U.S. Government Report: Wind Power Costs Trending Towards an All-Time Low

Posted By Lowell F. on February 9th, 2012

Clearly, wind power technology is advancing, and wind power generation costs are coming down, the only questions being “how fast” and “will that trend continue?” A new presentation (“Recent Developments in the Levelized Cost of Energy from U.S. Wind Power Projects.”) by researchers at the Lawrence Berkeley National Laboratory (LBL) and the National Renewable Energy Laboratory (NREL), following up on an October 2011 report (“Understanding Trends in Wind Turbine Prices Over the Past Decade”) by the same people, provides us with answers to those questions.

The report’s key findings are encouraging, important, and impressive ones, certainly for those of us who are rooting for wind power to succeed. For instance, the report finds that “the levelized cost of wind energy is now trending towards an all-time low within fixed wind resource areas.” How low is low? According to the LBL/NREL researchers, “the levelized cost of wind energy in the best wind resource sites is approaching ~3 cents/kWh (with available federal tax incentives).” To put that figure in perspective, consider the following, courtesy of CleanTechnica and the American Wind Energy Association (AWEA):

AWEA figures show that the average wind PPAs are now being priced at about 6 cents per kilowatt-hour, the same price for energy procurements from a combined cycle natural gas plant. The group says wind is actually about 2 cents cheaper than coal-fired electricity…

What’s causing wind power costs to come down? According to the LBL/NREL report, there are several factors at work, including bigger, more powerful wind turbines, higher capacity utilization factors, and improved ability of turbines to operate in lower wind speed areas. The result of all these factors is dramatic: as noted above, wind power costs are hitting all-time lows.

In addition to cost reductions, wind power turbine technology is improving rapidly as well. As a result, “[t]he amount of land area meeting or exceeding certain capacity factor and LCOE thresholds has substantially increased.” This is good news, as it “helps alleviate to a degree transmission and siting barriers,” thus opening up a great deal more land area to economically viable wind power development.

Could anything derail this progress towards rapid wind power growth in the United States? The LBL/NREL reports points to three possibilities: 1) increased wind power costs due to “demand for wind turbines…catch[ing] up with supply;” 2) a “move towards lower wind speed sites as a result of severe transmission/siting limitations;” and 3) “potential near-term loss of federal PTC/ITC/Treasury Grant.” The first factor is clearly economic, but the latter two factors are heavily impacted by government policy decisions – and thus subject to decisions by Congress, state and local officials, etc.

Ideally, of course, the government would play a positive, proactive role in helping to foster the thriving, vibrant wind power industry. Such a positive role would include, first and foremost, continued federal tax (and other) incentives for wind. Along these lines, it’s important to note – as we have many times previously – that the U.S. energy market is anything but a level playing field. To the contrary, fossil fuels have received enormous subsidies, implicit and explicit, for over a century now – far more than wind and other clean energy sources have ever received.

Today, with wind technology making great economic and technological strides, as the NREL/LBL report details, the government should at least be helping wind as much as it helps fossil fuels.

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