Executive SummaryOver the past 30 years, wind power has become a mainstream source of electricity generation around the world. However, the future of wind power will depend a great deal on the ability of the industry to continue to achieve cost of energy reductions. This summary report, developed as part of the International Energy Agency (IEA) Wind Implementing Agreement Task 26, The Cost of Wind Energy, provides a review of historical costs, evaluates near-term market trends, reviews the methods used to estimate long-term cost trajectories, and summarizes the range of costs projected for onshore wind energy across an array of forward-looking studies and scenarios. It also highlights high-level market variables that have influenced wind energy costs in the past and are expected to do so into the future.
Historical and Near-Term Trends in the Levelized Cost of Wind EnergyBetween 1980 and the early 2000s, significant reductions in capital cost and increases in performance had the combined effect of dramatically reducing the levelized cost of energy (LCOE) for onshore wind energy. Data from three different historical evaluations, including internal analysis by the Lawrence Berkley National Laboratory (LBNL) and the National Renewable Energy Laboratory (NREL) as well as published estimates from Lemming et al. (2009) and the Danish Energy Agency (DEA) (1999), illustrate that the LCOE of wind power declined by a factor of more than three, from more than $150/MWh to approximately $50/MWh between 1980s and the early 2000s ( Figure ES-1). However, beginning in about 2003 and continuing through the latter half of the past decade, wind power capital costs increased-driven by rising commodity and raw materials prices, increased labor costs, improved manufacturer profitability, and turbine upscaling-thus pushing wind's LCOE upward in spite of continued performance improvements ( Figure ES-1). Sources: LBNL/NREL (internal analysis), Lemming et al. 2009, and DEA 1999 [2012][2013] suggests that the LCOE of onshore wind energy is now at an all-time low within fixed wind resource classes, and particularly in low and medium wind speed areas ( Figure ES-2). Moreover, the fact that capital costs remain higher than in the early 2000s but that those increased costs are rewarded by improved performance and a lower LCOE demonstrates the fundamental interdependence of capital cost and performance in wind turbine and project design.
Long-term Trends in Wind Energy LCOEFurther into the future, the LCOE of wind energy is expected to continue to fall, at least on a global basis and within fixed wind resource classes. Performance improvements associated with continued turbine upscaling and design advancements are anticipated, and lower capital costs may also be achievable. The magnitude of future cost reductions, however, is highly uncertain.Estimates of the future cost of onshore wind energy conducted to date have often been the result of an iterative process that incorporates some combination of historical trends, learning curve anal...