In July, the U.S. Department of the Interior approved large offshore wind farms in New Jersey and Maryland. Atlantic Shores in New Jersey and MarWin and Momentum in Maryland will join two large New York wind farms approved in June once financial agreements are in place.
These projects will receive billions of dollars in massive subsidies from the federal government and electricity ratepayers. What benefits will New Jersey and Maryland get from this huge amount of money?
To answer this question, it is best to recall the classic warning from Trojan horse legend, “Beware of Greeks giving gifts”– In other words, the potential dangers of accepting something that seems too good to be true.
The state ignored the warning and agreed to pay very high prices for power from new offshore wind farms – Empire Winds 1 and Sunrise Winds – off the coast of Long Island.
In announcing the final agreement, New York Governor Kathy Hochul triumphantly declared that the new project would More than 800 jobs created during construction phase and deliver Generate more than $6 billion in economic benefits to the state over 25 years.
The fact that New York will pay an average price of more than $150 per MWh (megawatt hours) for Empire Wind 1 and Sunrise Wind power is not appreciated.
This is better than Four Second-rate The average wholesale electricity price in New York in 2023-24 is $36 per megawatt hour.
At 2024 prices, the total annual premium for power from these wind farms will be approximately $520 million.
Over 25 years, New York taxpayers will pay about $13 billion for the so-called $6 billion benefit.
That's not all. Due to tax credits, U.S. taxpayers will bear at least 40% of the cost of wind farm construction. The minimum cost per megawatt (million watts) of capacity is $5.5 million, Federal subsidies for New York's two wind farms will total at least $3.8 billion.
What about employment and other financial benefits?
A study prepared for Empire Wind 1 owner Equinor and submitted to the federal Bureau of Ocean Energy Management (BOEM) says the project will create 180 direct jobs per year in New York during the six-year construction phase.
The study estimates that an additional 60 jobs will be created each year due to indirect employment effects, i.e. additional employment in the project's supply chain.
A more reasonable estimate for both projects would be to create 515 jobs per year, rather than 800.
According to reports submitted to BOEM, the combined contribution of these two projects to New York State's total added value (equivalent to state-level GDP) during construction will be less than $450 million.
Nearly the entire population of New York State will bear a very heavy financial burden.
A similar calculation of annual operations and maintenance (O&M) costs shows Annual contribution to total value added is approximately US$24 million, or approximately US$600 million over 25 years.
Not the $6 billion in benefits over 25 years touted by Governor Hochul; At 2024 prices, the actual valuation would be closer to $1.1 billion. anyway, Residents will pay a cumulative $13 billion in premiums for the electricity generated by these projects.
Additionally, the majority of new jobs created under the scheme were concentrated in the final year of construction, with the largest share (47%) made up of professional services. Overwhelmingly, these jobs are for people who would otherwise perform other tasks.
The economic benefits of the two offshore wind farms are far lower than the governor claims, and the work is mostly temporary assignments for professional services personnel.
Ms. Hochul believes that boosting the consultancy's business might be the desired outcome. still, Almost the entire population of the country will bear a very heavy financial burden.
After withdrawing from the New York plan, the Biden administration's overall goal is to reach a target of 30 gigawatts (gigawatts) of offshore power generation capacity by 2030 or soon thereafter.
This is equivalent to This is 17 times the total capacity of the Empire Wind 1 and Sunrise Wind projects.
Detailed costs and financial arrangements vary, but the figures above suggest States with offshore wind farms pay taxpayers about $9 billion in recurring premiums each year.
New job creation and revenue from capital and operations and maintenance expenditures are likely to be less than $800 million annually.
In addition to the huge subsidies from ultra-high electricity bills, federal taxpayers will contribute about $65 billion through tax credits if the Biden administration's offshore wind power goals are achieved.
Although the subsidies for individual projects may not seem outrageous, A subsidy of about $870 per person in the country for offshore generation was promised.
That could last 25 years, but for a small part of the country that supports renewable energy plans, it's a huge burden.
Top image via 60 Minutes/YouTube screenshot
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