As technology and market develop, cost of wind power dropping

April 12, 2012 by  
Filed under Green Energy News

Wind industry numbers for 2011 are about bigger and higher, with manufacturing closer to customers — all of which brings down the cost of wind-generated power.

Bigger is better in wind generation, as it is in much of industry: larger facilities take advantage of economies of scale.

The wind industry’s ramp-up to take advantage of those is apparent in the American Wind Energy Association’s 2011 U.S. Wind Industry Annual Market Report, released April 12.

Average turbine size, for example, as measured in megawatts of generation capacity, climbed significantly in 2011: 1.97 megawatts for those installed in 2011, up from 1.5 megawatts in 2005 and 1.77 megawatts in 2010.

Installations are getting taller, reaching for the higher, better wind resource. More than 97 percent of turbines installed in 2011 were at the typical 2010 hub height of 80 meters or above— and 5 percent hit a new 100 meters and higher.

Rotor diameter — the distance across the area swept by the blades — were on average about 80 meters in 2010, but more than a fifth installed in 2011 were over 100 meters.

“This allows access to markets of lower wind speeds in new regions of the country,” said AWEA Chief Economist Liz Salerno on a report-release conference call for the media.

At the same time, more manufacturing is taking place in the U.S. Nineteen manufacturers opened in 2011, with another 11 facilities announced, according to Salerno.

And because manufacturing is located all over the country, it’s closer to installation sites, bringing down delivered costs.

“Transportation and logistics aren’t cheap,” Salerno said. “They can be 18 to 20 percent of the cost of the turbine.”

There’s also more competition: Turbines installed in 2005 came from five manufacturers, while those installed in 2011 came from 23 manufacturers.

“More companies are involved, and all are establishing manufacturing facilities in the U.S. and building out their local supply chains,” she said.

All of this reduces the cost of wind generation facilities and, ultimately, of the electricity itself.

That trend was found in a study released last month by Lawrence Berkeley National Laboratory, “Recent Developments in the Levelized Cost of Energy from U.S. Wind Power Projects.”

Wind project costs have risen from a low of around $1,200/kilowatt of installed capacity in the early 2000s to about $2,150/kW in 2010, the analysis found.

But that simplistic analysis hides important details. Capacity factors have increased — that’s the percent of time a turbine actually turns generates electricity — and turbines require less maintenance. So equipment is better and should cost more up front.

At the same time, turbine prices are coming down — due at least in part to manufacturing closer to installation sites and to more competition.

When all is taken into account, the analysis found that the levelized cost per unit of electricity generated is now coming down. Including the federal Production Tax Credit, the cost at an average wind-speed site was around $50/megawatt-hour in 2002-2003 and rose to about $70 for installations in 2009-10, but in 2012-13 will be not much above $40.

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