New Report Shows Value of “Aggregated Procurement” to Significantly Reduce Cost of Offshore Wind Energy
"Buyers Network" of Creditworthy Off-takers, in Combination with Other Strategies, Could Lower Expected Cost of Energy of Offshore Wind Energy
Washington, DC & Montpelier, VT — The Offshore Wind Accelerator Project (OWAP) today released a comprehensive analysis of the value of "collaborative aggregated procurement" for offshore wind power.
The report, Collaborative Procurement of Offshore Wind Energy - A Buyers Network: Assessment of Merits and Approaches, demonstrates how the purchase of significant amounts of offshore wind energy by a buyers network—in combination with low-cost financing and extension of key federal tax credits—could substantially lower its costs in the near-term.
The report is a collective effort by Clean Energy States Alliance, Pace Global, Drinker Biddle & Reath LLP, and the Law Offices of Carolyn Elefant. It confirms the value of a buyers network to achieve significant reductions in the levelized cost of offshore wind energy. Specifically, the report finds that:
- Use of a buyers network has the potential to reduce the cost of offshore wind power by approximately $35 per megawatt hour.
- If a buyers network uses low-cost debt in the form of taxable or tax-exempt bonds, the cost could be further reduced by as much as an additional $20 per megawatt hour.
- The ability to use federal investment tax credits could result in an additional $50 per megawatt hour reduction in cost.
- The combination of aggregated procurement, low-cost financing, and use of the federal investment tax credit (if extended by Congress) could result in an expected levelized cost of energy for offshore wind of $95 per megawatt hour, on average. This would make offshore wind power highly competitive with other forms of electricity in the U.S.
The report describes the concept of a buyers network, essentially a consortium of creditworthy purchasers (including utilities, state and federal agencies, and large private commercial and/or institutional entities) that enter into long-term contracts with a developer(s) for a project’s generation. By creating economies of scale, a buyers network can spread fixed costs, such as transmission lines, over larger-scale wind farms; lower construction costs from efficiencies; reduce concentration of risk; and reduce capital costs, resulting in cost-competitive offshore wind power. The report provides recommendations and an action plan for creating a successful buyers network.
“Use of aggregated procurement can be a game changer for the domestic offshore wind industry,” said Mark Sinclair, Executive Director of Clean Energy States Alliance and lead investigator for the report, in a statement about its release. “The report demonstrates both the power and the simplicity of this approach, and provides a blueprint for effective implementation of a buyers network. We now look forward to working with interested states, federal agencies, utilities and other institutions to encourage the use of this strategy to accelerate the development of this important new industry in the U.S.”
Collaborative Procurement of Offshore Wind Energy - A Buyers Network: Assessment of Merits and Approaches is available in full on the Clean Energy States Alliance website at
About the Offshore Wind Accelerator Project: The Offshore Wind Accelerator Project (OWAP) is a collaborative effort to fast-track the development of the United States' significant offshore wind resource. Managed by the Clean Energy States Alliance, the project works with state and federal officials, industry representatives, and non-governmental organizations to tackle the major barriers to offshore wind development in an accelerated time frame. Learn more at www.offshorewindworks.org.
About Clean Energy States Alliance: Clean Energy States Alliance (CESA) is the only national nonprofit organization representing the collective voice of public clean energy funds. CESA provides information sharing, technical assistance services, and a collaborative network by coordinating multi-state efforts, leveraging funding for projects and research, and assisting clean energy programs with program development and evaluation. For more information, visit www.cleanenergystates.org.
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