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Wind Power Cost: the facts

Electricity generated by wind turbines has in the past been more expensive than electricity generated by more conventional means. This has changed over the past few years and now wind power is providing some of the cheapest available energy.

This page has been written in Australia from an Australian perspective but will have a much wider relevance.

Before March 2018 my notes concerning the cost of wind power have mainly been on my general wind power page, but ignorance and misinformation on the subject has been common enough to justify a special page.

This page was started as a separate page on 2018/03/29, modified 2018/05/30
Contact: email daveclarkecb@yahoo.com (David K. Clarke) – ©
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A South Australian wind farm
Wind farm
Wind farms like this, together with solar power, are gradually replacing fossil fuelled power stations
Utility-scale wind power in Australia was almost non-existent before the beginning of the twenty-first century. At the turn of the century there were only 30 megawatts (MW) of installed wind power capacity in the whole country and three-quarters of that had been build in the last year of the old century. At the time I created this page, March 2018, there was over 4,700 MW in Australia (see chronology of wind farm construction in Australia). A further 2,952 MW was under construction. The main reason for this phenomenal growth was the decline in the cost of the technology.

In 2018 on-shore wind power and utility-scale solar photo-voltaic power were the cheapest options for new-build energy generation.

It is important to discriminate between wholesale electricity prices (the prices that the generators receive) and retail electricity prices (the prices that the consumers pay). Wholesale prices are typically a fraction of retail prices and, at least in Australia, the former have tended to fall in recent years while the latter have increased, due to increased charges for transmission and distribution.

Opponents of wind power have made much of relatively high retail power prices in South Australia, the state with the highest wind power penetration. Over a few years up to 2018 in South Australia:
  • The average price received by large generators for electricity (wholesale price) from wind farms was in the order of $50/MWh (5c/kWh);
  • The average price received by large generators for electricity from gas generation was in the order of $100/MWh (10c/kWh).
Gas generators get high average prices because they are available on demand, but the fact remains that the wholesale cost of gas-fired electricity generation has been about twice that of wind power!

It was the high prices given to power that was available on demand, compared to power available all the time (base-load) or intermittently (wind and solar photo-voltaic), that was making utility-scale batteries a very economically attractive proposition in early 2018. At the time of writing the biggest battery in the world at Hornsdale Wind Farm in South Australia had proven so successful that a number of other utility-scale batteries were either proposed or under construction. Solar thermal power with energy storage had become very attractive for similar reasons.

Cost data

The cost data below has been collected from many credible sources. It is important to consider the dates at which it was collected because of the steeply declining cost of wind power.


Lazard's home page describes the business as: "A global firm, built over generations, on a foundation of client service. Lazard has a simple and powerful model, focused on two businesses: Financial Advisory and Asset Management."

In 2017 Lazard produced its latest (at the time of writing this) Levelized Cost of Energy Analysis (Version 11.0). The figures in the table below were extracted from that report; the costs are for the USA, are in US dollars and are for utility-scale installations. I have selected only the figures for on-shore wind, solar PV and their main competitors in non-renewables: gas combined cycle, coal and nuclear.

Energy sourceCost range in 2017Change from 2009-2017
Wind$30-$6067% decrease
Solar$43-$5386% decrease
Gas combined cycle$42-$7827% decrease
Coal$60-$1438% decrease
Nuclear$112-$18320% increase

Lazard's analysis indicated that in Australia, solar was a little less expensive than in the US and gas power a little more expensive.


Wind power compared to others

Costs of electricity from many generation methods, reported by the World Energy Council, is shown elsewhere on this page.

Cost of human power

This note was added in August 2016 to put the cost of energy in the modern world in the context of the energy (or power) that can be produced by a human.

According to Wikipedia a healthy, well fed, labourer can produce about 75W for 8 hours. The national minimum wage in Australia in 2016 was $17.70 per hour. $17.70 for 75 Watt-hours is about $0.24/Wh or $236/kWh or $236,000/MWh.

That is about 4000 times the cost of wind power in Australia in 2017.

International Energy Agency

In October 2015 the International Energy Agency (IEA) released a report titled "Medium-Term Market Report 2015: Market Analysis and Forecasts to 2020". It contained a graphic giving contracted prices of wind and solar power in a number of countries. The averages of these figures were:
  • US$63/MWh for wind and
  • US$79/MWh for solar PV

Bloomberg New Energy Finance

On 2015/10/05 BNEF published a report titled "Wind and Solar Boost Cost-Competitiveness Versus Fossil Fuels".
"The BNEF study shows that the global average levelised cost of electricity, or LCOE, for onshore wind nudged downwards from [US]$85 per megawatt-hour in the first half of the year, to [US]$83 in H2, while that for crystalline silicon PV solar fell from $129 to $122.

