Study Explores Trends in the Cost of Wind Energy across Six Countries
image credit: (Photo by Dennis Schroeder / NREL)
- Aug 6, 2020 9:04 pm GMTAug 6, 2020 9:03 pm GMT
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New research from Berkeley Lab and international partners has found that falling capital costs for wind turbines are only a minor contributor to the falling cost of wind energy.
A new article in the journal Applied Energy looks at onshore wind energy trends from 2008 to 2016 in the United States, Denmark, Germany, Ireland, Norway, and Sweden. It draws on work by a multi-country collaborative organized under the auspices of the International Energy Agency's Wind Technology Collaboration Programme (IEA Wind). Though several years have now passed since this period, many of the highlighted trends have continued in more-recent years.
Results indicate that there has been a general move towards larger, taller wind turbines with lower specific power ratings, resulting in higher capacity factors. This is true despite small declines in the average wind resource quality of newly developed sites over this period. Wind project capital costs and project finance costs also generally fell, as did ongoing operational costs in most countries.
Overall, these trends resulted in a reduction in the average levelized cost of energy of 33% for new projects by the end of the study period, albeit with substantial variation from one country to the next. The biggest factors driving down levelized costs are changes in capacity factors, financing costs, and capital costs, accounting for 45%, 25% and 17%, respectively, of the total estimated reduction, again with significant differences across countries (see figure).
These findings illustrate the need to consider wind systems holistically when assessing past and possible future drivers of levelized costs. The primary historical focus in the broader literature on upfront capital costs is incomplete. There are many pathways to reduced levelized costs, and performance enhancement, operational cost reductions, improved financing terms and increases in project life all come into play.
Though the levelized cost of wind energy fell over the studied time period, the value of wind energy in wholesale power markets was also found to have declined. Both the cost and value of wind energy are important when considering overall trends in economic competitiveness.