Cost of wind approaches coal-fired generation
PARIS, France, May 11, 2005 (Refocus Weekly)
The levelised cost to generate electricity from wind turbines can be as low as US$35 per MWh, compared with $25 for coal-fired power plants, according to an international assessment.
Solar PV can produce power for as low as $150 per MWh in areas with high
availability, while cogeneration is $25 and natural gas can generate for $37 per
MWh with a discount rate of 5%, conclude the OECD Nuclear Energy Agency and the
International Energy Agency in ‘Projected Costs of Generating Electricity.’
The 232-page report is designed to be a reference for policy makers, system
analysts and energy economists and is “particularly timely in the light of
current discussions of energy policy in many countries.”
The study provides generation cost estimates for 130 power plants powered by
coal (27), gas (23), nuclear (13), solar (6) and wind (19) plants, as well as 34
combined heat and power plants that use coal, gas and combustible renewables.
The data were provided by 22 countries and were based on “technologies
available today and considered by participating countries as candidates for
commissioning by 2010-2015 or earlier.”
The competitiveness of alternative generation sources “ultimately depends on
many parameters: there is no clear-cut winner,” it concludes. Major issues for
generation costs include descriptions of state-of-the-art technologies,
methodologies for incorporating risk in cost assessments, the impact of carbon
emission trading, and how to integrate wind power into the grid.
The calculations are based on levelised lifetime costs assuming an economic
lifetime of 40 years, 85% average load factor for base-load plants and discount
rates of 5% and 10%. “The data provided for the study highlight the increasing
interest of participating countries in renewable energy sources for electricity
generation, in particular wind power, and in combined heat and power plants.”
Specific overnight construction costs for windfarms range between $1,000 and
$2,000 per kW (except for one offshore facility) with construction periods of
one to two years. Excluding specific costs associated with intermittent supply
and the need for backup power to compensate for the low average availability
factor, and using availability/capacity factors of 17% to 38% for onshore and
40% to 45% for offshore windfarms, the 5% discount rate provides a levelised
costs for wind of $35 to $95 per MWh, with a large number below $60. The share
of O&M in total costs ranges between 13% and 40% in one case.
At a 10% discount rate, the levelised costs of wind generation ranges from $45
to $140 per MWh.
For solar plants, availability/capacity factors varied from 9% to 24%, and
levelised costs at the higher end were $150 at a 5% discount rate and $200 at
10%. For facilities with lower availability factors, levelised costs approached
or exceeded $300 per MWh.
“The lowest levelised costs of generating electricity from the traditional
main generation technologies are within the range of $25-$45 in most
countries,” it concludes. “Environmental policy is also playing a more and
more important role that is likely to significantly influence fossil fuel prices
in the future. Security of energy supply remains a concern for most OECD
countries and may be reflected in government policies affecting generating
investment in the future.”
“Within this framework and limitations, the study suggests that none of the
traditional electricity generating technologies can be expected to be the
cheapest in all situations,” it explains. “The preferred generating
technology will depend on the specific circumstances of each project. The study
indeed supports that on a global scale there is room and opportunity for all
efficient generating technologies.”
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