Wind’s massive step forward

The wind sector is not just making significant improvements in the capital cost and performance of its turbines, but also in the cost of maintaining them once installed. No wonder the clean tech's cost competitiveness is improving rapidly.

While many people have repeatedly cirticised wind power as a mature technology without potential for cost reductions, it seems to regularly prove the doubters wrong. The improvement comes not just from falling turbine costs and better performing turbines, as discussed here previously, but also through a rapid decline in ongoing operation and maintenance costs.

New research published by leading clean energy analysts Bloomberg New Energy Finance overnight, the Wind Operations and Maintenance Price Index, found operating and maintenance (O & M) costs falling to €19,200 ($A23,859) per MW annually in 2012, from €30,900 ($A38,407) per MW in 2008 – 38 per cent in just four years.

The figures come from confidential contracts provided to Bloomberg by leading players in the sector, with the decline in ongoing costs driven by increased competition for service contracts and the improved service performance of the turbines.

“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 of wind farms,” Michael Liebreich, chief executive of Bloomberg New Energy Finance, said. “This new O&M Price Index shows that servicing wind farms at the operating stage is also becoming much more cost-efficient.”

Add these falling costs of O & M to the learning rate of 7 per cent for wind and you can see why the technology is now already on a par with the cost of coal power in some regions.

Indeed the learning rate alone (which works out how much prices fall per MW for every doubling of capacity) underestimates the falling costs of building a wind farm, with efficiency gains in the construction stage adding a further boost. Combine the wind farm construction learning rate with that of building the turbines and for every doubling of wind capacity, there are price declines of around 14 per cent per MW.

Within the period 2008 to 2012, there has been more than a doubling of global wind capacity, which based on the learning rate, means there would have been more than a 14 per cent decline in the cost of building a wind farm in the timeframe to go with the 38 per cent drop in operating and maintenance costs. It’s a phenomenal rate of cost erosion.

And while O & M costs are expected to be more stable over coming years, other avenues for improvement are likely to open up.

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