Wind Energy Costs

As wind energy is not generally cost-competitive with the thermal sources of electricity generation, the pattern of development has been largely dependent on the support mechanisms provided by national governments.

Wind costs have declined steadily and a typical installed cost for onshore wind farms is now around US$ 1 000/kW, and for offshore around US$ 1 600/kW. The corresponding electricity costs vary, partly due to wind speed variations and partly due to differing institutional frameworks. Wind prices are converging with those from the thermal sources but it is not easy to make objective comparisons, as there are few places where totally level playing fields exist. Two examples may be given. Until recently, the UK operated a competitive tender market for renewable energy sources which guaranteed payments for 15 years. Vigorous competition drove prices down rapidly and the prices realised in the last round of the Non-Fossil Fuel Obligation may be compared with prices for new gas and coal-fired plant. These comparisons, shown in Figure 13.4, show that wind prices are very similar to those for coal-fired plant and only a little more than those of gas-fired plant. The second set of comparisons, shown in Figure 13.5, has been drawn from two US sources: a Department of Energy projection for 2005 and a recent analysis for the State of Oregon in 2000. This comparison shows a bigger gap between wind and gas although wind is significantly cheaper than nuclear. Other US data suggest that wind prices down to around 4 US cents/kWh can be realised in some areas.

Figures 13.4 and 13.5 Electricity prices (in US cents/kWh) for wind and the thermal sources, UK and USA

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