The strong economics of wind energy
As a follow-up to a recent article I posted on renewable energy, this article discusses the economics of wind in both the developed and developing worlds compared to other renewable energy sources. At the recent climate conference in Paris, 70 countries highlighted wind as a major component for their emissions-reduction schemes.
I spoke with Giles Dickson who is CEO of the European Wind Energy Association (EWEA). I asked him economic questions related to the wind industry and I also asked him to look into his crystal ball and describe the future of wind. Mr. Dickson is in a great position to answer these questions because his organization includes 600 members who represent wind industry manufacturers, operators, and companies comprising the full wind-energy supply chain.
First, I asked why companies were investing in wind. His response was clear: wind is competitive economically. He told me about the SolutionWind campaign which is a platform that gives industry leaders like Unilever, BNP, Aveda, IKEA, LEGO, Google, Microsoft, SAP, and others the chance to tell their customers and the general public why they have chosen wind. SolutionWind includes interviews with these leaders (and case studies soon to be published) wherein the case is made that using wind energy adds value to these companies.
Companies want to reduce their emissions and they want access to reliable, inexpensive power. Companies want to know how to achieve these two goals in a way that is quick and efficient. For many of them, wind is the answer. It’s inexpensive and emissions-free (aside from initial manufacturing and installation and service) and it gives the companies control over their energy supply.
Globally, the average cost of wind is $83 per megawatt-hour. This is the levelized cost of electrical delivery. How does it compare to other energy sources? Well the averages for coal and gas are $84 and $98, respectively. In the USA, gas is slightly cheaper than wind but this is the only large economy where that is the case. As a comparison, solar photovoltaic energy averages $122 globally for each MW-hour.
There are some additional system integration costs and market balancing costs that vary geographically. The cost of balancing out the variable wind power is usually paid by the wind-power producers. And of course there are the costs of reinforcing the grid, such as building transmission lines to wind farms.