Recent reports have confirmed that the cost of wind-generated electricity is lower than almost all alternatives in New Zealand and continuing to come down. Around the world, wind energy is increasingly cost competitive.
November’s Bloomberg New Energy Finance report suggests that the average wind farm will reach cost parity with fossil fuels by 2016. And New Zealand wind farm performance is well above average.
The Bloomberg report states that despite the numbers, there is still a strong perception that wind is an expensive form of generation. The New Zealand Wind Energy Association reports that in New Zealand is that Long Run Marginal Cost of wind generation (as low as $78/MWh) is approaching the short run cost of gas fired generation, with a gas price of $9+/GJ.
“If Bloomberg’s analysis is correct we can expect a point in the near future in New Zealand where new wind farms undercut gas-fired power generation if the price of gas rises by only a small amount,” says the NZWEA. Looking forward, Bloomberg expects onshore wind farm costs to fall another 12% in the next five years.
The Bloomberg press release states “The best wind farms in the world already produce power as economically as coal, gas and nuclear generators.” And the cost of electricity from wind turbines is continuing to come down.
According to Bloomberg there is what they term a 7% ‘experience curve’ – for every doubling of installed capacity around the world there is a 7% reduction in turbine costs. Overall costs reduce more, due to better designs and improving ability in the industry to make the most of them.
Capacity factors have improved 62% over the past 27 years, meaning far more electricity generated per MW installed. Operations and maintenance has also delivered a big cost saving. Putting it all together, Bloomberg calculates that the cost of energy has gone down by 14% for every doubling of capacity installed around the world – it now stands at EUR52/MHh (NZ$94).
Another 12% is all that is required to hit parity with the average gas fired CCGT. And as Bloomberg states, “That figure for gas-fired power excludes the cost of carbon emitted…”
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