The Economic Potential of Offshore Wind Energy

Transcription

1 The Economc Poenal of Offshore Wnd Energy The Case of Penche-Nazaré 2 nd June 2016 Mara A. Cunha-e-Sá NOVA SBE Ana Fara Lopes NOVA SBE

2 Movaon Objecve: deermne f and when here s economc poenal value of offshore wnd energy a local level Wha are he man drvers ha mpac on he profably of he nvesmen from a socal perspecve? Sudy Se: Penche-Nazaré se n he norhwesern coas of Porugal

3 P1 P2 P3 j years 1 years 2 years 3 years j Begnnng of nvesmen j+ 1 End of he frs cycle j End of he second cycle j End of he hrd cycle

4 CAPEX ( 2013/KW) Movaon The cos of capal (CAPEX) s expeced o decrease a ndusry level over me Technologcal developmen, economes of scale, learnng by dong and R&D subsdes Typcally characerzed by a learnng rae rangng beween 10 and 20% Therefore he nal year of nvesmen should be endogenous! Years

5 Movaon A careful analyss of he local characerscs (e.g. elecrcy produced, dsance from coas, waer deph, ype of sol) s requred o evaluae he profably of near- and offshore wnd energy nvesmens

6 Movaon Clmae change mgaon: man argumen o foser renewable energy From a socal perspecve, exernales should be aken no accoun Posve Negave Emsson Savngs Waer Savngs Arfcal Reefs Vsual Impac Bodversy Impac Nose mpac (Consrucon) Carbon Emssons Brds Moraly Bodversy Ar Polluans Eleromagnec felds Populaon

7 Movaon 1. Endogenous Sarng year of nvesmen 2. Accouns for local characerscs Levelzed Cos of Energy Ne Presen Value and Inernal Rae of Reurn Capal Expendures (CAPEX) Analyss Energy Sysems Plannng No No No Yes Yes Yes Yes No 3. Accouns for he value of exernales Yes, bu rarely done Yes, bu rarely done No Yes, bu lmed o CO2 emssons

8 Mehodology Elecrcy Produced Offshore Wnd Nearshore Wnd Marke/Prvae Perspecve Revenues Prce of elecrcy of he Iberan Marke Capal Expendures (CAPEX) Technologcal Advancemens Coss O&M Expendures (OPEX) Insalled Capacy Wake Effec Exernales 8

9 Elecrcy Produced Re venues p( P ) s (1 d M 1 ) The amoun of elecrcy produced wll be represened by p: p ( P) 8760* * w( P) * P : capacy facor (% of me durng whch he energy devce s operang a nomnal capacy) P: nsalled capacy (KW) per klomeer squared Elecrcy Produced Prce of Elecrcy CAPEX O&M Expendures Wake Effec CO2 Savngs Ar Polluan Savngs Vsual Impac 9

10 Prce of elecrcy ( /MWh) Prce of Elecrcy MIBEL (he sngle marke of elecrcy n he Iberan Pennsula), whch s n place snce 2007, jons n a spo marke producers and consumers of elecrcal energy The reference prce n he regulaed spo marke has been volale /MWh Reference prce n he Spo marke Elecrcy Produced Prce of Elecrcy CAPEX O&M Expendures Wake Effec CO2 Savngs Ar Polluan Savngs Vsual Impac 10

11 Mehodology Elecrcy Produced Offshore Wnd Nearshore Wnd Marke/Prvae Perspecve Revenues Prce of elecrcy of he Iberan Marke Capal Expendures (CAPEX) Technologcal Advancemens Coss O&M Expendures (OPEX) Insalled Capacy Wake Effec Exernales 11

12 Capal Coss CapalCos s C b( j, ) P The oal coss are capal coss (CAPEX) and yearly operaon and manenance (O&M) coss (OPEX) b( j, ) j a 1 1 b Elecrcy Produced Prce of Elecrcy CAPEX O&M Expendures Wake Effec CO2 Savngs Ar Polluan Savngs Vsual Impac

13 Operaon and Manenance Expendures (OPEX) OMCoss x( ) C 1 (1 d) O&M coss ncurred each year are a percenage of he nal capal When he devces reach her ypcal lfeme, he coss assocaed wh her manenance should ncrease x( ) x0 0, 005 e n5 Elecrcy Produced Prce of Elecrcy CAPEX O&M Expendures Wake Effec CO2 Savngs Ar Polluan Savngs Vsual Impac

