Wind energy costs: 744 to 1,500 ?/kw

Ireland reported costs declining as global demand for wind turbines and raw materials moderated. Typical project costs can be apportioned in Ireland as follows: wind turbines (65%), grid connection (12%), onsite electrical (8%), civil engineering (8%), development
(4%), and legal/financial (3%).

A typical cost for connection was from 150,000 to 300,000 €/MW. In Italy, the average installed wind power plant cost of a land-based wind farm at a site of medium complexity, with15 km of roads and 12 km of electric line for connection to the high-voltage grid, was around 1.8 million €/MW.

About 70% of this cost was for wind turbines and their installation and commissioning, and 30% for the other items. Of these other items, development costs (site qualification, design, administrative procedures, and so on) took nearly half.

Operation and maintenance costs are tracked in some countries. In Norway, average maintenance cost is reported as 140 NOK/MWh (17.0 €/MWh). Estimates of production costs from sites with good wind conditions (33% capacity factor) suggest a production cost of about 530 NOK/MWh (64 €/MWh), including capital costs (discount rate 8.0%, 20-year period), operation, and maintenance.

In Denmark, the components of total O&M costs are as follows: repairs (21%), insurance (21%), service agreements (29%), administration (16%), land rent (12%), and other (1%). Many wind turbines have had gearbox problems after seven to ten years of operation, causing significant additional costs over and above the normal operating costs.

A wind turbine gearbox is replaced on average four times in a wind turbine’s lifetime and costs about 20% of the price of a wind turbine. Some countries reported estimates for the cost of wind energy and compared those estimates to the incentive payments developers can expect. A comparison of wind power costs among participating countries using a consistent methodology is being explored in IEA Wind Task 26 Cost of Wind Energy, and a state of the art report is expected in 2010.

The costs reported here have been calculated with different assumptions but are interesting nonetheless. Denmark reported that the cost of wind power electricity onshore in 2009, excluding risk factors and profit, was calculated to be 30 to 50 €/MWh. The actual cost depends on the wind profile at the location and also on the type of investor.

Private investors will expect a shorter payback period than large investors like utilities. Private investors require 40 to 80 €/MWh on top of the raw cost (includes profit and risk factor) to invest in wind power production. In 2009, an investor in Denmark received approximately 70 €/MWh; half was subsidy and half was the free market price.

In Mexico, the levelized generation price over a 20-year period was estimated at 65 USD/MWh (45 €/MWh) in 2009. In Finland, on coastal sites, the cost of wind energy production was estimated to be about 60 to 80 €/MWh without subsidies. The estimated cost of offshore production could exceed 100 €/MWh.

The average spot price in the electricity market Nordpool was 37 €/MWh in 2009 (51 €/MWh in 2008). In Finland, wind power still needs subsidies to compete, even on the best available sites. The planned feed-in guaranteed price of 83.5 €/MWh for 12 years (90.2 €/MWh for the first wind farm projects) is expected to start for the onshore market in 2011.

Considering these estimated generation costs, it is interesting to compare reported incentive payments. In Ireland, by January 2010, the value of the REFIT incentive program for large-scale wind farm projects was 67.35 €/MWh. In Italy, the sale of energy production from wind power yielded an average price of 67 €/MWh in 2009.

The additional income from the sale of tradable green certificates (TGCs) was, on average, nearly 88 €/MWh in the 2009 trading. Owners of wind power plants between 1 kW and 200 kW in Italy can also opt for either a fixed tariff of 300 €/MWh for energy fed into the grid or exchange (net metering) contracts.

In net metering, their income equals the avoided price of the electricity they would have bought as customers, an average of 200 €/MWh.