Written by Peter Drown Wednesday, 05 May 2010 12:00
"I was on a roll with that for awhile," Dr. Gary Hunt told me, pointing to a box containing a textbook he is authoring—a six-hundred-plus page manuscript on applied econometrics for advanced students. He has two chapters left.
A professor in UMaine's School of Economics, Dr. Hunt has published over thirty articles in notable peer-reviewed journals, but it was his three latest papers exploring the cost of wind energy that I was in his office to hear about.
Cost analysis and energy prices are familiar territory to Dr. Hunt. "This is a return to an area I had significant interest in early in my career," Hunt explained. His doctoral dissertation in part analyzed the relationship between capital investment and energy prices, and his numerous papers and appointments demonstrate his significant work in the field of economics.
He first heard about the wind project when Dr. Habib Dagher, director of AEWC Advanced Structures and Composites Center, spoke about it for the Phi Kappa Phi honor society, of which Hunt is UMaine chapter president. "I became very interested after I heard his presentation and decided to do some investigation into the economics of wind energy," he explained. Hunt spent that summer and fall doing background research on the subject, and in November 2009 began distributing a series of papers entitled Maine Offshore Wind Energy, analyzing the resource and potential cost of wind energy.
The first paper, Wind Resources, Technologies, and Energy Production, investigates the denominator in the cost equation: the wind resource. Combining wind speed data from ocean observing stations (some from UMaine's own NERACOOS) with the known power curve of a 5 MW turbine he arrives at several estimates for annual offshore energy outputs.
In paper number two, Cost Estimates, Hunt explores the numerator: all the costs that go into developing an offshore wind farm. He gathers data from previous European experience and factors in learning effects, supply chain constraints, and tax incentives, to estimate the capital, O&M, and other costs of wind energy production. He divides this number by the wind resource estimated in paper one and the result is the average cost of wind energy in terms of dollars per kilowatt-hour (kW h).
Paper number three is perhaps the most relevant from the public's point of view. In Comparative Cost Analysis, Hunt uses the same cost estimation method from the previous paper to arrive at average per kW h costs for several energy alternatives, including traditional fossil fuels, solar photovoltaic, nuclear, and onshore wind. He strips off the current 30% investment tax credit and favorable tax depreciation rules for renewable energy and utilizes the more traditional 10% credit and rules instead. Also, he adds a carbon cost based on several estimates of what that charge should be.
Under the paper three's conditions, he estimates that offshore wind energy becomes competitive with traditional fossil fuels in 2020-2030. This coincides well with both the Department of Energy's "20% Wind Energy by 2030" plan, and the vision of the DeepCWind Consortium of having a floating wind farm in the Gulf of Maine within that time period.
The potential to tap into the vast wind resource in the Gulf of Maine has important economic implications for the state. He envisions a plan shared by others involved in the project of replacing home heating oil with electric heat pumps and traditional vehicles with plug-in electric vehicles. The offshore wind farm would provide a large share of the electricity.
The benefits don't end there. Dr. Hunt explained how a 5 GW project would almost certainly provide an export opportunity. "Even if we do the most we can envision in terms of using it locally...there's still a need for power export."