WindEconomics: Cost of wind falling faster than predicted

With turbine and project sizes exceeding what was thought possible only a few years ago, the cost of wind energy is likely to continue falling

Ørsted's 1.4GW Hornsea Two will be the world's biggest offshore wind farm once online, scheduled for next year
Ørsted's 1.4GW Hornsea Two will be the world's biggest offshore wind farm once online, scheduled for next year

The cost of wind energy is expected to continue falling to 2050 — and at a greater rate than experts had expected in 2015, recently published research shows.

A survey of a large number of wind industry experts on the likely trends in the costs of wind energy to 2050 conducted in 2020 by the Lawrence Berkeley National Laboratory in the US showed that the consensus was there would be further significant reductions in energy costs. The results showed that responses to the same survey conducted in 2015 had been too cautious, overall, and the downward movements that occurred were significantly greater than the predicted values, as shown in the chart below.

In the latest survey, the median estimate for the reduction in onshore wind costs was around 12% by 2025, and up to 40% by 2050. The corresponding reductions for fixed-bottom offshore wind were higher — around 20% by 2025, rising up to nearly 50% by 2050.

The study also considered the prospects for floating offshore wind, which is projected to come down to around 40% of the 2019 fixed-bottom figure by 2050.

The report also lists the lower and upper bound figures that were exceeded by only 25% of the respondents. In the case of onshore wind in 2050, the median value was $25/MWh; the lower bound was $20/MWh and the upper bound $30/MWh. This spread of +/minus 20% was also typical of the variations for offshore wind, bringing the lower-bound estimate for fixed offshore in 2050 to $34/MWh.

As a comparator, the average wholesale electricity price in the US from January to May 2021 was close to $40/MWh. Gas prices — which have a strong influence on wholesale electricity prices — are likely to rise, according to the US Energy Information Administration. The corresponding European figure for wholesale electricity prices was around $55/MWh; it has risen steadily this year, driven by increases in the cost of carbon.

The cost estimates are consistent with prices that have been realised in recent offshore wind auctions and confirm that offshore wind is now competitive in many wholesale electricity markets.

The survey elicited respondents' views on which factors contribute towards the lower prices. The principal drivers were thought to be reductions in capital costs and increases in productivity, with lesser contributions from savings in operating costs, longer design life and lower weighted average costs of capital. The trend towards larger machines is expected to continue – both onshore and offshore – and the table below summarises the median estimates for hub height, rotor diameter and power rating.

Although there are likely to be significant regional differences between wind projects, the survey suggested some common trends.

Onshore wind speeds, for example, are likely to decline, as the best sites are used up. The survey suggests the median annual average wind speed at 100 metre height, for onshore projects, will decline from 7.9m/s in 2019 to 7.5m/s in 2035.

The average offshore wind speed (9.5m/s) for fixed-bottom projects — at 100m height — is not expected to change. However, this does not appear to be entirely consistent with the expectation that projects are likely to be sited further from shore (70km in 2035, compared with 40km in 2019). (Wind speeds generally increase with distance from land).

Average project sizes offshore are expected to increase from 500-699MW (2019) to 900-1,299MW (2035). This is likely to be one of the contributing factors towards lower costs. Offshore projects in 2035 with floating turbines are expected to be smaller than fixed ones, but further from shore, in deeper water and to experience higher wind speeds (10m/s at 100 m height).

At a glance — This month's report conclusions

Expert elicitation survey predicts 37% to 49% declines in wind energy costs by 2050, Wiser, R., Rand, J, Seel, J. et al.. Nature Energy 6, pp555–565 (April 2021) Results from a survey of wind energy experts looking at prospects for cost of energy reductions through to 2050. Results from a previous study underestimated possible cost reductions.

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