thom Tillis (R) Congressman David Rouzer (R) – 7th District No X X X X X X X 84 Picture Sources • http://urbanomnibus.net/redux/wp-content/uploads/2010/12/Super-Post-Panamax-liner.jpg • http://ibc.lynxeds.com/files/pictures/_DSC3072.JPG • http://media.dma.mil/2014/Dec/10/2000956693/-1/-1/0/140708-M-IY869-689.JPG • http://iss-foundation.org/wp-content/uploads/2012/08/bluefin-photo.jpg • http://www.power-technology.com/projects/sheringham-shoal/images/1-wind-farm.jpg • http://www.siemens.com/press/pool/de/pressebilder/photonews/PN200826/300dpi/PN200826-07_300dpi.jpg • http://www.maritimejournal.com/__data/assets/image/0011/726896/MJ-Newsletter-19-4-12-French.jpg • http://sbstatesman.com/wp-content/uploads/2014/10/WindFarm_Mariusz.Pa%C5%BAdziora.jpg • Slide 4: Esri, GEBCO, IHO-IOC GEBCO, DeLorme, NGS | General Bathymetric Chart of the Oceans (GEBCO), NOAA Environmental Satelite, Data, & Information Service (NESDIS), National Geophysical Data Center (NGDC) | Stephen Creed and Christine Taylor Bureau of Ocean Energy Management | BOEM Office of Renewable Energy Programs, MarineCadastre.gov |Esri, DeLorme, FAO, USGS, NOAA, EPA, NPS • http://www.governor.state.nc.us/sites/all/themes/govpat/images/GovPatMcCrory-HQ.jpg • http://www.doi.gov/news/photos/images/SecretaryJewell.jpg • http://portal.ncdenr.org/web/guest/secretary-bio • https://www.whitehouse.gov/sites/whitehouse.gov/files/images/Administration/People/president_official_portrait_hires.jpg • http://www.fisheries.noaa.gov/pr/images/cetaceans/rightwhale_baleen_georgiadnr_permit15488.jpg