Since 2000, cumulative installed capacity has grown at an average rate of around 30% per year. In 2008, more than 27 Gigawatts (GW) of capacity were installed in more than 50 countries, bringing global capacity onshore and offshore to 121 GW. Wind energy in 2008 was estimated by the Global Wind Energy Council to have generated some 260 million megawatt hours (260 terawatt hours) of electricity.
In contrast to the situation on land, deployment offshore is at an early stage. The world’s first plant, in shallow water, was installed in 1991, about 3 km off the Danish coast. By the end of 2008, approximately 1.5 GW had been installed, mainly in the Baltic, North and Irish Seas: off the coasts of Denmark, the United Kingdom, the Netherlands, Ireland, Sweden and Belgium. Additional offshore wind turbines are in operation off China, Germany, Italy and Japan, while additional projects are planned in Canada, Estonia, France, Germany, Norway and the United States (Offshore Centre, 2009).
Just six countries worldwide account for almost all wind turbine manufacturing. Although Denmark contains only a little over 3% of global installed wind capacity, at the end of 2008, more than one-third of all turbines operating in the world were manufactured by Danish companies. Other principal turbine manufacturing countries include Germany, Spain, the United States, India and China, with components supplied from a wide range of countries.
Under specific conditions, onshore wind energy is competitive with newly built conventional power plants today, for example where the carbon cost is effectively internalised, the resource is good, and conventional generation costs are high, as in California. In Europe, with a stable, meaningful carbon price under the European Emission Trading System, competition with newly built coal plants would be possible at many sites.
However, competitiveness is not yet the rule, and reduced life cycle cost of energy (LCOE) from wind is a primary objective for the wind industry. Therefore, this roadmap targets competitiveness with conventional electricity production as a key goal, the achievement of which is necessary so that market forces can be more heavily relied upon to incentivise investment in new wind power deployment.
A fully representative assessment of the costs of all types of electricity production technologies and fuel sources would take into account external (socio-environmental) costs. Integrating the cost of induced climate change, as well as pollutants, into electricity markets can generate new revenues for clean energy production, and increase the competitiveness of clean energy, including wind.
In 2008, reported investment costs for wind generation (including wind turbine, grid connection, foundations, infrastructure, etc.) for European projects on land ranged from USD 1.45 to USD 2.6 million/MW (EUR 1 to EUR 1.9 million).
In North America, investment costs ranged from USD 1.4 to USD 1.9 million/MW (EUR 0.98 to EUR 1.3 million); and in Japan from USD 2.6 to USD 3.2 million (EUR 1.8 to EUR 2.2 million). Costs in India and China stand at just under and just over USD 1 million/MW (EUR 1.45), respectively.
Modern wind turbine technology
The average grid connected turbine has a rated capacity of about 1.6 MW. It extracts energy from the wind by means of a horizontal rotor, upwind of the tower, with three blades that can be pitched to control the rotational speed of a shaft linked via a gearbox to a generator, all housed in the “nacelle” atop the tower. Other design variations being pursued include two-bladed rotors, and drive trains with large-diameter low-speed generators in place of the conventional gearbox and high-speed generator. Today’s offshore wind turbines are essentially marinised versions of land turbines with, for example, enhanced corrosion protection.
Wind turbines generate electricity from wind speeds ranging from around 15 km/h, (4 metres per second [m/s], corresponding to force three on the Beaufort Scale or a “gentle breeze”) to 90 km/h (25 m/s, force nine, or “strong gale”).
The availability of a wind turbine is the proportion of time that it is ready for use. Availability thus provides a useful indication of operation and maintenance (O&M) requirements, and the reliability of the technology in general. Onshore availabilities are more than 97%. Availability of offshore turbines ranges from around 80% to 95%, reflecting the youth of the technology.
An important difference between wind power and conventional electricity generation is that wind power output varies as the wind rises and falls. Even when available for operation, wind plants will not operate at full power all of the time. This characteristic of variability will become increasingly significant as wind penetrations of energy rise above around 10%, at which level power system operation and, eventually, design, need to be modified to maintain reliability. For a comprehensive study of wind energy technology, readers might consult the recent publication Wind Energy – The Facts, produced by the European Wind Energy Association (EWEA, 2009).
