The document discusses declining costs of wind power based on a report from IRENA. It finds that wind power costs have dramatically decreased, with onshore wind now competitive with fossil fuels in many countries. Further cost reductions are expected as turbine prices decline and operations and maintenance costs are optimized. While wind power is increasingly affordable, continued policy support may still be needed for efficient renewable energy development. Overall, renewable energy costs are falling faster than expected, posing challenges but also opportunities to shift policy focus.

1. The Renewable Revolution:
Wind Power Costs
Michael Taylor
mtaylor@irena.org
IRENA Innovation and Technology Centre
27 November, 2012

2. About IRENA
Director-General: Adnan Amin
Established April 2011
The intergovernmental RE agency
Mission: Accelerate deployment of renewable energy
Scope: Hub, voice and source of objective information for
renewable energy
Mandate: Sustainable deployment of the six RE resources
(Biomass, Geothermal, Hydro, Ocean, Solar, Wind)
Location: Headquarters in Abu Dhabi, United Arab Emirates
Innovation and Technology Centre IITC, Bonn
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3. IRENA Membership
IRENA’s 101 Members and 159 Signatories
Status: September, 2012 3

4. Organizational structure
Office of the
Director -General
Knowledge
Policy Advisory Innovation and
Management
Services, Capacity Technology Centre
Innovation and
Building (PASCB) (IITC)
Technology (KMTC)
IRENA is NOT a:
Bank
R&D institute
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NGO

5. COSTING….
WHY?
HOW?
WITH WHOM?
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6. Rationale and goals
• Renewable energy can meet countries policy goals for
secure, reliable and affordable energy and access.
• Lack of objective and up-to-date data
• Economics are a key decision factor
• Cost declines, rapid for some renewables, occurring
• Decision making is often based on:
 outdated numbers
 opinion, not fact based
• IRENA to strive to become THE source for cost data
• Goals are to assist government decision-making, and fill
significant information gap 6

7. Framework
Where to set the boundaries?
Are costs even available? Prices, or price indicators?
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Levelised cost of electricity (LCOE)

8. Data Sources
• General information
 Business journals (eg Photon), consultancies (eg BNEF), industry associations
(eg WWEA, ESTELA, etc.), auctions and tenders (eg Brazil), project design
studies, development banks (e.g. KfW), World Bank, etc......
• Questionnaire: real world project data IRENA/GIZ collaboration
 79 projects for Asia and Africa (34 PV, 20 hydropower, 11 wind,
8 biomass, 3 hydbrid and 3 CSP)
 7 submissions unusable!
• Data gaps, some assumptions required. Transportation data difficult
to seperate out
• Difficult to define what is a “development project“
• Inconsistencies in the allocation of costs
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9. TODAY’S COSTS
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10. Key findings
• A renewable revolution is under way
• Dramatic cost reductions for Solar PV, onshore wind
competitive at best sites, CSP has great potential,
hydropower and biomass more mature
• Unpredictable price variations affect policy efficiency
• Renewables now the economic solution off-grid and for
mini-grids
• Data collection poses challenges
• A shift in policy focus will need to come
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11. Levelised cost of electricity
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Note: assumes a 10% cost of capital

12. Wind
• Capacity factors are increasing
(US example)
• Wind turbine prices declining
(US example)
• The LCOE is coming down
(Brazilian Auctions)
• Onshore wind is now competitive
with fossil fuels in many countries
• Offshore wind is still expensive
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13. Wind turbine prices
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Sources: LBNL, 2012; BNEF, 2012; IEA Wind, 2007, 2008, 2009, 2010, 2011 and 2012.

14. Wind farm total installed costs
Non-OECD
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Sources: IRENA Renewable Cost Database

15. Wind farm capacity factors
Non-OECD
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Sources: LBNL, 2012 and IRENA Renewable Cost Database

16. O&M costs
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17. The LCOE of wind
Non-OECD
2011 USD/kWh
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18. COST REDUCTION
POTENTIAL
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19. Learning curve for turbines
Strong anomalies in recent years; further analysis needed
H2 2012
Chinese
turbine prices
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Source: Bloomberg New Energy Finance, February, 2011

20. The share of O&M in the LCOE
of wind power
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21. Summary of cost
reduction potentials
• Wind is often the most competitive non-hydro RE, LCOE will
continue to decline.
• Will global market prices for turbines converge like PV
modules?
• Operation and maintenance cost can account for a
substantial share of LCOE, cost reduction potential less well
understood.
• Balance of project costs: will these continue to decline as
rapidly as equipment costs?
• Reasons for differences in bottom-up engineering cost
estimates and real world project costs not well understood
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22. CONCLUSIONS
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23. Implications of cost declines
• Rapid, unexpected, cost reductions pose challenges
• Efficient support policies still needed
• An integrated strategy is required
• Policy focus will need to shift, depending on country, in the
near future. Few countries “get” this!
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24. To Conclude
• A renewable revolution underway driven by a virtuous circle
• Renewables are THE economic solution for off-grid and mini-grid
electricity projects (PV and small-scale wind, biomass and hydro) and
increasingly for grid-supply
• Wind, and renewables in general, increasingly competitive without
assistance. But typically for best resources -> needs to expand
• Reductions in LCOE of wind will be driven by technology improvements
and capital cost reductions, but are there constraints?
• Renewables will increasingly have to work together
• Analysis will have to shift from LCOE to electricity system costs. Demand-
side is the forgotten resource!
• The quest for better cost data and understanding of differences continues.
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Regular updates for PV, CSP and wind will be needed

25. Renewables are increasingly
competitive, but more needs to be done
to fulfill their potential…
IRENA is part of the solution
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26. Additional slides
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27. Typical installed capital costs
and capacity factors
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