Wind energy cost-competitive in Europe
The group’s survey of Comparative Costs of Energy in Europe 2007 reveals that “Wind energy is now in a range that is cost competitive with power from new conventional power plants. Most importantly, there is no fuel cost, and therefore no fuel risk, associated with wind power.”
The analysis is based the cost per Megawatt-hour of energy for building a new conventional generation facility versus a new wind power plant in Europe.
Additionally, Europe’s trend towards stricter carbon dioxide limits means that wind and other renewable energy technologies will become relatively less expensive than fossil fuels in the future. Were carbon emissions subject to a 30 Euro charge per metric tonne, land-based wind turbines would produce energy well below the cost of natural gas and coal plants. Interestingly, new nuclear facilities would also be energy cost leaders. Even without a carbon penalty, wind power is becoming cost competitive with traditional energy supplies, says EER. Under three price scenarios, electricity cost estimates show that wind power costs are converging with natural gas and coal power. The major cost concern for natural gas plants is fuel price, as surging gas prices make conventional energy more expensive. Increased commodity prices and requirements for advanced Nitrous Oxide (NOx) control systems also add to investment costs. Combined Cycle Gas Turbine plants are improving the efficiency of new plants.
New coal plants in Europe are required to employ Flue Gas Desulphurization, increasing the cost of construction. In the future, coal plants will remain vulnerable to carbon constraints, notes EER.
The report identifies wind power’s other benefits over conventional generation sources, primarily the minimization of project risks related to security of fuel supply, construction time, and carbon emissions.
The size of the wind power industry is now allowing for economies of scale, reducing capital and operating costs significantly over the past decade. Despite supply chain shortages and increased metal prices over the past few years, the industry is adjusting to greater global demand and these capital costs will decrease, predicts EER. Wind remains more cost-competitive than other renewable energy sources such as solar and biomass, and offers the largest potential in Europe in the short term, concludes the report.
“With wind power becoming more cost-competitive it will play an important role in Europe’s power generation mix going forward, especially in light of the growing risk of energy security, rising fuel costs, and climate change,” says to EER senior analyst Alex Klein.
Comparative Costs of Energy in Europe 2007 can be read here.