14 Wake Effec (Wnd) Trade-off beween spacng and elecrcy producon Whle hgher denses (KW/km2) ncrease profably for he prvae nvesor, also ncreases losses due o he wake effec: w 1, P ) - *P, ( 2 P P Nomnal Capacy of Turbne Nomnal Capacy of Turbne Nomnal Capacy: 5MW for offshore and 3MW for nearshore wnd Elecrcy Produced Prce of Elecrcy CAPEX O&M Expendures Wake Effec CO2 Savngs Ar Polluan Savngs Vsual Impac

15 Mehodology Elecrcy Produced Offshore Wnd Nearshore Wnd Marke/Prvae Perspecve Revenues Prce of elecrcy of he Iberan Marke Capal Expendures (CAPEX) Technologcal Advancemens Coss O&M Expendures (OPEX) Insalled Capacy Wake Effec Exernales 15

16 Carbon Doxde Emsson Savngs Carbon emsson savngs SCC( j, )* Carbon 1 (1 d) * p( P) Socal Cos of Carbon: ncludes he monezed damages assocaed wh ncremenal ncreases n carbon emssons, ncludng he mpacs on propery, ecosysem servces, agrculure and human healh values SCC( j, ) SCC0 (1 g) j 1 1 Value of Carbon emsson savngs depends on wha marne based elecrcy s nended o replace Emsson Facor consdered (Quany of CO2 emed per KWh produced - gco2/kwh) Elecrcy Produced Prce of Elecrcy CAPEX O&M Expendures Wake Effec CO2 Savngs Ar Polluan Savngs Vsual Impac 16

17 Ar Polluon Emsson Savngs Ar Polluon Reducon,u 1 D u * u * p( P ) (1 d) Sulphur doxde (SO2) and Nrogen oxdes (NOx), ha have a sgnfcan local mpac on he healh and well-beng of he populaon. Assumpon: local ar polluans (NOx and SO2) are unregulaed Elecrcy Produced Prce of Elecrcy CAPEX O&M Expendures Wake Effec CO2 Savngs Ar Polluan Savngs Vsual Impac 17

18 Vsual Dsamenes Coss from he vsual mpac decrease as offshore wnd developmen s done furher away from shore Socey s more nclned o he developmen of offshore wnd raher han onshore, mplyng ha here are smaller exernal coss for offshore raher han onshore wnd developmen Vsual mpac only applcable for offshore wnd energy and affecs households and ourss Landscape Coss 1 WTP H * Number Households WTP (1 d) T * Number Tourss Elecrcy Produced Prce of Elecrcy CAPEX O&M Expendures Wake Effec CO2 Savngs Ar Polluan Savngs Vsual Impac 18

19 3 1,,,,,, Coss Landscape * Reducon Ar Polluon Savngs Carbon Emsson Re max SOCIAL P P P j A CapalCoss OMCoss venues 19 Economc Poenal of Marne Renewable Energy Dscouned Revenues Dscouned Coss Area Avalable Decson Varables Emssons savngs Landscape Impacs

20 Daa (Benchmark case) Varable Value (Offshore) Value (Nearshore) Annual growh rae of socal cos of carbon (%) 2,5% Area avalable (km 2 ) Capacy Facor (%) 37,67% 31,96% Coss of O&M (%) 3,5% 3% Dscoun Rae (%) 5% Emsson Facor (on CO 2 ) 0, Emsson Facor (on NO x ) 0, Emsson Facor (on SO 2 ) 0, Inflaon Rae (%) 1,5% Margnal Socal damage per on of NO x 2087,3 Margnal Socal damage per on of SO ,8 Number of households n Penche and Nazaré Number of ourss n Penche and Nazaré Socal cos of carbon for 2012 ( /on) 9,5 Typcal lfeme of urbnes (years) 20 Wake Coeffcen (1) 1,125 1,018 Wake Coeffcen (2) 0, , WTP per Household ( /year) 80 WTP per ours ( /year)

