ECONOMICS

Wind energy economics

As already mentioned in previous pages, annual electricity production will vary enormously depending on the amount of wind on your turbine site. Therefore, there is not a single price for wind energy, but a range of prices, depending on wind speeds.

The graph to the right shows how the cost of electricity produced by a typical Danish 600 kW wind turbine varies with annual production (the example built into the Wind Energy Economics Calculator has been used to find the points for the graph). The relationship is really very simple: If you produce twice as much energy per year, you pay half the cost per kWh iIf you believe that maintenance costs increase with turbine use, the graph might not be exactly true, but close to true).

If we use the graph above, plus the example from the page on income from wind turbines we find the relationship between wind speeds and costs per kWh below. Remember, that everything on this page is based on our examples, so you cannot use the graph to predict costs for any particular project. As an example, if your real rate of interest is 6% per annum, rather than 5, costs are approximately 7.5% higher than shown in the graph. When you use the Wind Energy Economics Calculator in a moment, you can use your own data to compute the cost of electricity.

The example is for a 600 kW wind turbine with project lifetime of 20 years; investment = 585,000 USD including installation; operation & maintenance cost = 6750 USD/year; 5% p.a. real rate of interest; annual turbine energy output taken from power density calculator using a Rayleigh wind distribution (shape factor = 2).

You should note that wind speeds at 50 m hub height will be some 28-35% higher (for roughness classes between 1 and 2) than at 10 m height, which is usually used for meteorological observations, cf. the wind speed calculator page. Look at the grey axis at the bottom of the graph to see how wind speeds at 10 m height may translate into higher wind speeds. A wind speed of e.g. 6.25 m/s at 10 m height in roughness class 1 will translate into 8 m/s at 50 m hub height.