Monday, January 28, 2013

Falling Costs Powering Wind Boom: Down Another 21% Since 2010

With more than 40,000 megawatts of wind installed around the world in 2011, and probably more in 2012, the US and global wind boom is driving down costs of wind power. Economies of scale and innovation are both making wind power more competitive with the passing of every year.

Wind turbine performance is getting better and better, with machines harvesting more electricity from the wind.  Efficiency throughout the wind chain of production is rising. Consequently, Bloomberg reports that the levelized cost of energy from wind turbines has fallen by 21% since 2010.

The reduction in wind power costs means that wind power is competitive with natural gas when gas prices are about $5 per thousand cubic feet.  Everywhere in the world gas, except in the USA, well exceeds $5.

While the price of wind power will continue to decline, the price of gas in the USA has been rising since hitting an incredible bottom in April of 2012 of about $1.80. Since then gas prices have risen nearly 100%, and gas prices of $4 to $5 during the next 5 years would surprise nobody.

Given the continuing decline in wind power costs, and $5 natural gas pricing, the future of both wind and natural gas are bright. Over the next 20 years, America will increasingly shift toward gas, wind, as well as solar for electricity.

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