21 Mllons Resuls An nvesmen s consdered vable from he decson maker s perspecve f has posve profs and occurs no laer han 2050 From he prvae perspecve we fnd ha neher offshore nor nearshore wnd are vable a local level However, from he socal perspecve, he nvesmen s profable sarng n he near fuure Benefs Sarng Year of Invesmen - Nearshore Wnd Offshore Wnd 0 21

22 Mllons Resuls Offshore wnd sands as he energy source wh he hghes economc poenal value (around mllon euros, wh an nvesmen sarng n 11 years) Annual elecrcy producon s around 20 TWh n all hree nvesmen cycles. The dscouned ne benefs from ar polluans reducon (15.6 bllon euros) are hree mes he value of reducons n CO2 emssons and cover half of he prvae coss (10 000) (20 000) Nearshore wnd energy deploymen se has a posve economc poenal value of around 433 mllon euros, wh an nvesmen sarng n 37 years. (30 000) Offshore Prvae Coss Landscape Coss CO2 Benefs Nearshore Prvae Revenues Ar Polluon Benefs 22

23 Resuls (Domesc Benefs of Carbon Emssons) Snce CO2 s a global polluan, he benefs of reducng CO2 emssons are no fully appropraed by he counry responsble for ha reducon If we assume ha he range of domesc benefs of carbon emsson savngs s zero Nearshore wnd energy would no longer be profable from a socal perspecve Offshore wnd deploymen would sll be vable sarng n 14 years. 23

24 Resuls (Nearshore Wnd) Nearshore wnd s lkely no vable from a socal perspecve, because: 350% 300% 1. Marke condons whch we have assumed may change n he me span requred -> he opmal sarng year of he nvesmen s n 37 years (2049) 2. Oher mporan negave mpacs specfc o nearshore wnd deploymen were no accouned for, e.g nose a he consrucon phase. 3. Nearshore wnd energy s very sensve o vsual landscape cos scenaros 250% 200% 150% 100% 50% 0% Dscouned Ne Benef Sarng Year of Invesmen Hgh Welfare Loss Scenaro Low Welfare Loss Scenaro 24

25 Resuls (Emsson Facors) Offshore wnd s nermen durng he day, hus producon from offshore wnd sources mgh have o be complemened wh elecrcy producon from fossl fuel sources Sarng years of nvesmen: beween 106 and 152 years -> Changes n he emsson facors can affec he man conclusons from a polcy perspecve 80% 60% 40% 20% 0% -20% -40%. The hgher he share of coal dsplaced, he more mporan ar polluon savngs become, as observed n he case of replacng a mx of coal (25%) and onshore wnd (75%) (S3) agans replacng exclusvely naural gas (S2). -60% Benchmark S1 (Average emsson facor) Prvae Coss Landscape Coss CO2 Benefs S2 (Naural gas) S3 (Coal + Onshore wnd) Prvae Revenues Ar Polluon Benefs 25

26 Resuls (Seleced Areas) There are many conflcng human uses a he sudy se. I s more relevan o calculae he poenal of offshore wnd energy deploymen n areas wh a hgher energy resource

27 Resuls (Seleced Areas) The norhern area records an economc poenal of 921 mllon euros wh he nvesmen sarng n 7 years (by 2019) Annual elecrcy producon s around 1,7 TWh n he frs cycle, ncreasng o 1,9 TWh n he hrd cycle An nvesmen n he souhern area can be profable n 6 years from he socal perspecve, recordng a socal value of mllon euros. Yearly elecrcy producon of 2,8 TWh n he frs, ncreasng o 3,2 TWh n he hrd cycle Norh Souh

28 Conclusons From a prvae perspecve, he nvesmen s never profable. However, akng no accoun he posve exernales assocaed wh offshore wnd energy, he nvesmen becomes vable Offshore wnd energy may be vable from 2023 onwards from a socal perspecve, dependng on many facors: Energy mx dsplaced: Offshore wnd energy s no longer vable from a socal perspecve f fossl fuels (e.g. Coal) n he dsplaced energy mx decrease Relably of he daa: here are ye no commercal scale projecs of offshore wnd energy Conflcng uses a he sudy se If so, here s scope for nervenon: To sar nvesng n 2023, a FT of 88 /MWh would suffce 28

29 Thank you! Emal: 29