Cost of Wind Energy
OPERATING AGENT ORGANIZATION:
National Renewable Energy Laboratory (NREL)
OA Representative:
Dr. Maureen Hand
National Wind Technology Center
NREL
1617 Cole Blvd.
Golden, Colorado 80303
The United States
Tel: +1 (303) 384-6933
Email: maureen.hand@nrel.gov
Web Site: Task 26 Cost of Wind Energy
Wind power generation has come to an “historical” point at which, just as installed costs were becoming competitive with other conventional technologies, the investment cost per megawatt for new wind power projects has started increasing. This is believed to be the result of increasing commodity prices (mainly raw material such as copper and steel, plus a bottleneck in certain sub products) and the current tightness in the international market for wind turbines. While important markets for wind energy are experiencing rising costs, noticeable differences still exist among countries.
Wind is becoming an important source of electricity generation in many markets and is competing with other technologies—notably natural gas and nuclear—in terms of new installed capacity. Without a clear impartial voice regarding costs, organizations without a good understanding of wind systems are left to determine and publicize their costs, often in error. These issues are exacerbated by the diversity of the wind portfolio and variations in international project development costs assumptions.
This is precisely the background that justified the initiation of IEA Wind Task 26 Cost of Wind Energy in 2008. The work undertaken by participants in this cost task is expected to provide a sound methodology to discuss the specific costs of wind systems, to project future wind technology costs, and to form the basis for a more comprehensive analysis of the value of wind energy.
The objectives of this task are
• To establish an international forum for exchange of knowledge and information related to the cost of wind energy.
• To identify the major drivers of wind energy costs—e.g., capital investment, installation, operation and maintenance, replacement, insurance, finance, and development costs—and to quantify the differences of these cost elements among participating countries.
• To develop an internationally accepted, transparent method for calculating the cost of wind energy that can be used by the International Energy Agency (IEA) and other organizations.
• To derive wind energy cost and performance projections, or learning curves, that allow governments and the research community to anticipate the future trends of wind generation costs.
• To compare the cost of wind energy with those of other electricity generation technologies, making sure that the underlying assumptions used are compatible and transparent.
• To survey various approaches to estimating the value of wind energy, e.g., carbon emission avoidance, fuel price stability.
A simple spreadsheet model will be developed that represents the major elements of wind projects’ costs. This tool could be used by IEA or others in estimating wind project costs. The model inputs and methodology will be clearly defined and documented. A representative set of input parameters specific to each participating country will be collected. These data should represent typical costs and project performance for proposed or installed projects, for both land-based and offshore wind technology. Manufacturers, developers, and other wind industry participants will be engaged to obtain these representative costs. Surveys or interviews will be used. Based on this common set of data from each participating country, assumptions for a generic estimate of wind energy costs will be determined. Each participant will quantify the differences between their country’s cost structure and that of the generic model. A report will summarize these results, providing insight into the different cost drivers for each participating country.
