WindEconomics: Wind share could rise to 35% of global electricity production by 2050

While there is a consensus that the costs of onshore and offshore wind energy will continue to fall, there is, unsurprisingly, some variation in the projections.

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The International Renewable Energy Association (Irena) released a report on The Future of Wind at the end of last year, about the same time as the Danish Energy Agency report reviewed here last month.

This report acknowledges the uncertainty inherent in forecasting and quotes maximum and minimum values.

As Irena has a global focus, whereas the Danish data relates to its domestic market, the starting point for offshore is somewhat higher, reflecting the influence on the global average of US prices.

By the year 2050, however, Irena’s projected minimum value is $1,400/kW, which is lower than the corresponding Danish figure of around $2,000/kW.

There is a distinctly less pronounced spread in the projections for onshore wind, with Irena’s maximum value of $1,000/kW slightly lower than the Danish figure of $1,085/kW.

Irena suggests that the productivity of wind turbines will continue to rise, and so its projections for the cost of energy from offshore wind are $50-90/MWh in 2030, falling to $30-70/MWh by 2050.

The corresponding figures for onshore wind are $30-50 for 2030 and $20-30 two decades later. The reports suggests that the corresponding range of costs for the fossil-fuel technologies will be $50-170/MWh.

Irena estimates that wind-energy generation accounted for 6% of total electricity in 2018. It has developed a pathway that would bring about a significant reduction in energy-related carbon dioxide emissions, which it considers ambitious but achievable.

In this scenario, onshore wind capacity would increase ninefold and offshore wind by a factor of over 40 to deliver 21% of electricity by 2030 and 35% by 2050.

The annual investment required would need to increase from the 2018 level of $86 billion/year to $205 billion/year by 2030 and $311 billion/year by 2050 to deliver these increases.

No sign of any competition

Another projection for future costs comes from the US Department of Energy’s Energy Information Administration (EIA), in its Annual Energy Outlook (AEO), mentioned briefly last month.

The EIA has publisheda set of "alternative renewables cost assumptions" to supplement the AEO report, which "examine the effect of changes to technological experienced-based factors".

The reference cases (shown in the chart below) for 2050 fall between the Irena projections for offshore and onshore wind.

For offshore, the capital costs are estimated at $2,369/kW, slightly lower than Irena’s maximum. For onshore wind the reference figure is $878/kW, quite close to the average of the two Irena estimates.

The AEO goes on to consider high and low-cost estimates (not shown), with the low-cost onshore figure at $538/kW.

An examination of the installed cost data in the AEO for other technologies in 2020, alongside data for earlier years, suggests that costs are only falling for wind and solar photovoltaics, which means these technologies are unlikely to face any significant competition in the near future.

The capital costs of onshore wind declined by 40% between the 2013 and 2020 estimates, while utility PV costs fell 66%. For offshore wind, the drop is more modest, reflecting the fact that the US is still catching up.

There was a steep increase in 2020 in the cost of solar thermal technology, from just over $4,000/kW in 2018 to $7,600/kW in 2020, but the US DoE does not comment on this.

It may be noted that there are only two such installations currently operational in the US, with a total capacity of 510MW. The capital costs of nuclear, hydro, geothermal and biomass show no signs of decline.

At a glance — This month’s report conclusions

Future of Wind, International Renewable Energy Agency, October 2019 Examines possible trajectory of wind development to make a substantial contribution to decarbonising electricity.   

Alternative Renewables Cost Assumptions in AEO 2020, US Energy Information Administration, January 2020 Considers alternative trajectories for renewable development to those in its main Anual Ennergy Outlook report.

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