This is an excerpt from the First Quarter 2012 edition of the Wind Program R&D Newsletter.

A recent analysis conducted by the Lawrence Berkley National Laboratory (LBNL) and the National Renewable Energy Laboratory (NREL) suggests that lower capital costs and continued increases in wind turbine productivity will drive down the levelized cost of wind energy for U.S. wind projects constructed in 2012 – 2013. Estimates focused on changes in capital costs and turbine production indicate that the levelized cost of energy—a standard for comparing wind energy with other sources of electricity generation—for projects in 2012 – 2013 could be 5% to 26% lower than the previous lows observed in 2002 – 2003. The most substantial improvements are expected at low-wind-speed sites (e.g., 6 – 7 m/s annual average wind speed at 50-m above ground). These anticipated trends are good news for the wind industry and stand in stark contrast to the period of 2003 to 2010, when the cost of wind energy was pushed higher by increasing turbine prices.

This analysis is notable, because current wind turbine prices (which will influence projects costs for 2012 – 2013) remain higher than their previous lows in 2002 – 2003, despite being substantially lower than the prices experienced between 2008 and 2010. These higher prices, when compared to 2002 – 2003, are partly attributable to the increased materials needed for the higher hub heights and larger rotors of today's turbines. As this joint LBNL/NREL work demonstrates, however, the productivity benefit gained by utilizing taller hub heights and larger rotors is more than enough to offset the incremental increase in turbine prices from 2002 – 2003 to the present. Additionally, because many of the technological advances emerging in today's fleet of new wind turbines have a greater impact on low-wind-speed sites, these new turbines also have the potential to substantially increase the amount of land area that might reasonably be developed—more good news for the wind industry.

Levelized cost of energy estimates for 2012 – 2013 are based on the GE 1.62-MW platform. Both the 82.5-m and 100-m rotor diameters were studied, as well as the 80-m and 100-m hub heights. Depending on the specific turbine configuration, capital costs are assumed to be between $1,600/kW and $2,025/kW. A 9% nominal financing rate is applied, an operating cost of $60/kW/year is assumed, and production losses of 15% are also included. Additional assumptions apply for projects installed earlier.

For details of the analysis, datasets and caveats, see Recent Development in the Levelized Cost of Energy from U.S. Wind Power Projects.

DOE's Lawrence Berkeley National Laboratory addresses the world's most urgent scientific challenges by advancing sustainable energy, protecting human health, creating new materials, and revealing the origin and fate of the universe. Founded in 1931, Berkeley Lab's scientific expertise has been recognized with 13 Nobel Prizes. The University of California manages Berkeley Lab for the U.S. Department of Energy's Office of Science.

DOE's National Renewable Energy Laboratory (NREL), located in Golden, Colorado, provides industry with the technical support it needs to develop advanced wind energy systems. NREL's research capabilities include design review and analysis; software development, modeling, and analysis; systems and controls analysis; turbine reliability and performance enhancement; certification and standards; utility integration assessment; wind resource assessment and mapping; technology market and economic assessment; workforce development; and outreach and education.