Electricity Prices Would Skyrocket Under Cooperís Offshore Wind Goals | Beaufort County Now | Gov. Cooperís desire for building 8 gigawatts (GW) of offshore wind in North Carolina would have severe impacts on our electricity bills

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    Publisher's Note: This post appears here courtesy of the John Locke Foundation. The author of this post is Jon Sanders.

  • Gov. Cooper's desire for building 8 gigawatts (GW) of offshore wind in North Carolina would have severe impacts on our electricity bills
  • The cost of building 8 GW of offshore wind capacity in North Carolina would range from $55.7 billion to $71.5 billion
  • Residential electricity bills would increase by $400 to $500 per year

    Gov. Roy Cooper seeks to populate the ocean waters off the beaches of North Carolina with massive wind turbines. If he got his way - as expressed in an executive order issued June 9, 2021 - then by 2040 the waters surrounding North Carolina would be home to 8 gigawatts (GW) of wind energy facilities.

    A recent study estimated that 8 GW of offshore wind production here would cost North Carolinians 45,000 to 67,000 permanent jobs. The study's estimate was based on expected electricity price hikes and their impacts on the economy; it did not include other economic effects, such as on the major coastal industries of fishing and tourism.

    A new John Locke Foundation policy report, "Big Blow: Offshore Wind Power's Devastating Costs and Impacts on North Carolina," looks at a range of impacts offshore wind energy development would have on North Carolina. They include electricity prices, CO2 emissions, jobs and economic growth, coastal tourism and fishing, sensitive habitats, and endangered whales, fish, turtles, birds, and more.

    This research brief is the first in a series that will examine one by one the issues raised in that report. It discusses the report's estimated electricity price hikes that North Carolina families, small businesses, and industrial customers would suffer from building and operating 8 GW of wind energy facilities off North Carolina shores. The estimates were made for Locke by Mitch Rolling and Isaac Orr from the Center of the American Experiment.

    Electricity Price Impacts from Adding 8 GW of Offshore Wind

    Here are several findings from Rolling and Orr's analysis of building and maintaining 8 GW of offshore wind energy capacity in North Carolina:

  • The cost of building 8 GW of offshore wind capacity in North Carolina would range from $55.7 billion to $71.5 billion.
  • Electricity rates for residential customers would increase by 28% to 36% over their 2020 levels by 2040.
  • Residential customers would pay around $400 to $500 extra per year for electricity.
  • Meanwhile, commercial electric customers (local businesses) would be paying $1,600 to $2,000 extra per year.
  • Industrial customers would be paying $48,000 to $60,000 more per year.

    Rolling and Orr based their costs estimates on a range between regional cost data (the base-cost scenario) from the U.S. Energy Information Administration (EIA) and on data provided by Dominion Energy in Virginia (the low-cost scenario), which currently has a research project for offshore wind called the Coastal Virginia Offshore Wind pilot project. Under their assumptions, offshore wind generation is added incrementally to achieve Cooper's 2.8 GW by 2030 and 8 GW by 2040. Their model holds constant the current grid as well as annual generation pre-Covid, with a capital structure based on the most recent approved structure for Duke Energy Carolinas and a 1% property tax. (See the report for the fuller description of the methodology.)

    A cost ranging from $55.7 billion to $71.5 billion to build offshore wind energy capacity would result in an average cost increase per North Carolina electricity customer of $330 to $425 per year. This cost increase would peak in 2040 in a range of $641 to $823 per customer.


    You can see the electricity price hikes go into effect in the following two tables. Notice, however, how they follow several years of essentially flat rates. How those came about is thanks to horizontal drilling and hydraulic fracturing (fracking), which produced competitively priced natural gas that allowed North Carolina's electricity provision to transition from coal to more nuclear and natural gas without losing reliability or efficiency.


    But why would it cost so much? Part of the answer is the enormous capital cost involved. But as Rolling and Orr point out, North Carolina's existing nuclear and natural gas power plants can generate electricity at very low costs, comparatively:

    Data from the Federal Energy Regulatory Commission (FERC) show North Carolina's nuclear plants are some of the lowest-cost sources of electricity in the state, generating electricity for $21.71 per MWh. North Carolina's natural gas plants generated electricity for $35.83 per MWh, and coal plants in the state generated electricity for $53.84 per MWh, on average.

    Compared with $21.71 per MWh for nuclear and $35.83 per MWh for natural gas, how does offshore wind fare? Rolling and Orr estimated offshore wind's costs between $137.00 and $164.39 per MWh. The following table gives the cost comparisons according to the low-cost scenario:


    Notice the intermittency cost. That's because switching from one form of electricity generation to another isn't as simple as switching to a different brand of paper towel, where there might be slight performance differences but is overall merely a matter of consumer preference. Intermittency is a huge factor for the weather-dependent renewable sources of wind and solar, requiring backup generation of reliable natural gas or coal plants (the costs of which must be included as part of a renewable source's cost) while operating them less efficiently (making them more expensive).

    Speaking of consumer preference: in North Carolina, the consumers get no say over who provides them electricity, for how much, and from what sources. For that reason, North Carolina state law seeks to protect them from being taken advantage of and ensure that they get the least-cost, reliable electricity at the flip of a switch. Nevertheless, with such a huge captive consumer base, the forces of cronyism have big incentives to keep chipping away at those protections for their own benefit, and now they're seeking to force highly expensive offshore wind energy on North Carolinians.

    The next brief in this series will discuss how electricity prices behave like regressive taxes and examine the critical problem of energy poverty, which would be made worse in North Carolina from the sort of price hikes discussed here.
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