In the same period, the LCOE for coal-fired generation increased from $66 per MWh to $75 in the Americas, from $68 to $73 in Asia-Pacific, and from $82 to $105 in Europe. The LCOE for combined-cycle gas turbine generation rose from $76 to $82 in the Americas, from $85 to $93 in Asia-Pacific and from $103 to $118 in EMEA."
It is interesting that these costs are significantly higher than those given by the International Energy Agency (above) and the recently contracted prices in Australia (below).

Also see Wind and Solar are Crushing Fossil Fuels, 2016/04/06, Bloomberg New Energy Finance.

Several recent price agreements in Australia

Updated 2017/05/08
  • In 2014 the ACT Government signed contracts to buy wind power from several new wind farms:
    • For Aus$87/MWh from Ararat Wind Farm Pty Ltd;
    • For Aus$81.50/MWh from Coonooer Bridge Wind Farm Pty Ltd;
    • For Aus$92/MWh from HWF1 (Hornsdale Wind Farm Stage 1, owned by Neoen) Pty Ltd.
  • In September 2015 AGL sold a 50% stake in Australia's biggest wind farm, Macarthur, and at the same time signed an agreement with the new owners to buy power at Aus$79/MWh (US$57).
    The prices highlighted in bold on the left were each record low prices at the time of the contracts; showing how the price of wind power was continuing to fall.

    $81.50 in 2014 to $60 in mid 2017 is a 26% decrease.

    In the third ACT renewable energy reverse auction (second for wind power) late in 2015:
    • For Aus$89.10/MWh from Sapphire Wind Farm 1 Operations Pty Ltd;
    • For Aus$77/MWh from Hornsdale Wind Farm 2 Pty Ltd.
  • In the forth ACT renewable energy reverse auction in mid 2016:
    • Crookwell Wind Farm Stage 2 in NSW was contracted for 91MW at Aus$86.6/MWh;
    • Hornsdale was contracted for a further 109MW at Aus$73/MWh (Stage 3).
  • AGL will pay Aus$65/MWh for the output of Silverton Wind Farm, see RenewEconomy, 2017/01/19, for more information. (That was equal to US$49 at the time.)
  • Origin Energy agreed to a long-term power purchase agreement at below Aus$60/MWh for power generated by the proposed Stockyard Hill Wind Farm; May, 2017. RenewEconomy reported that the price was well below $60 and "closer to $50 than $60".
  • AGL contracted with PARF to buy the electricity from Coopers Gap Wind Farm for five years for 'less than $60/MWh' in August 2017.
The prices contracted under the ACT reverse auctions are fixed for 20 years.

Electricity prices in US wind power states decreased while prices in other states increased

On 2014/05/05 David Ward for the American Wind Energy Association reported
"states that obtain more than 7 percent of their electricity from wind saw an average electricity price decrease of 1.31 percent over the time period the groups looked at, while the nation saw an average electricity price increase of 3 percent."

Costings report from World Energy Council, 2013
Note that this graphic is now at least five years old; renewable energy prices have fallen more since then.

Cost of Energy Technologies, compiled in 2013
Cost of energy
The X axis is costs in US$/MWh
STEG – solar thermal energy generation; PV – photovoltaic; CCGT – combined cycle gas turbine
Download the full WEC report
Graph Credit, World Energy Council and Bloomberg New Energy Finance
In October 2013 the World energy Council published a document titled World Energy Perspective: Cost of Energy Technologies.

The graph on the right was downloaded from the above WEC site. It shows onshore wind as being among the cheapest electricity generating technologies; in particular, in 2013 it was on a par with coal; both around US$80/MWh.

More recent contracted prices for wind power are given in another section on this page. They show that wind farm power prices continued to fall; around January 2017 AGL contracted to pay Aus$65/MWh for the output of Silverton Wind Farm; that was equal to US$49 at the time.

Wikipedia gives levelised costs of energy (LCOE) from a number of sources.

Cause or effect?


The Australian situation

South Australia has some of the highest electricity prices in Australia, it also has the highest penetration of wind power.

Apart from the wind power and a little solar PV, most of SA's power is generated by burning expensive gas; two old coal-fired power stations were shut down in 2016 because they were economically uncompetitive.

Wind power is attractive in SA because of the high price of electricity. The four other mainland states have cheap (and dirty) coal and the remaining state, Tasmania, has plentiful hydro-power.

