Onshore Windfarm Costs Plummet

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Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland) -- Onshore windfarm costs have plummeted over the last four years to make it more competitive with traditional, fossil-fuel-powered electricity generation.

A comprehensive study, the Wind Operations and Maintenance Price Index, carried out by Bloomberg New Energy Finance (BNEF) found that the average price for full-service operations and maintenance (O&M) offerings for onshore wind farms fell from €30,900 ($39,500) per megawatt (MW) in 2008 to €19,200 ($24,600) per MW annually in 2012.

The news comes in the same week that the U.K. government, which has the world's most ambitious wind power targets, had to robustly defend its wind power goals from internal revolt.

"Wind power has done much to improve its competitiveness against gas-fired and coal-fired generation in recent years, via lower-cost, more technically advanced turbines, and more sophisticated siting and management of wind farms," said Michael Liebreich, chief executive of BNEF. "This new O&M Price Index shows that servicing wind farms at the operating stage is also becoming much more cost-efficient."

The wind index, which is compiled using contractual data submitted by leading wind energy players on a confidential basis, puts the falling costs down to increased competition between turbine manufacturers over contracts and the improved service performance of the turbines themselves.

While onshore windfarm operating costs may have fallen overall, the U.K. and markets in eastern Europe still charge the most for full-service offerings. Conversely, the U.S. offered the most competitive pricing of all markets.

The U.K. recently sailed past the 5,000 MW mark for onshore wind power with the opening of the 28.6 MW Drone Hill windfarm by AES in the Scottish Borders. For additional information, see October 1, 2012, article - U.K. Onshore Wind Breezes Past 5,000 MW.

The government's energy policy came under fire last week when the newly appointed Tory Energy Minister, John Hayes, attacked onshore windfarms and claimed "we can no longer have wind turbines imposed on communities."

He argued: "If you look at what has been built, what has consent and what is in the planning system, much of it will not get through and will be rejected. Even if a minority of what's in the system is built we are going to reach our 2020 target. I'm saying enough is enough."

The U.K.'s Energy and Climate Change Secretary Edward Davey had to release a statement countering the claims and reinforcing the government's commitment to a massive rollout of more wind power.

"There has been no change to Government policy on renewable energy, as collectively agreed by the Coalition Cabinet," Davey explained. "We set out in the Renewable Energy Roadmap in July 2011 how we expect to reach our target of getting 30% of all U.K. electricity from renewable sources by 2020. There are no targets - or caps - for individual renewable technologies such as onshore wind. Nor are there reviews being done of onshore wind on the basis of landscape or property values. Onshore wind is one of the cheapest renewables, which is why we've been able to cut the subsidy. It has an important role to play in our energy future."

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, and eight offices outside of North America, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.