Earlier this year, the International Energy Agency (IEA) and the National Renewable Energy Laboratory (NREL) released a comprehensive study focused on the cost of energy from wind. The report is a useful resource for anyone interested in the path that wind power has taken, and the road ahead over the next several decades. The following lays out some insights from our perspective—considerations for airborne wind and the power industry as a whole.
1. The cost of installing wind power has increased over the last eight years. There are two primary drivers of this increase: first, turbines continue to grow in size, with larger blades and taller towers that allow for greater electricity production. Growing in size means using more materials, which is more expensive. That cost is offset by the fact that a larger turbine selling more power can make more money. But a second factor has pushed turbine prices even higher: the price of commodity inputs like steel and fiberglass has risen this decade. Higher priced materials make turbines more expensive, and compound the cost increase for large turbines.
2. The cost of producing wind energy is expected to decrease 20-30% by 2030. Of course, what really matters in energy production isn’t how much a technology costs to install, but how much it costs over its life relative to how much energy it generates, known as Levelized Cost of Energy (LCOE). A wind farm built in an average location in the US today has an LCOE around $0.07 per kilowatt hour (kWh) if you exclude tax incentives. A 30% reduction would mean the average US wind farm will produce a kWh of power for a little less than 5 cents. That’s on the low end of the range for wholesale power rates in the US today. So while it’s exciting to see projections of lower costs, conventional wind power won’t be a clear winner against other sources of electricity generation without new innovation.
3. Cost reducing innovations are either “bigger + taller” or tertiary to turbine technology. The report outlines some direct turbine improvements, such as improved blade control systems that make turbines more efficient. But nearly every expected innovation falls into two other camps. The first is longer blades and taller towers, which as explained above have the tradeoff of increased material use and upfront cost. The second is improvements in the turbine supply chain such as better manufacturing processes and more accurate weather forecasting. This suggests that most of the innovation in conventional wind turbine technology has already been achieved.
From our perspective at Makani, this all adds up to a big opportunity. Our technology drives cost reductions directly, by eliminating most of the mass of conventional turbines and generating more energy. We’re working to make clean, renewable wind power competitive with fossil fuels—not in 2030—but in the next few years.