However, Windpower Monthly recently reported that a Swedish contract had been agreed for a 29-year period, which suggests that the industry is moving towards longer lifetimes, beyond the 20-year period that is often the basis of cost estimates or contract periods.
Although 40-year lifespans are common in fossil-fuel generation, the wind industry is too young to provide much experience that is relevant.
Inspection of the database maintained by the Danish Energy Agency shows that there are just four wind turbines still operating that are 40 years old.
But there are 170 turbines that are 30 years old or more, 560 25-year-old machines and 2,040 wind turbines still going after 20 or more years.
The latter category includes one (prototype) wind turbine rated at 2MW. (The total number of wind turbines in Denmark at the end of 2018 was 6,270.)
The first offshore wind farm, at Vindeby, operated for 26 years before being decommissioned.
The ability to plan for lifetimes up to 40 years is likely to prove economically attractive.
Although project finance may not be available for such long periods, economic viability may well be realised on the basis of receiving a fixed price for, say, 20 years, and then wholesale prices for the remaining life.
Alternatively, wholesale prices may be adequate, avoiding the need for any subsidies. This is reflected in the graph (below), which shows typical prices for offshore and onshore wind.
The range of contract lengths is extended back to 15 years, which is appropriate to the contracts for difference scheme in the UK.
Extending contract lengths from 15 to 30 years brings the levelised cost of offshore wind at $3,000/kW down from $113/MWh to $86/MWh. Onshore wind costs, at $1,500/kW, are roughly half these levels.
The chart shows that onshore wind prices are comfortably within the range of European wholesale prices expected in 2025 — between $38/MWh and $68/MWh — and, given that capital costs are likely to fall between now and then, levelised costs are likely to be well within, or below, the range of wholesale prices expected by that date.
Offshore wind, at first sight, is not yet able to deliver generation costs within the range of expected 2025 wholesale electricity prices, but recent auction bids have already seen projects being awarded for "zero subsidy" bids.
It is likely that these are based on assumptions by the developers either that capital costs will come down below $3,000/kW and/or that the projects will procure additional sources of revenue from capacity payments and/or balancing services.
Another factor that reduces the levelised costs of energy, as the chart shows, is a reduction in the cost of capital.
The data have been calculated on the basis of estimates of 6% and 4.5%; the lower value brings down the levelised costs of energy by around 11%.
With interest rates remaining low and confidence in the wind-energy industry increasing, further small reductions in the cost of capital to 4.5% might be a possibility.