Onshore wind energy is already cost competitive with coal and gas, and it is much cheaper than nuclear power

The cost of energy is a topic high up on the media agenda but it is a thorny issue complicated by all the different variables and methods used to calculate the cost of energy.

One commonly used method is the “levelised cost of energy” (LCOE), which is, in simple terms, the lifetime cost of an electricity-generating project per unit of energy generated.

Calculations have shown that onshore wind power is already cost competitive with coal and gas, and it is much cheaper than nuclear energy.

Offshore wind power is an industry about 15 years behind onshore in terms of maturity and people inside the sector regularly talk about offshore wind being too expensive today.

To give you an idea of the figures, EWEA has developed an “electricity calculator” using the LCOE which shows that in 2010 gas cost €55 per MWh, coal €68 per MWh, nuclear €100 per MWh, onshore wind €65 per MWh and offshore wind €90 per MWh. Looking ahead to 2020, these figures change showing gas, coal and nuclear as much more expensive than onshore wind (€67/MWh, €80/MWh, €100/MWh, €57/MWh respectively) and offshore wind, at €74/MWh, cheaper than all conventional power sources except gas.

But how are we going to get to that point? Financing, manufacturing capabilities and support schemes are all variables in the calculation of the LCOE, and availability and stability are key, said Athanasia Arapogianni, EWEA’s Senior Research Officer. She believes that “offshore needs to be better coordinated with a well-developed supply chain and logistics. And of course the sector needs a stable regulatory framework giving security to developers and investors.”

“Moreover, investors and the offshore wind industry sector need to start speaking the same language”, she said, explaining that the finance community needs to grasp the opportunities in offshore wind, while the offshore wind industry needs to dedicate enough time to “selling” its bright prospects.

One session at the upcoming EWEA 2013 Annual Event in Vienna is set to spark lively debate on the impact of the financial crisis on the LCOE and bringing down the cost of wind energy, especially offshore. It is also expected to delve into the findings of a report by the UK’s Crown Estate into reducing the cost of offshore wind energy. Find out more about this session taking place on 6 February at 16:00 here.

By Zoë Case, http://www.ewea.org/blog/