In a few parts of the world there is some correlation between high electricity prices and high wind power penetration. (Probably Australia and the USA, apparently not in Europe. Very significantly China and India, two countries that are installing huge amounts of wind power, have very low electricity prices.)

Wind farm opponents are quick to claim that the wind farms have caused the high electricity prices in those places where a correlation exists, but it could just as easily be the other way around.

If you wanted to build any sort of power station and you had a choice of where to build it, you would, of course, go somewhere you were going to get a high price for the electricity you generated. You would look for places with high electricity prices. So it could well be that the high electricity prices attract wind farms, rather than the wind farms causing the high prices.


As early as 2014 wind power was Denmark's cheapest energy

On 2014/07/22, Ray Weaver reported in the Copenhagen Post that:
"Onshore wind power is the cheapest form of new electricity generation in Denmark, according to a recent study by the Danish Energy Agency (DEA), the government's energy research body. An analysis made public on Friday showed that new onshore wind plants due to come online in 2016 will cost ... far less [per kWh] than coal, biomass and other forms of energy production.
The price of wind power continued to drop after 2014.

Altered 2016/05/23

Cost of electricity

Power costs in Australia
Power costs
From ABC Fact Check
Wind farm opponents often point to increasing electricity prices and claim that renewable energy, and wind power in particular, is to blame. The facts are otherwise.

South Australia has more wind power per capita than any other Australian state. The graph on the right shows that SA's electricity prices were only marginally higher in 2013 and 2014 than in other states. In fact, power price rises in SA have been lower in the period when most of the state's wind farms were built than in the eastern, mainly coal-powered, mainland states in the same period. See elsewhere on this site.

The ACT, with the cheapest power in the nation, is aiming at 100% renewable energy, much of it wind power, by 2020. The ACT does not have its own wind power, it has contracted to buy power from renewable generators outside of the territory.

In July 2015 the Australian Labor Party announced a policy of aiming at 50% renewable energy by 2030. Hugh Saddler wrote an analysis of what this would cost in The Conversation on 2015/07/22. Basing his estimates on costs involved in the ACT's proposed 90% renewable energy by 2020, he wrote:

"Taking these factors together, a reasonable assumption would be that wholesale market prices would increase by 4 cents per kWh above present levels in every state market except South Australia, where the price rise might be closer to 3 cents per kWh because its energy is more expensive to begin with."
Note that this is small compared to the cost increases due to higher distribution costs; see below.


Wholesale electricity prices have been falling

The Australian Energy Market Operator average price tables show that the wholesale prices of electricity have been falling in the interconnected eastern states from 2006/07 to 2011/12. Most of Australia's wind farms were brought online during this period. Also see The Conversation: Electricity prices fall: renewable energy deserves merit.

Renewables are suppressing electricity prices

The USA experience
Wind energy share
The 11 US states that get more than 7% of their electricity from wind energy have seen their electric prices decrease by 0.37% over the past five years, in contrast to all other states, where electricity prices have increased 7.79% during that time.
From Climate Crocks
On 11th July 2013 Sid Maher had an article in The Australian titled "Electricity market shrinks by 40pc as prices tumble".

Mr Maher discussed the increased supply of renewable energy to the market. He quoted the Chief Executive of the Energy Supply Association of Australia (ESAA), Matthew Warren, as saying "One of the major effects of this increased supply of renewable energy in a shrinking national market is to suppress the wholesale price of electricity." Note, the generation of power from renewables, including wind, is suppressing wholesale power prices.

Dylan McConnell, Research Fellow, Melbourne Energy Institute at University of Melbourne wrote an article for The Conversation titled "Power of the wind – how renewables are lowering SA electricity bills".

The article discusses a proposal by The Essential Service Commission of South Australian (ESCOSA), to lower electricity prices, 'by an average of $160 per household'; and ascribes the lower costs to the 'Merit Order Effect' of SA's plentiful renewables.


International Energy Agency forcast that renewables will surpass gas by 2016

"As their costs continue to fall, renewable power sources are increasingly standing on their own merits versus new fossil-fuel generation," said IEA Executive Director Maria van der Hoeven (2013/06/26).

Australia has relatively low retail electricity prices

Opponents of renewable energy have falsely claimed that electricity prices in Australia are high because of wind and solar power. Quoting from page 40 of the report "Energy in Australia, 2012" from the Bureau of Resources and Energy Economics:
"Households in Australia face relatively low retail electricity prices compared with many OECD economies. Although Australian electricity prices were above those in some countries such as the United States and Canada, they were just below the OECD average in 2010."
Of course retail prices have risen significantly in Australia since 2010, but have they also risen significantly in other countries?

