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Wind
Wind Power Price Trends in the US
a report by
Mark Bolinger and Ryan Wiser
Lawrence Berkeley National Laboratory
In 2008, for the fourth year in a row the US led the world in adding an average price of just over US$40/MWh (with 50% of
new wind power capacity, and also surpassed Germany to take the individual project prices falling between US$33/MWh and
lead in terms of cumulative installed wind capacity. The rapid growth US$51.5/MWh). Although Figure 2 does show a modest increase in
of wind power in the US over the past decade (see Figure 1) has the weighted-average wind power price over the past three years,
been driven by a combination of increasingly supportive policies reflecting rising prices from new projects, the cumulative nature of
(including the federal production tax credit [PTC] and a growing the graphic mutes the degree of increase.
number of state renewables portfolio standards), uncertainty over
the future fuel costs and environmental liabilities of natural gas and To better illustrate changes in the price of power from newly built
coal-fired power plants and wind’s competitive position among wind projects, Figure 3 shows average wind power sales prices in
generation resources. This article focuses on just the last of these 2008 grouped by project vintage (i.e. by each project’s initial
drivers – i.e. trends in US wind power prices – over the period of commercial operation date).
2
Although the limited project sample
strong capacity growth since 1998. and the considerable variability in prices across projects installed in a
given time period complicate analysis of national price trends (with
averages subject to regional and other factors), the general trend
Installed project costs are
exhibited by the capacity-weighted average prices nevertheless
suggests that following a general decline since 1998, prices
primarily a function of wind
bottomed out for projects built in 2002 and 2003, and have since
turbine prices, which account for
risen significantly.
3
Specifically, the capacity-weighted average 2008
sales price for projects in the sample built in 2008 was roughly
70–80% of total installed costs.
US$51.5/MWh, up from an average of US$43.2/MWh for the sample
of projects built in 2007 and $20.6/MWh higher than the average of
$30.9/MWh among projects built at the low points in 2002
Wind Power Price Trends in the US and 2003.
Berkeley Laboratory maintains a database of wind power sales prices
and this currently contains price data for 145 wind projects installed in The wind power sales prices shown in Figures 2 and 3 reflect the total
the US between 1998 and the end of 2008. These projects total amount of revenue (above and beyond any government incentives)
9,873MW, or 42% of the wind capacity brought on-line in the US required to generate a target return for project investors given the
over the 1998–2008 period. The data set excludes utility-owned installed cost of the project and the amount of electricity that project is
projects, merchant plants and other projects that sell renewable expected to generate over time.
4
To facilitate an understanding of the
energy certificates (RECs) separately from underlying power.
1
As such,
the prices in this database reflect the bundled price of electricity and
Mark Bolinger is a Research Scientist at Lawrence
RECs as sold by the project owner under a power purchase
Berkeley National Laboratory, where his work focuses
agreement. As these prices are artificially suppressed by the receipt of
on renewable energy policy analysis, as well as
available state and federal incentives, they do not represent the true
understanding the cost, performance and value of
renewable generation within electricity markets. His
cost of wind generation (which would be at least US$20/MWh higher
recent analytical work includes modelling the impact
than the prices shown here due to the impact of the federal PTC on
of different financing structures on the economics of
wind and solar power, evaluating major changes to
wind power prices).
renewable energy policy resulting from recent US
stimulus packages and tracking the cost and
Based on this database, the capacity-weighted average power sales
performance of wind and solar power in the US.
price from this sample of post-1997 wind projects remains
E: MABolinger@lbl.gov
low by historical standards. Figure 2 shows the cumulative
Ryan Wiser is a Staff Scientist at Lawrence Berkeley
capacity-weighted average wind power price (along with the range
National Laboratory. He leads and conducts research
of individual project prices falling between the 25th and 75th
in the planning, design and evaluation of renewable
percentiles) in each calendar year between 1999 and 2008. Based on
energy policies, and on the costs, benefits and
market potential of renewable electricity sources.
the limited sample of seven projects built in 1998 or 1999 and
Dr Wiser received a BSc in civil engineering from
totalling 450MW, the weighted-average price of wind in 1999 was
Stanford University and holds an MSc and PhD in
energy and resources from the University of
more than US$64/MWh (expressed in 2008 dollars). By contrast,
California, Berkeley.
by 2008 the cumulative sample of projects built between 1998 and
2008 had grown to 145 projects totalling 9,873MW, with
© TOUCH BRIEFINGS 2009
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