Lawrence Berkeley National Laboratory’s onshore wind market report, published earlier this year, presents a wealth of data on the flourishing wind industry in the US. It includes data on wind turbine sizes and generation, and reflects on the continuing reductions in turbine costs.
The steady fall in project costs, however, may have come to an end, exacerbated by steep rises in commodity prices that have occurred this year, after the report was published. Although this will push up the price of wind turbines — and of wind projects — wind is likely to remain competitive with gas in the light of increased fuel prices. These fuel and commodity price increases are occurring in most of the world and are not just an American phenomenon.
With 16,836MW of additions and an estimated $24.6 billion invested, 2020 was a record year for new wind capacity. Wind was the largest source of new electrical generating capacity. Total wind power capacity in the US grew to just under 122GW, some way behind China’s total of 288GW.
The average rotor size and power rating of onshore wind turbines continue to increase, reaching 125 metres and 2.75MW in the US, respectively, in 2020. The average hub height was 90 metres, unchanged from 2019, but this may increase in the future as the industry seeks to compensate for a diminishing supply of good wind sites.
The average capacity factor has remained steady since 2014 at around 41%. Although it has climbed from around 30% in 2010, this reflects the trend towards lower specific power ratings at a given size — the ratio of the turbine’s rated power to the swept area (W/m2). In 2010 the specific power of new turbines was 325W/m2, by 2019 it was 223W/m2. The productivity — in kilowatt hour per square metre of rotor area — at around 900kWh/m2 a year, may, in fact have fallen slightly, as the best sites are used up.
The trends in wind turbine prices and project costs are shown in the chart, below. Wind turbine costs fell to $840/kW in 2020, from $875/kW in 2019, while project costs rose slightly to $1,462/kW, from $1,430/kW.
There are significant regional variations around this figure, with the cheapest projects (average $1,238/kW) being found in Texas, which installed the most wind. The most expensive were in the zone covered by the Midcontinent Independent System Operator (Miso) (average $1,633/kW). Project size was also a factor, with the largest projects (200MW-plus) returning the cheapest costs.
Berkeley Laboratory's cost estimate for wind energy show it decreasing from $50/MWh in 2010 to $33/MWh in 2020. The decline over a decade is due not only to the reduction in installed costs, but also thanks to lower interest rates for debt and equity.
The chart below, as well as the project costs chart above, suggests that the downward trend in prices may be coming to an end. Moreover, recent upward trends in gas, electricity and commodity prices, all of which are linked, confirm that view. Wind is, however, likely to retain its competitive edge over gas.
A new era?
The price of oil, on 27 September, was more than double the price a year ago, and the natural gas futures price in the US, according to the Energy Information Administration (EIA), was more than $19/MWh — up from $10/MWh a year earlier. Allowing a margin for transport to power stations, that translates to an electricity generation cost of around $45/MWh, which is a rough benchmark for the US.
Turmoil in European gas markets has pushed electricity prices above this level. Quite apart from the impact of higher electricity prices, commodities have their own supply problems; steel and copper prices have increased by around 50% since the start of the pandemic.
Noting that materials account for around 90% of the cost of a wind turbine, a 50% increase in the cost of all commodities would push turbine prices up towards $1,200/kW and installed costs towards $2,000/kW. At that level, however, wind can still compete with gas-fired generation at $45/MWh; more so with the higher electricity prices prevailing in Europe.
At a glance — This month’s report conclusions
Land Based Wind Market Report. Lawrence Berkeley National Laboratory, Wiser, R et al, 2021 Comprehensive review of developments, status and costs of utility-scale land-based wind turbines in the United States.