The authors, Ryan Wiser and Mark Bolinger, emphasise, however, that the sample size was limited, as the amount of wind commissioned in 2013, was just over 1GW, much less than in previous years. The fact that the trend for all three figures were similar nevertheless suggests that they are realistic.
Movements in the average installed costs since 2000 are shown in the chart, below, clearly marking out how the average project cost has fallen from a peak of $2,262/kW in 2009 to $1,630/kW in 2013. There are inevitably wide variations in these costs. The 2013 average was $1,630/kW and most projects were in the $1,400-$2700/kW range, with one outlier at approximately $4,600/kW.
Economies of scale showed a significant effect. The average price of the smallest projects (5MW or less) was $2,692/kW, and the average price of the largest (above 200MW) was $1,893/kW. The variation in prices of the actual wind turbine was not as significant as the variation in the cost of the full project. This range was approximately $900-1,300/kW.
The report quotes an average power purchase price for wind in 2013 as $25/MWh and stresses that this is not a wind-energy generation cost. This is due to the fact that there are a number of federal and state incentives in the US that combine to increase the revenue to wind-farm owners by at least $15/MWh.
A comparison with the wholesale electricity prices, which ranged from $25/MWh to $55/MWh in 2013, puts wind at the lower end of this range. Looking to the future, electricity prices generally are expected to move upwards, making wind increasingly competitive.
Short schedule benefits wind
Two recent papers from authors at the Vermont Law School in the US looked at construction cost overruns in nuclear, wind and solar energy and highlighted the significant differences between the technologies.
In the Electricity Journal for May 2014 in a paper called Construction Cost Overruns and Electricity Infrastructure: an Unavoidable Risk? the authors examined data from 401 projects in the power sector and found substantial differences between the technologies.
Of the nuclear power stations, 90% overran their projected cost, with an average cost escalation of 117%. That corresponds to just over $1,000/kW. Hydroelectric projects were also subject to significant cost overruns, with 75% going over budget, resulting in the average cost escalation of 71%. Only 57% of wind projects, by contrast, overran their budget, with an average cost overrun of 8%, which corresponds to just over $5/kW. The solar technologies (photovoltaics and concentrating solar power) had the best track record, with 28% delivering under budget and an average cost escalation (when it occurred) of only 1.3%.
The paper notes that the technologies with the highest cost overruns were those with the longest construction times. Hydro and nuclear construction projects are extremely complex, and numerous factors can upset the construction schedule and overall cost. Construction times averaged about ten years for hydroelectric, and 7.5 years for nuclear projects. Wind and solar projects, by comparison, are generally completed within one to two years.
The paper concludes that "investments in electricity infrastructure are risky ventures", but notes the risks associated with wind and solar are significantly less than those attached to hydro and nuclear.
Another Vermont paper on a related theme by Mark Cooper, senior fellow for economic analysis at the Institute for energy and the Environment, Vermont Law School, said:"The economic failure of nuclear power and the development of a low carbon electricity future: why small modular reactors are part of the problem, not the solution", shows how onshore costs have been falling for the past 30 years, whereas nuclear costs have been moving upwards. It challenges the assumption that small reactors might be the way to achieve competitive nuclear electricity.
That argument has been challenged by commentator Rod Adams on the Atomic Insights website; he says small reactors have been used in submarines for many years. It looks as though the future of wind as a competitive low-carbon option is secure for some time.
AT A GLANCE - THIS MONTH'S REPORT CONCLUSIONS
DOE 2013 Wind Technologies Market Report
US costs for turbines, projects and energy generated are lower for 2013 than 2012
Construction Cost Overruns and Electricity Infrastructure
Wind and solar have lower cost overruns as they are quicker to build
The economic failure of nuclear power and the development of a low carbon electricity future
Offshore costs falling over 30 years