Wind Power Becoming Competitive with Coal

Feb 06, 2011 - STATE DEPARTMENT RELEASE/Contentworks - energycentral.com

A recent study from Bloomberg New Energy Finance says that costs for electricity generated by onshore wind are now on par with costs for coal-generated power in the United States and several other markets. That could speed up development of renewables at a time when the world seeks cleaner sources of energy.

President Obama has called for 80 percent of U.S. energy to come from sources that produce little or no greenhouse gas emissions by 2035, a goal that will require increases in wind, solar, hydro and other "green" power sources. The United States gets about 11 percent of its electricity from renewable sources today.

WIND BLOWS IN THE RIGHT DIRECTION

Growing sales, more efficient wind turbines and overcapacity in the production of hardware have pushed the cost of onshore wind power to $68 per megawatt-hour. That's just above the $67 per megawatt-hour to produce coal-generated electricity, Bloomberg reported in its latest market analysis.

Electricity from plants fueled by natural gas still costs significantly less -- $56 per megawatt-hour, Bloomberg reported.

One megawatt-hour can power about 800 average-sized, single-family homes in the United States for one hour.

The study shows "wind continuing to become a competitive source of large-scale power," said Michael Liebreich, chief executive of Bloomberg New Energy Finance.

"For the past few years, wind turbine costs went up due to rising demand around the world and the increasing price of steel," he said. "Behind the scenes, wind manufacturers were reducing their costs, and now we are seeing just how cheap wind energy can be when overcapacity in the supply chain works its way through to developers."

Capital costs for offshore wind farms still run up to 50 percent higher than the cost to develop wind power on land, according to a recent report by SBI Energy, which tracks the market for renewable energy. Offshore wind turbines must be larger to withstand high ocean winds, but they can also generate more power, which helps offset some of the initial investment, SBI wrote.

Despite such challenges, a growing number of nations, including the United States, are pursuing offshore wind. Turbines at sea have less of an environmental impact than those on land and they can generate much more electricity.

U.S. PUTS OFFSHORE WIND ON FAST TRACK

In 2010, the United States cleared the way for the first large-scale offshore wind project off the coast of Massachusetts in the northeastern United States. That set the stage for proposals to open up other areas for such development, including the Mid-Atlantic coasts of New Jersey, Maryland, Delaware and Virginia.

The government hopes to deploy 10 gigawatts of offshore wind energy capacity by 2020, and 54 gigawatts by 2050. Millions of homes could get their power from wind that way.

The U.S. Department of the Interior has put the Mid-Atlantic projects on an expedited approval track, and leases to developers could be offered by late 2011, the agency said. To support those projects, the Department of Energy has announced $50.5 million in new funding to develop new wind turbine designs and to identify market barriers to wind energy.

The government recently gave a $1.3 billion loan guarantee to the world's largest wind farm that will be developed in eastern Oregon in the northwestern United States.

Although the rate of growth in U.S. wind installations slowed in 2010, the industry continues to expand. This is largely thanks to a federal tax credit that makes renewable energy more competitive with coal and other fossil-fuel sources, which long have enjoyed federal subsidies.

Thirty-seven states now have commercial wind stations within their borders, the American Wind Energy Association (AWEA) reported recently. Iowa, with 20 percent of its power coming from wind, leads the pack.

In the last five years, 400 manufacturing plants have been built or expanded to produce wind energy equipment, said AWEA Executive Director Denise Bode "We're going to be making a whole lot more affordable, homegrown electric power in the years to come," she said.