Cost of renewables to the consumer

On 2013/06/29 the Clean Energy Regulator gave the volume weighted average market price for large-scale generation certificates (LGC) as $38.69/MWh. What this means is that, on top of whatever price the wind farmers can get for the electricity they generate on the open market, they get another $38.69 per megawatt-hour because the power is renewable. $38.69/MWh equals $0.03869/kWh – about 4¢/kWh. This is factored into the retail price of electricity. So if a quarter of the electricity is renewable, as in South Australia, about 1¢ is added to the approximately 25¢ that one pays for electricity; a 4% increase due to wind farms.
The Australian Energy Market Commission's report on "Future Possible Retail Electricity Movements: 1 July 2010 to 30 June 2013" stated in its Executive Summary that "the most significant driver of the expected increase in residential electricity prices is the increasing cost of distribution services, which is expected to contribute 41% of the total increase in residential electricity prices". Other substantial increases were ascribed to wholesaling (19%), transmission (8%) and retailing (14%).

On the other hand:

"Renewable Energy Target (RET) costs are forecast to comprise around 11% of the total increase in residential electricity prices at a national level. This increase in costs is related to an expansion in the renewable energy generation target from the Mandatory Renewable Energy Target of 9,500 GWh to the RET of 45,000 GWh by 2020. Other components of the residential electricity price include feed in tariff scheme costs and the costs of other state based energy efficiency and demand management schemes. Together these cost components comprise around 5% of residential electricity prices at a national level and are not expected to have a significant impact on the total residential electricity price over the reporting period in most jurisdictions."
The report also gives 3% as the "contribution to national price increases" from the Renewable Energy Target.

PJM, the independent grid operator for all or parts of 13 US states produced a report that confirmed that wind energy is decreasing both the price of electricity and emissions of harmful pollutants. (See Into The Wind.)

Opponents of renewable energy (including the Liberal party) like to connect the proposed carbon tax with a rise in electricity prices. Energy prices are rising world-wide; and will continue to do so. The cheap sources of petroleum have been used up, those that remain cost more to exploit. Until recently consumption of electricity has risen steadily (in Australia and world-wide), this has led to a need from the building of expensive new electricity transmission and distribution infrastructure. Domestic solar power has helped to decrease the average demand for power from the electricity grid, but peak power consumption, so far as I know, has not declined, and the generation and transmission system has to be able to cover peak demand. Ultimately this must all be paid for by the end consumers of the electricity.

There is no justification for the claim that power prices would fall without a carbon tax.

Renew Economy has an informative article on the relationship of wind power to electricity costs in South Australia, dated 2012/03/21.

Heat wave of January 2014

Giles Parkinson on RenewEconomy pointed out that solar and wind power forced wholesale electricity prices down. He quoted a report by Sinclair Knight Merz:
"We conclude that wind generation is likely to have significantly reduced the price impact brought about by sharply rising demand during the heat wave period. In the seven days to 19 January, wind farms contributed around 6 per cent of overall supply in SA and VIC, and as a consequence, wholesale prices were at least 40% lower (on a consumption weighted average basis) than they would have been without the contribution of wind."

ACT has the highest renewables target and lowest electricity prices

Sophie Vorrath, writing for RenewEconomy says that the proposed development of up to 550MW of wind, solar and waste to energy projects, working toward their 90% renewables target (by far the highest on the mainland), will help them retain the lowest electricity prices of any state or territory in Australia.
Wind home

Historical interest
The material below was written some years ago and is left for reference


Impact of Operational Wind Generation on the National Electricity Market

By P. Wild, W.P. Bell, J. Foster; School of Economics, Uni. Qld. (Download pdf) Modelling showed:
"The stand-out states are South Australia and Victoria which experience [wholesale electricity price] reductions of between 24.9 and 38.9 per cent and 14.5 to 21.6 per cent over the interval 2010-2012."
"The impact of wind generation in the NEM was to reduce carbon emissions in all states. The stand-out state was South Australia with percentage reductions in carbon emissions in the range of 3.6 to 11.0 per cent."


reported in 2013/02/07 "that new wind farms could supply electricity at a cost of $80/MWh – compared with $143/MWh for new build coal, and $116/MWh for new build gas-fired generation."
Renewably generated electricity has been more expensive than fossil-fuel fired electrical generation (unless the environmental costs of burning fossil fuels is taken into account), but this is changing. In mid 2012 it seems that the cost of wind and solar photovoltaic is becoming competative to new coal, gas and nuclear. The costs of solar PV power has fallen more quickly than utility scale wind power.

