Study Explores Trends in the Cost of Wind Energy across Six Countries

August 3, 2020

We are pleased to announce the publication of a new article in the journal Applied Energy focused on historical trends in the cost and value of land-based wind energy.

The study draws on work by a multi-country collaborative organized under the auspices of IEA Wind, focusing on six countries (and the EU): the United States, Denmark, Germany, Ireland, Norway, and Sweden. The study covers an historical period spanning 2008 and 2016. Though several years have now passed since this period, many of the highlighted trends have continued in more-recent years.

Results indicate that there has been a general move towards larger, taller wind turbines with lower specific power ratings, resulting in higher capacity factors. This despite small declines in the average wind resource quality of newly developed sites over this period. Wind project capital costs and project finance costs also generally fell, as did ongoing operational costs in most countries.

Overall, these trends resulted in a reduction in the average levelized cost of energy of 33% for new projects by the end of the study period, albeit with substantial variation from one country to the next. Analysis of the components of levelized cost change indicate that changes in capacity factors, financing costs, and capital costs accounted for 45%, 25% and 17%, respectively, of the total estimated reduction, again with significant differences across countries (see figure).

These findings illustrate the need to consider wind systems holistically when assessing past and possible future drivers of levelized costs. The primary historical focus in the broader literature on upfront capital costs is incomplete. There are many pathways to reduced levelized costs, and performance enhancement, operational cost reductions, improved financing terms and increases in project life all come into play. 

Though the levelized cost of wind energy fell over the studied time period, the value of wind energy in wholesale power markets was also found to have declined. Both the cost and value of wind energy are important when considering overall trends in economic competitiveness.

The Applied Energy article can be found here. Other work from the IEA Wind task on the cost of wind energy can be found at: 


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