Welcome to Task 26

Introduction –

Wind power generation has come to a “historical” point where, just as installed costs were becoming competitive with other conventional technologies, the investment cost per MW has started increasing for new wind power projects. 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), the current tightness in the international market for wind turbines, and other factors. Signals in the US market indicate an increase exceeding 60% from average investment costs for projects installed from 2001 through 2004, up to approximately 2100 $/kW (Wiser and Bolinger 2010). Other important markets for wind energy are also experiencing rising costs, although noticeable differences still exist among countries.

This is precisely the background that justifies the initiation of this task. As wind is becoming an important source of electricity generation in many markets and competes with other technologies –notably natural gas – in terms of new installed capacity, it is crucial that Governments and the wind research community are able to discuss the specific costs of wind systems on the basis of a sound methodology. Without a clear impartial voice regarding the costs of wind systems, organizations without a clear understanding of wind systems are left to determine and publicize the costs of wind systems, often in error. These issues are exacerbated by the diversity of the wind portfolio and variations in international project development costs assumptions. The work undertaken in this task is also expected to assess methodologies for projecting future wind technology costs. Finally this task aims to survey methods for determining the value of wind energy.

The work for this task formally began in January 2009 and is expected to continue for three years until the end of 2011. 

Wiser, R. and M. Bolinger (2010), 2009 Wind Technologies Market Report, DOE/GO 102010-3107.

Objective

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 and other organizations.
• To derive wind energy cost and performance projections, or learning curves, which 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.