Cost of running onshore wind farms falls by more than a third – research

2 Nov 2012

The cost of operating and maintaining onshore wind farms is falling, on average, by more than 11pc a year, an indication that wind energy is starting to close the cost gap between conventional forms of power generation such as coal and gas – that’s according to new global figures from the research firm Bloomberg New Energy Finance.

The figures have been released as part of Bloomberg’s first Wind Operations and Maintenance (O&M) Price Index.

Through its analysis of confidential contract data from 38 major wind farm operators across the globe, Bloomberg New Energy Finance (BNEF) said average costs for operation and maintenance contracts have dropped by 38pc over the past four years, giving a boost to the onshore wind farm sector’s competitiveness.

BNEF said that average operation and maintenance costs fell from €30,900 per MW in 2008 to €19,200 per MW for 2012, a cumulative 38pc drop over the past four years, or just over 11pc per year.

Commenting on the findings, Michael Liebreich, chief executive of BNEF, said wind power has improved in competitiveness against its gas and coal-fired generation counterparts in recent years as a result of lower-cost, more technically advanced turbines. He also cited the more sophisticated siting and management of wind farms.

“This new O&M Price Index shows that servicing wind farms at the operating stage is also becoming much more cost efficient,” said Liebreich.

The index attributed the decline in prices for operating and managing onshore wind farms to higher competition between turbine manufacturers vying for service contracts, as well as the improved service performance of turbines.

The research also found the average length of contracts rose from 4.5 years in 2008 to 6.9 years in 2012. This, said BNEF, was due to manufacturers angling to secure longer-term agreements.

The analysis reported that markets in Eastern Europe and the UK had the highest pricing for full-service offerings. This, according to BNEF, could be due to factors such as higher labour costs and a limited local supply chain. It said the US shows the most competitive pricing of all markets.

While BNEF said manufacturers have had fairly similar pricing from 2008 until now, it said the German manufacturer Enercon is an exception. The research firm said Enercon’s prices for full-service contracts were almost 20pc lower than the market average between 2008 and 2012.

BNEF said it would be updating its O&M index twice yearly.

Wind turbine image via Shutterstock

Carmel Doyle was a long-time reporter with Silicon Republic