Economic Development

Wind Energy Costs Trending Down

“More efficient turbines are generating greater amounts of wind power at lower costs.”

—Peter Asmus,
Pike Research senior analyst

Since 2008 wind turbine prices in the U.S. have fallen by nearly one-third on average, according to a new report from Lawrence Berkeley National Laboratory (Berkeley Lab). "Understanding Trends in Wind Turbine Prices Over the Past Decade" examines how $-per-kW costs have declined in recent years, after having previously doubled over the period from 2002 through 2008. Berkeley Lab analyzed price data on a sampling of U.S. wind turbine transactions totaling 23,850 megawatts from 1997 through early 2011.

Wind Energy Cost Drivers

In conjunction with improvements in turbine design and performance, falling turbine prices enable the latest generation of wind power projects to profitably sell electricity at prices well below what was common several years ago. The Berkeley Lab report examines seven primary drivers of wind turbine prices in the United States, with the goal of estimating the degree to which each contributed to the recent trend:

  • Labor costs, which have historically risen during times of tight turbine supply
  • Warranty provisions, which reflect technology performance and reliability
  • Turbine manufacturer profitability, which can impact turbine prices independently of costs
  • Turbine design, which is principally manifested through increased turbine size
  • Raw materials prices, which affect the cost of inputs to the manufacturing process
  • Energy prices, which impact the cost of manufacturing and transporting turbines
  • Foreign exchange rates, which can impact the dollar amount paid for turbines and components imported into the United States

Wind Energy Outlook

The U.S. Department of Energy has set a goal of obtaining 6% of U.S. electricity from wind energy by 2020. That goal is consistent with the overall rate of growth for wind in the U.S., even though the industry has been subject to boom-bust cycles from year to year. According to a new report from Pike Research, total installed wind capacity in North America will more than double over the next six years, increasing from approximately 53,000 megawatts in 2011 to almost 126,000 megawatts by 2017.

"This will be another difficult year for wind power in North America, but we do see signs of recovery," says Peter Asmus, Pike Research senior analyst. "Larger, more efficient turbines are generating greater amounts of wind power at lower costs, and both the U.S. and Canadian governments have shown strong commitment to the wind industry during this challenging economic time."

Wind energy generation costs have declined over time to a current range of 6-9 cents per kilowatt-hour with an average of 8.2 cents, according to the National Renewable Energy Laboratory. Researchers and policy-makers are looking for ways to continue to lower the kilowatt hour cost of wind energy systems for effective growth and for related economic benefits.

Wind Energy Research

Researchers at Iowa State Univesity with wind blade

Iowa State University researchers with TPI Composites turbine blade
photo: Iowa State University


One research project is finding better ways to manufacture wind turbine components in the U.S. through a joint project of Iowa State University's Wind Energy Manufacturing Laboratory, U.S. Department of Energy's Sandia National Laboratories, and TPI Composites, a blade manufacturer. The researchers are using high-precision lasers to analyze wind turbine blades for minor defects and working to improve wind blade design and fabrication techniques.

The researchers' goal is to develop new, low-cost manufacturing systems that could improve the productivity of turbine blade factories by as much as 35 percent, which would support an avearge cost reduction to 6 cents per kilowatt hour by 2020. "Manufacturing in this industry is done largely by hand," says associate professor Frank Peters. "Our goal is to find ways to automate the manufacturing."

Information Resources

Use the following links for more information from cited sources:

Berkeley Lab report - "Understanding Trends in Wind Turbine Prices Over the Past Decade"

National Renewable Energy Laboratory - Open Energy Information

Pike Research - Wind Energy Outlook for North America

Iowa State University - Wind Energy Manufacturing Lab helps Iowa State engineers improve wind power

Rural Summit on Capitol Hill Seeks Sustainable Solutions

“Local ownership through Community Wind development not only provides initial construction jobs, but more importantly it provides long-term economic activity.”
—Dan Juhl, Chairman and CEO, Juhl Wind, Inc.

Washington, D.C., April 28, 2010 - U.S. Senators Harry Reid, Blanche Lincoln, and Debbie Stabenow were joined by former president Bill Clinton and wind energy developer Dan Juhl as they hosted a Rural Summit at the capitol. The event brought together stakeholders from communities around the country to focus on revitalizing rural America through economic development and job creation, and preserving the rural way of life for future generations.

“Today was all about finding ways we can work together to create a sustainable rural economy,” said Senator Lincoln, Chair of Rural Outreach for the Senate Democratic Caucus. “I have worked diligently with my Senate colleagues over the last year and a half to pass historic legislation that will benefit rural America. From the Recovery Act...to working toward passage of the toughest financial reform legislation in our nation's history to put the needs of Main Street over the interests of Wall Street—I am working to make sure that rural America is strong and successful.”

Panel discussions focused on creating jobs in rural America through investments in infrastructure and critical services, along with building a sustainable rural economy through increasing small business access to capital, small business development and workforce development.

In his keynote speech Clinton offered a positive assessment of the job creation opportunities that exist for rural communities as the economy recovers and moves forward, particularly in creating new and sustainable sources of energy. “Manufacturing will make a comeback in this country, mark my words,” said Clinton. “It's going to be an enormous opportunity for small towns to get manufacturing jobs.”

Dan Juhl
Dan Juhl, Chairman and
CEO of Juhl Wind, Inc.

Dan Juhl, Chairman and CEO of Juhl Wind, Inc. represented the wind power industry and extolled the benefits of Community Wind. “Local ownership through Community Wind development not only provides initial construction jobs, but more importantly it provides the long-term economic activity for 20 plus years as our wind farms are owned and operated by our farmer partners,” said Juhl. “While it may cost $4 plus million to install one 2 megawatt turbine, there is only about $500,000 of local construction activity. However, that same turbine derives $500,000 a year in revenue—or $10 million over each 20 year period. That is why we are so committed to ensuring that our wind farms our owned by the people of rural America vs. larger utility conglomerates based hundreds of miles away—and sometimes from other countries.”

Economic Development Impacts of Community Wind Projects: A Review and Empirical Evaluation

“Economic Development Impacts of Community Wind Projects: A Review and Empirical Evaluation” by E. Lantz and S. Tegen, National Renewable Energy Laboratory, in April 2009.

Community wind projects have long been touted (both anecdotally and in the literature) to increase the economic development impacts of wind projects, but most analyses of community wind have been based on expected results from hypothetical projects. This report provides a review of previous economic development analyses of community wind projects and compares these projected results with empirical impacts from projects currently in operation.

Read the Report

Property Taxation of Wind Generation Assets

"Property Taxation of Wind Generation Assets," North American Windpower, May 2006, Vol. 3, No. 4, pp. 31-34. This article, written by Warren Ault, summarizes research he did for Windustry in 2005 into the actual and potential local economic benefits of wind power, focusing particularly on a survey of the varieties of approaches throughout the United States to the use of local property taxes. Click on the link below to download a PDF copy of the article.

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