Abstract:

According to Nordhouse's theory (1973), the price of resources cannot raise indefinitely. The limit to this raise is the price of implementing backstop technologies, which are technologies that can offer the same services as the mainstream technology (resource) for a higher cost and without the risk of depleting in the near future. In the traditional economics theory this idea highlighted the raising cost of raw materials. In the case of fossil fuels, the global prices do not raise in the long term. Fossil fuels are being supplanted by renewable resources. Technological progress systematically lowers the prices of implementing and using renewable energy. However, the scale of those changes depends not only on technological changes, but also on the conditions in which renewable energy infrastructure is spread. These conditions determine whether or not renewable energy can supplant fossil fuel technology. The technology costs for renewable energy are roughly the same for countries in the same part of the world, yet the scale on which conventional energy sources are supplanted by renewable technologies varies. This paper aims to evaluate the development of offshore wind power generation technologies in Poland into a backstop technology for the mainstream, coal-based system. The method used was a comparative analysis of the most important factors influencing the costs of developing offshore wind farms. These factors are: planning practices, including legal regulations and environment protection laws, effective supply chains, choosing developers who can create projects and investors, who can implement them, developing land infrastructure, preparing the electrical grid operators to take in large amounts of energy produced in unstable quantities, and social acceptance. The evaluation was based on comparing the financial effectiveness of investment projects using LCOE (Levelized Cost of Electricity). The results show that offshore wind energy technology may allow for cheaper energy production, compared to the dominating coal-based technology, as early as the year 2030. Using favorable financing conditions (weighted average cost of capital at 4%), this could even be in 2025. This supports the thesis that offshore wind energy is the backstop technology for energy generation in Poland.