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Costs message is one of stability

Every year Windpower Monthly looks in depth at the cost of wind power and calculates how it measures up against other key energy sources.

This year, the figures show that the cost of both onshore and offshore wind energy in 2012 compared more favourably against other sources than in 2011.

Calculating these results requires assimilating a mass of data to which complex calculations are applied. Our figures, which build on years of experience and research, take into consideration the cost of construction, finance, power production, maintenance, decommissioning and, for some energy sources, the cost of fuel.

Then there are many variables to apply to the results. Most significantly for wind power is the available wind speed and the percentage of output to rated capacity, or capacity factor, likely to be achieved at any given location. These variables create a wide range of potential wind-power generation costs per megawatt hour.

The result, therefore, is not simply one figure, but a complex and varied set of figures that can and does baffle the media. And as energy policy expert Tom Burke points out, people can find numbers anywhere to back up whatever argument they want to make.

Let's be clear about this: there is a very positive wind story here. It is not just that onshore wind generation costs are better comparatively. That is true, but to look into the detail, the lowest potential cost for onshore wind has changed little. Offshore, the change is more significant, and this can be attributed to falling installation costs. But already this message is becoming muddied.

A simpler way to tell the positive story about wind is to look at the changes in the costs of the other energies, particularly nuclear and gas. That is where the biggest changes have occurred in the past 12 months.

Nuclear generation costs are creeping up, largely because facilities are expensive to build and interest rates for the capital are on an upward trajectory. Wind too has construction costs to consider, but at about a quarter of the cost of constructing a nuclear plant, it is unlikely to fall prey to crippling and unplanned overrun costs.

Gas saw a rapid growth in the US through increased production of shale gas, which initially led to a price drop. In Europe, too, prices had dipped. However, this now seems to be changing, with a trend towards higher prices beginning to emerge - even in North America; leading to higher generation costs.

So, unlike nuclear and gas, wind generation cost offers certainty. And once the wind farm is built, the generation costs will not change.

There is no fuel to pay, no imports to negotiate. Just cost stability.

And that is a clear good news story for any energy supply.

New website

This month sees the launch of the new windpowermonthly.com website. Already a high-traffic daily resource for breaking news in the industry, we have redesigned and re-organised the site to incorporate extra content and many improvements.

Look out for the on-page translations, easy navigation to the in-depth reports, analysis and archived content, and the mobile-friendly design.

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