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Wind Farm Operating Costs Fall 38% in Four Years, BNEF Says

Wind Farm Operating Costs Fall 38% in Four Years, BNEF Says

The cost of running and maintaining wind farms has fallen 38 percent in four years as competition among contractors increased and turbine performance improved, bringing closer the day that the technology matches fossil fuel.

The average price of operation and maintenance contracts for onshore farms this year slid to 19,200 euros ($25,000) a megawatt from 30,900 euros in 2008, Bloomberg New Energy Finance said today. It took data from 38 developers and service providers in more than 24 markets for its first O&M Price Index.

Wind power has done much to improve its competitiveness against gas-fired and coal-fired generation in recent years via lower-cost, more technically advanced turbines and more sophisticated siting and management,” Michael Liebreich, chief executive officer of London-based BNEF, said in the statement.

The figures help inform debate in the U.S. and Britain, where governments are considering how much to subsidize renewable energy. BNEF’s findings show manufacturers led by as Vestas Wind Systems A/S are bringing down prices, making the machines more profitable for power providers to run.

Britain is cutting subsidies for onshore wind by 10 percent as Prime Minister David Cameron’s government discusses halting subsidies once the current renewable energy targets are met. In the U.S., President Barack Obama’s administration is pushing Congress to renew tax credits favoring wind in the face of opposition from Republican lawmakers.

Subsidy Dependence

Without the U.S. credit, the market for wind towers may fall to $100 million to $500 million next year from $2 billion to $2.5 billion at present, BNEF said on July 31.

Declining costs for servicing wind farms are positive for developers of projects, which are suffering from subsidy cuts across Europe and the U.S. Service agreements are also an important additional revenue stream for turbine makers such as Vestas, the world’s largest turbine-maker.

Developers expect O&M pricing to be “fairly stable” to at least 2015 and view turbine makers Enercon GmbH, Siemens AG and Vestas as the best service providers, according to BNEF.

Enercon’s full-service contracts were nearly 20 percent cheaper than the average from 2008 to 2012.

Copyright 2012 Bloomberg

Lead image: Wind turbines via Shutterstock

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