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Economics of Wind Energy
Athanasia Arapogianni
Research officer
The European Wind Energy Association
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Contents
• Cost of wind energy structure
• Economics Tool
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Cost of wind energy
Source: EWEA, 2009
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Basic cost component of the investment/capital cost
Wind Turbine
Source: EWEA, 2009
Cost of wind energy – Capital/investment costs
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Source: EWEA, 2009
Cost of wind energy – Operation and maintenance costs
(O&M)
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Cost of wind energy – Operation and maintenance costs
(O&M)
The example of
Germany:
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Cost of wind energy – electricity production
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Cost of wind energy – electricity production
Wind Turbine:
Power Curve how
much power is generated
in every operating wind
speed
Site:
Distribution of wind
speed in a year for a
specific time
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Cost of wind energy – electricity production
Wind turbine
characteristics
X Wind turbine
Characteristics
Site
characteristics
Annual Energy Production in kWh
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Cost of wind energy for different discount rates
0
20
40
60
80
100
120
140
1 000 1 500 2 000 2 500 3 000 3 500
€/M
Wh
Number of full load hours
5% 7.50% 10%
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Economics of wind
Levelised cost of electricity generation (LCOE)
€/MWh cost over the lifetime of the projects, taking into
account the present value of all cost components
Different Generation
technologies
(Gas, Coal, Nuclear, Wind)
Different technical and cost
characteristics
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• Differentiating Wind Energy from Gas, Coal and
Nuclear
– main cost components of fossil and nuclear generation:
fuel and carbon emission costs
– High volatility and uncertainty to forecast fuel and
carbon costs Risk
• Necessary to include in the LCOE calculation the
corresponding risk Forming a fair basis of
comparison between the technologies.
Online Economics Tool
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EWEA’s Online Economics Tool
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Legend:
Onshore wind Gas Coal Nuclear
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Conclusions
The cost of wind energy consists of several components –
most of them known since the beginning and the rest
easy to predict
In order to compare the LCOE of different technologies on
a fair basis, the risk on fuel and carbon price volatility has
to be included.
The volatility of fuel and carbon prices has a great impact
on the final LCOE.
Wind energy (on and offshore) is becoming more
preferable not only as a renewable energy technology but
also as an investment which will not suffer from
unpredictable and volatile costs.