The Global Community for Sustainable Energy Professionals
Design improvements provide the main potential - material costs the main barrier
When predicting the learning curve of wind energy, a distinction should be made between on-shore and off-shore wind. While the former started to develop in the mid 1970s, the latter only took off around the year 2000 and is consequently still lacking extensive historical data. As the figures of the NEEDS study show, today’s off-shore wind and on-shore wind electricity prices are of the same order of magnitude.
Historical cost development curves of on-shore wind show large differences that depend mainly on the timeframe, the system boundaries, and the geographical area. As a general rule one can say that the experience ratio is higher for the complete system than for the turbine alone. This is confirmed by the bottom-up study of NEEDS, which shows that the relative share of the turbine cost in the complete wind energy cost increased in the past decades.
The bottom-up study also shows that cost reductions for wind turbines are mainly achieved through design changes, and not through cheaper manufacturing of the same pieces. Those design changes can range from incremental changes improving the electricity output of an existing model, to the design of a new and bigger type of turbine with higher capacity and efficiency.
Cost reductions in the future are expected to be based on such incremental design changes. Turbines are also expected to be increasingly designed to be site specific, i.e. to achieve maximum efficiency on a specific landscape location.
The expert assessment in the NEEDS study added two additional insights to the case. First, the price of materials is a decisive factor in the wind turbine cost. The market prices of steel and fibre glass account for more than half of the turbine cost. This limits the potential of cost reductions through improving manufacturing efficiency. A second important remark is that a distinction should be made between production cost and contract price. The latter is determined by market supply and demand. For example, the experts noted that contract prices for off-shore wind are currently rising due to heavy demand accompanied by high risks.
This last remark shows once again the importance of stable political support measures for renewable energy. High demand caused by government support will only result in a fundamental increase in supply capacity if the likelihood is high that this support will be continued in the following years. Temporary support measures will lead to temporary boosts in demand, resulting in a price increase instead of in a growth of supply capacity.
The conclusion of the NEEDS study predicts a progress ratio of 88 to 92% for wind turbines. Regarding electricity from wind energy, the study predicts a higher progress ratio: 85% for less windy regions and 80% for off-shore wind and windy on-shore areas.
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