Following a period of steadily declining investment costs, from the late 1980s, investment costs rose considerably in 2004, doubling in the United States for example. This increase was due mostly to supply constraints on turbines and components (including gear-boxes, blades and bearings) that made it difficult to meet the increasing demand for these parts; as well as, to a lesser extent, higher commodity prices, particularly for steel and copper.
While the current recession has loosened the turbine market, supply bottlenecks are likely to recur when markets fully recover, particularly if new investment in manufacturing has stagnated in the meantime, and may lead to re-inflated investment costs.
Lifecycle cost of energy
The lifecycle cost of energy (LCOE) of wind energy can vary significantly according to the investment cost, the quality of the wind resource, operation and maintenance (O&M) requirements, turbine longevity and the date of commissioning, and the cost of investment capital. Regional differences such as geography, population density and regulatory processes contribute to variations in development and installation costs and ultimately the LCOE of wind energy. For the purposes of this roadmap, wind LCOE is considered to range from a low of USD 70 (EUR 50)/MWh, under the best circumstances, to a high of USD 130 (EUR 90).
The recent US Department of Energy Wind Technologies Market Report estimates that the nation-wide capacity-weighted average price paid for wind power in 2008 (generated by projects commissioned during the period 2006 to 2008) was around USD 47/MWh. This price includes the benefit of the federal production tax credit, which has a value of at least USD 20/MWh according to the report, and other state level incentives (US DOE, 2009).
Operations and maintenance
The operations and maintenance (O&M) cost of wind turbines including service, spare parts, insurance, administration, site rent, consumables and power from the grid, is an important component in the cost of a wind power project.
It is difficult to extrapolate general cost figures due to low availability of data. Additionally, because the technology is evolving so fast, O&M requirements differ greatly, according to the sophistication and age of the turbine. A sample of projects examined recently in the United States suggested that O&M costs since 2000 range from USD 22/MWh (EUR 32) for projects built in the 1990s to USD 8/MWh (EUR 12) for projects built in the 2000s (US DOE, 2009).
There are limited data on offshore costs making it difficult to estimate an average cost since projects vary greatly in nature. In offshore projects, the turbine makes up only half of the investment cost, compared to three-quarters for land-based projects. The remaining costs consist mostly of foundation and cabling costs, which vary with distance from shore and water depth. Investment costs for offshore wind can be more than twice those for onshore wind developments. In 2008 offshore investment costs reached USD 3.1 million (EUR 2.1 million)/MW in the United Kingdom and USD 4.7 million (EUR 3.2 million)/MW in Germany and the Netherlands.
The lifecycle cost per megawatt hour of electricity generated by offshore projects constructed between 2005 and 2008 is estimated to range from USD 110 to USD 131 (EUR 75 to EUR 90)/MWh. Higher wind speeds offshore mean that plants can produce about 50% more energy than their counterparts on land, offsetting the higher investment costs to some extent. Reported O&M costs for offshore projects in the United Kindgom built from 2005 onwards range from USD 21 (EUR 14)/MWh in 2005 to USD 48 (EUR 33)/MWh in 2007 (JRC, 2009).
Although not within the scope of this report, it is important to note that the variable nature of wind output, at high shares, will incur additional costs to the power system in the form of balancing costs. A range of studies assessing balancing costs are summarised and contrasted in the recently completed report from the IEA Wind Implementing Agreement Task 25 “Design and operation of power systems with large amounts of wind power”.
Recent estimates suggest that sufficient energy is available in the wind to supply the planet’s needs for energy several times over. A recent assessment carried out by the European Environment Agency suggests that the potential in the European Union is about 30,400 TWh, seven times projected electricity demand in 2030. A similar report for the United States concluded “more than 8 000 GW of wind energy is available in the United States at $85/MWh or less … equivalent to roughly eight times the existing nameplate generating capacity in the country” (US DOE, 2008).
This publication was prepared by the International Energy Agency’s Renewable Energy Division. Paolo Frankl, Division Head, provided invaluable leadership and inspiration throughout the project. Hugo Chandler was the lead author for this roadmap. Many other IEA colleagues have provided important contributions, in particular Jeppe Bjerg, Tom Kerr, Uwe Remme, Brendan Beck, Cedric Philibert and Tobias Rinke.