Cost Of Wind Power Expected To Drop 12% By 2016


Global installed wind power capacity continued to grow in 2011, albeit at a slightly lower rate than in 2009 and 2010, according to new research conducted by the Worldwatch Institute for its Vital Signs Online service.

The world now has approximately four times the installed wind energy capacity than it did in 2005, reflecting the combined effects of falling prices, improved technology, global investment and various incentive programs.

China led the way, with a 43% share of global capacity additions in 2011, followed by the U.S. (17%) India (7%) and Germany (5%).

‘China continues to lead the world in wind capacity additions, having increased its capacity a remarkable 40 percent since 2010,’ notes Mark Konold, Worldwatch's climate and energy program manager and the author of the report. ‘But a gap remains between this installed capacity and the amount of wind power that is actually available for use in the country. Because of grid-connection challenges and other issues, China is struggling to use all of the electricity generated by its turbines.’

Despite large increases in installed wind power capacity, several Chinese provinces – including Inner Mongolia and Gansu – have actually lost a significant portion of their generation capacity due to technical problems, according to Worldwatch. Over the next five years, China plans to invest more than $400 billion to make improvements to its electrical grid that will enable it to fully integrate its total installed wind capacity by 2015.

In 2011, the U.S. accounted for approximately 17% of global wind power capacity additions. Although the country generated 27% more electricity from wind in 2011 than in 2010, wind power still accounts for less than 3% of total U.S. power generation, according to the report.

In the European Union (EU), Germany regained its position as regional leader for installed capacity. Currently, wind accounts for almost 8% of the country's electricity consumption. Although Spain added only one-third of the EU's total capacity since 2008, wind power accounts for almost 16% of the country's electricity consumption.

Economic instability has had some negative impacts on European wind power and has pushed future growth projections downward, the report adds.

Worldwide, wind power prices fell to $1.2 million/MW in the first half of 2011, mainly because of improvements in supply-chain efficiency and economies of scale. Competition from Chinese manufacturers and their excess capacity to build machines and flood the market also played a role.

In addition, the capacity factor of wind turbines continues to rise as better technologies enter the market, further driving down turbine costs. Combined, these factors are expected to bring down the cost of wind energy by 12% by 2016, making onshore wind cost competitive with coal, gas and nuclear power.

‘Global wind power growth looks very strong and is on a continued rise, largely because of China's incredible level of investment,’ says Konold. ‘Withhold that, and the picture looks more muddled.

"Developed economies are not reaching their fullest potential due to financial and policy uncertainty, and many developing economies are running into technical problems, despite slightly stronger growth in wind power capacity," he continues. "Although continued growth in wind power won't be as strong as it could be, as the supply increases and prices fall, wind energy is quite likely to continue its upward trend.’

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