Deepwater Wind - Energy Highway

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As estimated by the New York State Department of Public Service, the benefits of price
suppression of the renewable generation sources currently online in upstate New York
offsets more than half of the costs of the payments made to those same resources under
the Renewable Portfolio Standard program. CRA, in a study commissioned by
Deepwater estimated that a utility-scale offshore wind farm delivering power into
downstate New York would result in even higher price suppression benefits for
consumers as a result of downstate New York’s higher energy prices as well as the higher
peak coincidence of offshore wind generation. In other words, the same megawatt-hour
of low marginal cost power delivered into downstate New York produces 20% greater
consumer savings than if it were delivered into upstate New York.
Deepwater commissioned CRA to perform detailed system impact studies to estimate the
savings to rate payers created by the Project as a result of price suppression over its first
10 years of operations. CRA estimated that the price suppression impact during that
period to Zone K would average approximately $4.50/MWh for all power sold in that
zone, and $0.90/MWh for Zone J. The annual benefits for both zones would average
between $100 million and $300 million for a total 10-year benefit of $1.95 billion to
downstate ratepayers.
Long-Term Hedge Benefit
In addition to the environmental benefits of offshore wind, the Project is also the only
new utility-scale resource option in downstate New York (other than nuclear, which
would face considerable siting resistance) that can provide a long-term price hedge
against fossil fuels. As a point of reference, wholesale prices for natural gas in 2008 were
approximately twice the level as those just two years later in 2010 1 . While natural gas
prices are at an historic low today, creating overdependence on natural gas power
generation exposes the state to the long-term risk of higher gas prices or the type of
volatility that has occurred routinely in the past.
Reliability Benefits
The combination of a utility-scale offshore wind project and a controllable cable link to a
new part of the New England electric grid provides a number of important reliability
benefits for the downstate New York electric grid.
Peak Coincidence. Offshore winds in the Northeast tend to blow in the late afternoon
on hot summer days when the downstate demand is the highest. This high peak
coincidence of offshore winds makes offshore wind farms better able to supply load
when power is needed most; when the energy and capacity are most valuable in the
wholesale market; and when the air quality benefit is greatest, as the utility peaking
plants are generally the least efficient and dirtiest. While land based wind farms in
upstate New York have typical on-peak capacity factors of only 10%, the DWEC project
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1 www.eia.doe.gov
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