The economics of wind energy

This article presents the outcomes of a recent study carried out among wind energy manufacturers and developers regarding the current generation costs of wind energy projects in Europe, the factors that most influence them, as well as the reasons behind their recent increase and their expected future evolution. The research finds that the generation costs of an onshore wind farm are between 4.5 and 8.7 €cent/kWh; 6–11.1 €cent/kWh when located offshore, with the number of full hours and the level of capital cost being the most influencing elements. Generation costs have increased by more than 20% over the last 3 years mainly due to a rise of the price of certain strategic raw materials at a time when the global demand has boomed. However, the competitive position of wind energy investments vis-à-vis other technologies has not been altered. In the long-term, one would expect production costs go down; whether this will be enough to offset the higher price of inputs will largely depend on the application of correct policies, like R&D in new materials, O&M with remote-control devices, offshore wind turbines and substructures; introduction of advanced siting and forecasting techniques; access to adequate funding; and long-term legal stability.