Global benchmark prices for offshore wind have plunged 32% in the past year and 12% in the last six months, according BloombergNEF's latest analysis released Tuesday.
Benchmark prices hit $78/MWh for the second half of 2019, largely driven by cheaper equipment costs, according to analysts. Meanwhile, onshore wind and solar prices have dropped 6% and 11% respectively since the first half of 2019, hitting global benchmark prices of $47/MWh and $51/MWh. Battery storage prices also fell 35% in the past year, hitting a global average of $186/MWh.
Shorter duration battery prices dropped 4% since the first half of 2019 to $112/kW/yr. Globally, short-duration batteries are cheaper than building new natural gas, with the exception of the U.S., "where cheap gas gives open-cycle gas turbines ... an edge," BNEF said.
The lowest U.S. offshore wind contract price to date is Vineyard Wind's $64/MWh Massachusetts deal struck in August 2018, half the cost of the previous lowest U.S. bid at the time". Other U.S. developers have since bid closer to the global benchmark prices, with the New York State Energy Research and Development Authority (NYSERDA) finalizing contracts with Ørsted and Eversource on Wednesday for an average cost of $83.63/MWh.
Offshore wind remains a nascent industry in the U.S., though more states and utilities are expressing interest in the technology's potential. The most recent developments on the offshore wind front are Dominion Energy securing critical federal permits for its proposed 12 MW offshore wind farm — the first in federal waters.
The resource remains more expensive than traditionally-deployed onshore wind and solar, and prices for those resources are expected to continue dropping.
"Ongoing cost declines mean that benchmark PV and wind plants are just 4-5 years away from starting to challenge existing coal and gas plants on a cost-of-energy basis," BloombergNEF said in its executive summary. "[I]n the U.S., recently financed wind farms in the most windy states are at cost parity with the least efficient operating gas plants, even without the production tax credit."
NYSERDA's 1,700 MW project contracts, first awarded in July, are part of New York Democratic Gov. Andrew Cuomo's goal of 9,000 MW offshore wind for the state by 2035.
Offshore renewable energy certificate (OREC) prices for the Ørsted and Eversource projects dropped approximately 40% below what the research authority had initially projected in 2018, "signaling that the costs to deploy offshore wind are rapidly declining," NYSERDA said in a statement.