But wind’s competitiveness has nonetheless been undermined by continued low natural-gas prices and declines in the wholesale market value of wind energy.
This is according to the newly released 2017 Wind Technologies Market Report, published by the US Department of Energy (DOE). "Low natural-gas prices are pretty tough on everyone," said co-author and Berkeley Lab senior scientist Ryan Wiser. "Wind is not differently impacted. Everyone that relies upon the wholesale market is certainly challenged."
Wind’s market value has also declined because of issues such as the temporary match to system needs, but also due to transmission bottlenecks in some areas, such as the Southwest Power Pool (SPP). Perhaps the most surprising finding in the report was that the wholesale energy market value of wind in the SPP was found to be less than $15/MWh, noted Wiser.
"[Without] new transmission, it is very difficult to deploy large volumes of wind energy in that region [SPP]," he said. The levelised cost of energy (LCOE) was found to be as low as $40/MWh in recent years in the interior of the US, which includes SPP.
The report also found that the average levelised long-term price from wind power sales agreements nationally dropped to around $20/MWh last year, after peaking at $70/MWh in 2009. This dramatic trend, however, is partly because more wind development has moved to the windy interior. In that region, the PPA price decline has been more modest, from a lower starting price of $55/MWh in 2009 contracts to below $20/MWh in 2017.
Wind-project performance is improving. The average capacity factor in 2017 for projects built in 2014-16 was 42%, according to the report, compared with an average of 31.5% for projects built in 2004-11, and 23.5% for those installed in 1998-2001. This is because turbine design is changing, with higher ratings, larger rotor diameters and taller towers.
Installation costs have dropped by a third, or $795/kW, since the end of the last decade, and now stand at $1,610/kW, close to the previous low seen in the early 2000s. As turbines have become more sophisticated, prices had risen since 2000. "[But] developers and OEMs don’t care about installation cost; they care about LCOE," said Wiser. Early indications from
a sample of projects currently under construction suggest that "slightly lower" costs are on the horizon in the short-term, said the 81-page report.
Similarly, turbine pricing was an estimated $750-$950/kW as of this January, down from a high of $1,600/kW in 2008, said the DOE. Prices had hit a previous low of roughly $800/kW from 2000 to 2002, meaning turbine prices have only recently fallen back to where they were in the early 2000s. Not surprisingly, these price reductions, along with improved turbine technology, have helped push down project costs and wind-power prices.