In its Renewable Energy Medium-Term Market Report 2013, the International Energy Agency (IEA) compares all electricity-generating technologies and suggests that the minimum global price for onshore wind is about $50/MWh, which can only be bettered by geothermal and hydro in favourable locations, and coal and gas in some locations with cheap access. The IEA suggests the generation cost range for onshore wind is $50-160/MWh, with offshore wind at $150-340/MWh. Coal is placed at $40-90/MWh and gas at $40-130/MWh. This confirms once again that the cheapest wind can now compete with both gas and coal.
US wind versus solar
Two recent reports from the Lawrence Berkeley National Laboratory also give more detailed analysis on wind and photovoltaics in the US. The 2012 Wind Technologies Market Report, by Ryan Wiser and Mark Bolinger, analyses recent wind turbine costs, total installed costs and power purchase prices. A similar report - Tracking the Sun VI: An Historical Summary of the Installed Price of Photovoltaics in the United States from 1998 to 2012 by Barbose, Darghouth, Weaver and Wiser — tracks installed costs of photovoltaic plants over 14-years, but does not include any information on power purchase agreements.
This, however, can be gained from the Californian Public Utilities Commission (CPUC) and others. Combining this data, the key message is that installed costs of both wind and solar are falling, but wind still has significantly cheaper generation costs.
The Berkeley Laboratory wind report suggests that US wind-turbine prices are now in the $950-1,300/kW range, which is significantly lower than when prices peaked around 2009. Total installed costs in 2012 averaged around $1,940/kW, but the range is wide — from $1,400 to $3,000 per kilowatt.
Costs for operation and maintenance in 2012 — for recent projects — average $10/MWh, excluding site-specific costs, such as local rates and taxes, and transmission charges. The average power purchase agreement (PPA) was worth around $40/MWh and, after making allowance for the production tax credit (PTC), this means average generation costs were around $60/MWh. There is, however, a wide range of prices between the different regions of the US. Allowing for the PTC, wind energy costs are more than $100/MWh in the West; around $70/MWh in the Great Lakes and the north-east, and lowest in the interior, where they are just over $50/MWh. The report notes that local incentives may influence PPA prices, and so these may not necessarily reflect generation prices, even with the PTC allowance. However, the existence of the PTC means that wind plant owners only need to charge about $30/MWh for their wind to be viable. This price is competitive with wholesale power purchase prices, which are currently in a range between $20-40/MWh; wind therefore remains a viable competitor.
Balancing costs very small even at 40%
The Berkeley report also includes data on the wind integration costs in a number of regions, covered by different balancing authorities, which are responsible for operating the networks. These vary widely, but the report notes that "a consistent set of operational impacts has not been included in the study, so the results may not be fully comparable". With this proviso, the additional balancing cost for integrating 20% of wind energy varies from $2 to $10 per megawatt hour, and the range is similar at 40% wind integration. Not all the balancing authorities reported data at the higher 40% penetration level, however. These penetration levels are calculated on a capacity basis (wind power capacity divided by peak demand in the region); the energy penetration level is typically one half the capacity penetration level. The figures confirm that the additional balancing costs are very small.
Rising nuclear costs
The elusive question of global nuclear costs is addressed in two recent reports, that say they continue to move upwards. The World Nuclear Industry Status Report 2013, by Mycle Schneider and Antony Froggatt, suggests the capital cost of a new power station is EUR5,300/kW and a report by Parsons Brinckerhoff for the UK Department of Energy and Climate Change suggests that the mid-range cost of the first nuclear power station of a new series is £4,206/kW (EUR 4,921/kW). The latter figure leads to the generation cost estimate of around £100/MWh with what might be termed conventional private-sector financing (10% interest rate, 20-year term).
As noted previously in this column, however, the strike price (what consumers will pay for it, not the government) negotiations currently under way in the UK are rumoured to hinge around longer contract terms for nuclear, and a 35-year term would reduce the generation cost to around £90/MWh. The rumour mill has gone quiet in recent weeks, suggesting the parties to the negotiations may have been taking a summer break. Whatever the outcome, these latest cost projections confirm that onshore wind is cheaper than nuclear.