Anthony J. Pennings, PhD

WRITINGS ON DIGITAL STRATEGIES, ICT ECONOMICS, AND GLOBAL COMMUNICATIONS

Will Offshore Wind Power Print Money?

Posted on | March 15, 2021 | No Comments

Research is showing that offshore wind farms can increase biodiversity in oceans. Like sunken ships, windmill installations present unique opportunities for facilitating marine life. These new habitats can create artificial reefs and marine life-protection areas. Undersea hard surfaces rapidly collect a wide range of marine organisms that build and support local ecosystems. They also provide some refuge from trawlers and other industrial fishing operations.

This post will examine the prospects of wind energy, one of the promising alternative renewable energies that will work with hydropower, solar, and even small-scale nuclear energy to power the smart electrical grids of the future. Is offshore wind feasible? What are the downsides? Will it be profitable?
Can media economics help us understand the economics of wind power?

Personally, wind power hasn’t impressed me in the past. In graduate school in Hawaii, I remember a big windmill near the North Shore surf spots that didn’t seem to do much. Driving up into San Francisco along Interstate 5, the windmills seem big and slow. Flying over Oklahoma, the wind farms are a bit more impressive. But I didn’t understand the engineering and science of wind energy.

The physics of windmills means big is better. The larger the propellers can be built, the more efficient they become. Bigger windmills capture more wind, and that produces more torque. The more propellers can harvest the power of the wind, the more electricity they can produce. Wind and torque combine to transform mechanical energy into electricity.

torque and angular speed

Unlike solar, wind power is not directly contingent on solar rays but on larger climatic events. The US Department of the Interior‘s Bureau of Ocean Energy Management (BOEM) has been conducting environmental impact studies and is giving conditional permission to build offshore wind farms. Contracts to provide wind electricity as low as 5.8 cents per kilowatt-hour are being negotiated. Massachusetts, Virginia, and the far coast of Long Island, New York are some of the major sites under development. While previously a global laggard, the US is expected to become a major offshore electricity contributor after 2024.

The future of US offshore wind energy is dependent on several economic variables. One is power purchase agreements (PPAs) that businesses and other organizations use to solidify long-term purchases of electricity. Another is renewable portfolio standards (RPSs) that obligate US states to procure a certain percentage of renewable energy. RPSs have contributed to nearly half of the growth in renewable energies since 2000. Tax incentives are important and depend on political winds. The US Treasury extended safe harbor tax credits for renewable energies, including offshore wind in light of the COVID-19 pandemic. Offshore wind auctions are also crucial as cry “location, location, location” resonates soundly in this industry.

Renewable critics like the Manhattan Institute have been been critical of offshore windmills, arguing that they decline some 4.5% in efficiency every year. Another concern is who will pick up the decommissioning costs of deconstructing and recycling the windmills. But the technology is new as are the maintenance and regulatory practices.

Wind could be a significant boost for coastal communities. Major cities that were wedded to the ocean due to shipping are likely to benefit as offshore wind might provide cheap electricity and much-needed economic benefits. In terms of jobs and the revitalization of shore-based businesses a wide range of services will be needed. Energy control centers, undersea construction, equipment supply, and maintenance operations, are just some of the opportunities that are emerging around ocean-based renewable energy sources.

The economics of offshore wind energy are very much like media economics – high upfront costs and low marginal costs. Book publishing requires editors and pays author royalties. It also needs paper, printing presses, and the distribution capabilities required to produce fiction and non-fiction works. While some books may not be profitable, a best-seller can provide significant returns for the publisher. Movies require extensive upfront expenses in production and post-production, but each showing in cinemas worldwide costs relatively little. Wind power requires a major capital influx to set up. But the wind is free, so once operational, the windmill begins to produce electricity. Lubrication and other maintenance activities are needed at times, but electricity is created as long as the wind is blowing. If the infrastructure is set up efficiently, it will print money.

Ⓒ ALL RIGHTS RESERVED



AnthonybwAnthony J. Pennings, PhD is a Professor at the Department of Technology and Society, State University of New York, Korea. Born in New York, he had a chance to teach at Marist College near his home town of Goshen before spending most of his academic career at New York University. Before joining SUNY, he moved to Austin, Texas and has taught in the MBA program at St. Edwards University. He started his academic career at Victoria University in New Zealand. He has also spent a decade as a Fellow at the East-West Center in Honolulu, Hawaii.

Comments

Comments are closed.

  • Referencing this Material

    Copyrights apply to all materials on this blog but fair use conditions allow limited use of ideas and quotations. Please cite the permalinks of the articles/posts.
    Citing a post in APA style would look like:
    Pennings, A. (2015, April 17). Diffusion and the Five Characteristics of Innovation Adoption. Retrieved from http://apennings.com/characteristics-of-digital-media/diffusion-and-the-five-characteristics-of-innovation-adoption/
    MLA style citation would look like: "Diffusion and the Five Characteristics of Innovation Adoption." Anthony J. Pennings, PhD. Web. 18 June 2015. The date would be the day you accessed the information. View the Writing Criteria link at the top of this page to link to an online APA reference manual.

  • About Me

    Professor at State University of New York (SUNY) Korea since 2016. Moved to Austin, Texas in August 2012 to join the Digital Media Management program at St. Edwards University. Spent the previous decade on the faculty at New York University teaching and researching information systems, digital economics, and strategic communications.

    You can reach me at:

    apennings70@gmail.com
    anthony.pennings@sunykorea.ac.kr

    Follow apennings on Twitter

  • About me

  • Writings by Category

  • Flag Counter
  • Pages

  • Calendar

    August 2021
    M T W T F S S
     1
    2345678
    9101112131415
    16171819202122
    23242526272829
    3031  
  • Disclaimer

    The opinions expressed here do not necessarily reflect the views of my employers, past or present.