Published on February 9th, 2012 | by Zachary Shahan9
Wind Levelized Cost of Electricity (LCOE) at All-Time Low
February 9th, 2012 by Zachary Shahan
It’s been awhile since I read and wrote about so many huge clean energy stories in one day, or in one week. From clean, renewable energy providing Europe with 70% of its new power in 2011, to solar PV bringing down the cost of electricity in Germany, to the largest offshore wind farm in the world opening in the UK today, and even more big stories in between, this is a time to remember. Another big story, reported by Greentech Media and discovered by researchers at the Lawrence Berkeley National Laboratory (LBNL), is that the levelized cost of electricity (LCOE) from wind power has reached an all-time low.
Its LCOE is now between $33 and $65 per MWh and clearly beats that of fossil fuels. This is actually not brand new news, as it was previously reported at the end of December, but I’m sure not many eyes have run across this yet, and it’s worth broadcasting loud and clear.
In a detailed analysis of “four endogenous factors (labor costs, warranty provisions, profitability, turbine design/scaling) and three exogenous factors (raw materials prices, energy prices, foreign exchange rates),” LBNL researchers Mark Bollinger and Ryan Wiser found that the single largest contributor to the LCOE reductions was bigger wind turbines that have a higher capacity factor.
“The standard for turbines has moved up from 1.0 megawatts to between 1.6 and 3.5 megawatts, and taller towers and longer blades allow them to produce electricity from slower winds,” Herman Trabish writes.
“Due to the capacity factor/capital cost interdependency, and to falling turbine costs, falling operations and maintenance (O&M) costs, an increased turbine supply, and lower cost financing, Wiser said, ‘the delivered levelized cost of wind energy has declined substantially in recent years [… and] is now at an all-time low across all wind speeds.'”
“Assumed improvements in O&M costs, financing rates, and availability lead to substantial additional estimated LCOE reductions,” Wiser found, “of 24 percent to 39 percent.”
However, two challenges do remain that could actually increase wind’s LCOE again. Those would be increasing development of “lower wind speed sites as a result of severe transmission/siting limitations,” Wiser notes, or the “loss of federal PTC/ITC/Treasury Grant” incentives (it’s a constant struggle to ensure stable incentives for wind energy like the fossil fuel industry has received for over a century—somebody doesn’t want the new kid on the block to have equal access to the competition).