In 2013 wholesale power prices have fallen to quite low levels, partly due to reduced power consumption.

In February 2013 Bloomberg New Energy Finance reported on a study that showed that some renewables had become cheaper than fossil fuels in Australia.

"The study shows that electricity can be supplied from a new wind farm at a cost of AUD 80/MWh (USD 83), compared to AUD 143/MWh from a new coal plant or AUD 116/MWh from a new baseload gas plant, including the cost of emissions under the Gillard government's carbon pricing scheme. However even without a carbon price (the most efficient way to reduce economy-wide emissions) wind energy is 14% cheaper than new coal and 18% cheaper than new gas."


Capital costs of wind power
These figures are out of date; this section is left here for possible historic interest only.

Capital cost per Watt
Wind farmPer installed WattPer generated Watt
Brown Hill Range$2.46$6.23
Bungendore WF$1.56$5.95
Challicum Hill$1.45$5.11
Clements Gap$2.38$7.02
Lake Bonney #2$2.52$11.05
Starfish Hill$1.86$6.88
Wattle Point$2.47$7.54
The figure used for the capital cost of Wattle Point Wind
Farm was the reported sale price of $225m in 2007.
The cost of building wind farms is often stated by the organisations that build them – the total costs of the farms I've listed in the table on the right are given in the sections on the relevant farms.

In the table I give the capital costs per Watt, as well as I can calculate them, for several wind farms. Please note that the table gives the cost of building a wind farm divided by the maximum number of Watts that wind farm is capable of generating (cost per installed Watt) and the number of Watts it has generated on average (cost per generated Watt). The prices per generated Watt are from the capacity factors that I calculated in January 2011.

In dollar terms, the cost of building wind farms has increased in the last few years, at least partly due to substantial increases in the price of steel. Against this is a longer-term trend for the cost of wind turbines, per MW, to decrease. Factors such as these cause variations in the capital costs of wind farms with time. At least some of the variation in the costs per installed Watt would be due to the time of construction; a significant factor in the cost per generated Watt is the capacity factor achieved by the farm.

Unlike fossil-fuelled, or nuclear, power stations, once the wind farm is built there are, of course, no further costs for fuel; the capital cost is by far the greatest cost of wind power.

Cost of solar PV declining

Climate Spectator carried an article on declining prices of solar PV, 2012/05/17, (relating to a paper published on Bloomberg New Energy Finance). The report suggested that "fully installed system cost of $3.01/Watt for 2012 and $2.00/Watt for 2015" and that the cost of power generated by solar PV was now below residential grid-price parity in a number of countries including Australia.

True cost of coal

A big screen reminds people in Beijing of what a blue sky looks like
Beijing smog
Air pollution purchased from Australia
Image source: FengLi/Getty Images
The World Health Organisation has estimated that air pollution kills around seven million people each year and much of this comes from the burning off coal.

To this must be added the incalculable cost of climate change and ocean acidification, both of which are largely due to the burning of fossil fuels.

Climate Progress published an article that discussed the true cost of coal when the economic, health and environmental costs are all taken into account (no longer available on the Internet?). The original research was published in the Annals of the New York Academy of Sciences by Dr. Paul Epstein. It was calculated that if the true costs of coal was considered the price of electricity from coal fired power stations would rise by about 18 cents per kilowatt-hour (or $180/MWh).


Related pages on this site

Wind power

Wind power in Australia
Power price rises in Australia and renewable energy
A glossary of terms relating to wind power
Wind power in South Australia
South Australia's huge success with adopting renewable energy
Wind power problems, alleged problems and objections
  Subsidies, in relation to wind power

Non-renewable power

Fossil fuels

End of Coal: the coal industry is facing a terminal decline
Killer Coal: air pollution from coal burning kills millions of people world-wide each year


  Part-built nuclear power stations abandoned because of cost over-runs

Related pages off this site

Lazard's Levelized Cost of Energy 2017

Wikipedia: Cost of electricity by source; wind power

Report from IRENA; the International Renewable Energy Agency, 2017

The Conversation

Solar PV and wind are on track to replace all coal, oil and gas within two decades

FactCheck Q&A: are South Australia’s high electricity prices ‘the consequence’ of renewable energy policy? The verdict was 'no'.

Index to this page: Cost of Wind Power

On this page...
Capital costs of wind power
Cause or effect?
Costings report from World Energy Council
Cost data
Cost of electricity
Cost of human power
Denmark's cheapest energy
Historical interest
True cost of coal
US; wind power reduces electricity prices

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