Wind Power Becoming More Cost-Effective

Wind Turbines

According to a recent report from the Energy Information Administration, the average cost of wind power installations in the U.S. declined by 33 percent between 2010 and 2016. The total costs dropped from $2,361 per kilowatt (kW) to $1,587/kW. The decline stems from factors such as improved technological efficiencies and an increasing concentration of builds in geographies with lower installation costs.

After years of declining project costs, wind reached a low in 2004 of $1,342/kW. Costs gradually increased throughout the decade, reaching a peak in 2009 and 2010 of about $2,360/kW. Contributing to those increases were rising labor costs, an increase in the cost of critical manufacturing and construction commodities, and international currency exchange fluctuations that impacted vital equipment imports.

After 2010, installed costs began to decline as some of those pressures lifted. The global recession pushed construction and manufacturing commodity costs down, and domestic manufacturing capacity for wind turbine components increased. These were both driven by the increased number of installations.

Regional variations in wind turbine installation costs also had an effect. By 2010, the interior region of the United States carried an average installation cost of $2,069/kW. This compared with $2,247/kW for the rest of the country. By 2016, the costs in the interior had dropped 25 percent, while the rest of the United States had decreased by 10 percent.

Additionally, the share of wind capacity installations was almost evenly split between the interior and the rest of the geographic United States. By 2016, nearly 90 percent of incremental capacity was installed in the lower-cost Interior region. This capacity takes advantage of not only the more favorable wind resources of the region, but also the easily developed expanses of flat land that allow for larger project sizes and more favorable transportation access.

The increasing concentration of U.S. wind builds in the lower-cost interior reinforced a general decline in the average cost of wind projects throughout the country. Although other factors affected overall costs, 2016 averages would have been more than 10 percent higher if total wind installations had remained at 2010 geographic market shares.

 

Image Credit: structuresxx/Shutterstock.com

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