Economics of Wind Energy

Athanasia Arapogianni

Research officer

The European Wind Energy Association

Contents

• Cost of wind energy structure

• Economics Tool

Cost of wind energy

Source: EWEA, 2009

Basic cost component of the investment/capital cost

Wind Turbine

Source: EWEA, 2009

Cost of wind energy – Capital/investment costs

Source: EWEA, 2009

Cost of wind energy – Operation and maintenance costs

(O&M)

Cost of wind energy – Operation and maintenance costs

(O&M)

The example of

Germany:

Cost of wind energy – electricity production

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

Cost of wind energy – electricity production

Wind turbine

characteristics

X Wind turbine

Characteristics

Site

characteristics

Annual Energy Production in kWh

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%

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

• 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

EWEA’s Online Economics Tool

Legend:

Onshore wind Gas Coal Nuclear

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.