More good news on the renewable energy front Monday: The cost of onshore wind power has dropped to record lows, and in some regions is competitive with electricity generated by coal-fired plants, according to a survey by Bloomberg New Energy Finance, a market research firm.
“The latest edition of our Wind Turbine Price Index shows wind continuing to become a competitive source of large-scale power,” Michael Liebreich, Bloomberg New Energy Finance’s chief executive, said in a statement.
“For the past few years, wind turbine costs went up due to rising demand around the world and the increasing price of steel,” he added. “Behind the scenes, wind manufacturers were reducing their costs, and now we are seeing just how cheap wind energy can be when overcapacity in the supply chain works its way through to developers.”
Driving the trend are falling prices for wind turbines, which have dropped to their lowest level since 2005, according to Bloomberg New Energy Finance.
Bloomberg said it based its analysis on a review of wind turbine contracts provided by 28 turbine buyers in 28 markets across the world. Those contacts represent nearly 7,000 megawatts’ worth of turbines.
Of course, that’s not necessarily good news for turbine manufacturers in the short term. But it makes wind energy more competitive over the long run. Over the past year the industry in the United States, for instance, has seen the wind taken out of its sails as demand has fallen due to the economy and natural gas prices have plummeted.
According to Bloomberg, contracts signed in late 2010 for turbines to be delivered in the first half of this year this year fell 7 percent from 2009 to an average of $1.33 million a megawatt. That’s a 19 percent decline since 2007.
In some regions of Brazil, Mexico, Sweden, and the United States, the cost of electricity generated by wind farms is on par with coal-fired power, the report said. In those areas, the cost of wind-generated electricity is $68 per megawatt-hour compared to $67 a megawatt-hour for coal power and $56 per megawatt-hour for natural gas.
Meanwhile on Monday, Interior Secretary Ken Salazar and Energy Secretary Steven Chu announced that the federal government would grant $50.5 million over five years to spur offshore wind farm developments on the East Coast.
The money will go toward developing offshore wind technology and removing market barrier to building coastal wind farms.