Wind Power Prices Fall Below the Cost of Natural Gas

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The US Department of Energy released a report this week that examines wind power production in the United States. The report looks at data from 2018, and the resulting analysis demonstrates that prices, including turbine costs, are decreasing, causing the cost of building and operating wind farms to drop below the expected price tag for fueling natural gas plants.

Based on the data, according to a report by Ars Technica, wind farms are now cheaper to create and operate than the anticipated cost for purchasing fuel for an equivalent natural gas plant. Partially, this is due to a tax credit that makes renewable energy generation less expensive. As that credit phases out, it isn’t clear whether the falling price trend will continue.

Up until 2009, wind power costs were actually rising, hitting a peak of $70 per MegaWatt (MW)-hour. Since that point, there has been a steady decline. In 2018, for this first time, the national average dipped below $20 per MW-hour. In the Great Plains region, the prices have reached the mid-teens on occasion.

The price for natural gas power is expected to gradually rise through 2050. Without any considerations for plant operation costs, it has already crossed the $20 per MW-hour threshold. As a result, wind power, particularly in the central US, is already cheaper than operating a natural gas plant.

In 2018, approximately 7.6 GigaWatts (GW) of new wind power capacity made its way onto the grid. This represents a little more than 20 percent of the capacity additions in the US, putting wind power behind natural gas and solar power for capacity additions.

One reason wind power isn’t a bigger portion of the capacity increases is that not all parts of the US are ideal for this form of power generation. In areas that are, such as portions of the Great Plains, wind power represented over half of the capacity increases.

Overall, in 2018, wind farms supplied about 6.5 percent of the country’s electricity. However, in states like Kansas, Iowa, North Dakota, Oklahoma, and South Dakota, approximately 30 percent of the states’ power comes from wind.

Part of the reason for the decrease in wind power cost is technology improvements. Turbines have become more capable over time and generators are more effective at extracting power, including during days where the wind is lighter or more erratic.