New York, United States — ESI-AFRICA.COM — 17 November 2011 – The best wind farms in the world are already competitive with coal, gas and nuclear plants, but over the next five years, continued performance improvements and cost reductions will bring the average onshore wind plant in line with cheap natural gas, even without a price on carbon.
After analysing the cost curve for wind projects since the mind-1980′s, Bloomberg New Energy Finance (BNEF) researchers showed that the cost of wind-generated electricity had fallen 14% for every doubling of installation capacity. These cost reductions were due to a number of factors: more sophisticated manufacturing, better materials, larger turbines, and more experience with plant operations and maintenance.
Those improvements, combined with an oversupply of turbines on the global market, would bring the average cost of wind electricity down another 12% by 2016, the researchers calculated.
These two changes will drive the cost of wind energy down further, to parity with conventional energy sources. “Assuming specific learning rates for these components, we expect wind to become fully competitive with energy produced from combined-cycle gas turbines by 2016 in most regions offering fair wind conditions, the researchers add. Any increase in the cost of gas, which will consequently raise the cost of energy of gas-fired turbines, would bring forward the timing of grid parity for wind.
But the industry is still moving on an experience curve that is bringing the wind farms at cost parity with historically low natural gas prices “’ even without a price on carbon:
Justin Wu, lead wind analyst at Bloomberg New Energy Finance, said: “The public perception of wind power tends to be that it is environmentally-friendly, but expensive and intermittent.That is out-of-date in the best locations, where generation is already cost-competitive with fossil fuel electricity, and that will be the case for the majority of new onshore turbines installed worldwide by 2016.
“In the next few years the mainstream world is going to wake up to wind cheaper than gas, and rooftop solar power cheaper than daytime electricity. Add in the same sort of deep long-term price drops for power storage, demand management, LED lighting and so on – and we are clearly talking about a whole new game,” Wu added.
“Those cost reductions don’t just come magically from the lab; it takes a strong deployment strategy to realise them,” Wu emphasised. “In 1984, there were only 300MW of installed wind projects around the world. But by the end of this year, there will be over 240,000MW.”