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Costs still moving in right direction

Wind-power costs, onshore at least, fell last year. As they did the year before, and the years before.

Arguably, they have not fallen by much, and there are many geo-political variables that affect wind's competitive position against other forms of energy generation, but the trend is clear. Wind's costs are still heading in the right direction and, in many situations, onshore wind is on a par with other forms of generation.

Offshore wind ran into more murky waters in 2013, with installation costs rising sharply. As our annual analysis of global wind energy costs points out, there are relatively few offshore projects in development, nearly all of which are confined to a small area in northern Europe. It only takes a couple of big projects to hit problems to skew the figures, as happened in 2013. Distance from shore also adds to the cost. While undeniably more expensive than onshore wind, the trajectory of offshore costs is not yet clear.

Our analysis is supported by the findings of a number of international organisations with no particular wind axe to grind. The World Energy Council acknowledged last year that "the most mature and widely deployed clean-energy technologies, such as hydro and onshore wind, are today close to reaching parity with traditional solutions". The International Energy Association also reported last year that "wind power is now being deployed in countries with good resources without any dedicated financial incentives".

These acknowledgements are coming just in the nick of time. It is important for politicians, voters and energy providers to know that wind can survive without incentives, as the whole issue of financial incentives for energy generation, by no means exclusive to wind, will be a hot topic over coming months.

The European Commission has disappointed the industry by failing to propose country-specific binding renewable energy targets to 2030, something many see as the backbone of renewable-energy development. France and Germany are among the countries that believed that such a firm commitment was needed to provide the certainty required for cost effective investment in clean energy. The EC does propose a 40% reduction of 1990 greenhouse gas levels by 2030, which other countries, such as the UK, believe is enough for the renewables industry to be able to flourish.

And with so much offshore potential in European waters, a flourishing sector is required. Europe's experiences will help other regions too. Japan's nascent offshore wind industry faces new challenges from deeper water and typhoons (page 39), but there are still many areas where it can learn from Europe's work. The US wind industry, too, will be looking more closely at European offshore activity, as its 12-year running Cape Wind project moves one step closer to reality with a turbine deal announced.

New age finance

New investors are essential to wind's progress. Last year saw significant investment from internet giants such as Facebook and Google. It would be foolish to suggest these are completely altruistic companies, but they are run by a generation that grew up in an environmentally aware age. We may be seeing a new generation of investors, drawn to green technology, who can readily make a connection between profit and renewable energy. And they clearly believe that wind power makes financial sense.

Jacki Buist is editor of Windpower Monthly

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