Energy Updates

Governor Puts Discount Price Tag on Pristine Ocean Views

By John Toedtman, CRI Executive Director

Center for Energy & Environmental Policy

December 29, 2023



For millennia, mankind has sat on our ocean beaches enjoying the calm and pristine view (which is currently being threatened). This incredible natural masterpiece is being sold for a pittance. Delaware's Governor has now opened the door to the development of giant industrial offshore wind turbines just 10 miles off Delaware's coast.


On December 19, 2023, Governor Carney released details of a "potential agreement" with offshore wind developer US Wind to bring power cables ashore in Delaware Seashore State Park just south of the Indian River inlet bridge. The cables would go up Rehoboth Bay and Indian River to Millsboro, coming ashore to connect to a substation near the Indian River Power Station. 


The Governor's potential agreement with US Wind is a bad deal for Delaware's beach communities. First, consider the "benefits" of this agreement.


  • US Wind would pay the State a $350,000 per year lease payment, increasing 3% yearly for total payments of $9.4 million over twenty years, $3.7 million in today's dollars. US Wind would also pay $40 million over twenty years for community benefits, $9.4 million in today's dollars. These are the only guaranteed payments in the Term Sheet being negotiated between the state and US Wind, with a present value of about $13 million. 


  • US Wind promises 150,000 yearly free Renewable Energy Credits (RECs) if any are left after delivering promised RECs to Maryland. The RECs are valued at $76 million over twenty years, $26.7 million in current dollars. One REC is created for each MWh of power produced. However, US Wind has promised all the available RECs to Maryland utilities if the projects operate the planned 44% of the time. Unfortunately, our regional grid manager predicts offshore wind projects will only run 37% of the time. Most of the generation occurs in the spring and fall when electric demand is low, so it is likely all that power won't make it onto the grid, and generation will be curtailed. The more offshore wind projects built, the more likely curtailment will occur. It is unlikely Delaware will receive any RECs. 


  • Modeling showed residential electric rates may fall by $9 a year in Delaware along with reduced commercial and industrial rates. That only equals 0.5% savings, but the error bar in the modeling could be as high as 2.5% meaning the cost savings is not statistically significant and should be reported as such. Offshore wind starts and stops intermittently as wind speeds change. The modeling left out the high cost of reacting quickly to falling power output with inefficient gas and oil fired generators. It is unlikely there will be any savings in electric rates.



So, what are the costs? 


In its Draft Environmental Impact Analysis of this project with US Wind, the US Bureau of Ocean Energy Management used a University of Delaware survey of beachgoers to calculate potential lost tourism because of the daytime visual blight of turbines on ocean views. 


NOTE: The UD survey showed visualizations of 579 feet tall turbines and asked whether people would return to the beach with turbines present. The closer the turbines were to the beach, the more people responded that they would not return. 


Since US Wind plans to use turbines between 938 feet tall and 1050 feet tall, the survey results need to be adjusted for greater visibility, which suggests a net 24% of visitors may not return. 


  • A similar survey of recent renters in the Outer Banks showed that 38% would not return based on daytime views, but 54% wouldn't return based on nighttime views of blinking lights. The UD study showed nighttime visualizations but didn't report the results. 


  • US Wind is often quoted as planning to use an Aircraft Detection Lighting System that only turns lights on when radar detects aircraft. However, US Wind added a clause the system would only be used if it was commercially feasible, which it is not. Without a solid commitment, we should assume the system will not be used.


  • A state 2021 tourism report shows $2.7 billion in tourist spending at the beach, so a 24% loss equals $640 million in lost tourism, sixteen times the benefit. That could mean over 5,000 lost jobs, $200 million in lost wages, and over $65 million in lost taxes, according to the tourism report. The Net Present Value of the lease payment and community benefit fund totals $13 million over twenty years. Just 1% lost tourism costs twice that amount in just the first year. These are Maryland approved projects that are a very big losing proposition for Delaware. Our state government should not be supporting these projects by issuing permits to bring power ashore in Delaware.


  • The UD study also stated property values would fall, but no dollar values were given. A new University of Connecticut study shows when onshore wind turbines are highly visible, property values fall up to 11% the first year after construction. A Zillow search of recent home sales in our beach towns averaged over $1 million, so lost property values could exceed $100,000 per home.


Finally, the proposed agreement states that the state agencies should not consider the money the state will receive when issuing required permits (yeah, right, not going to happen). Overall, we encourage you to connect and voice your concerns on this issue with your local legislators.