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Wind energy will reduce costs sharply over next five years, IEA report finds

© IEA

Costs for onshore wind energy will fall 15% while offshore wind could cut costs by half in the next five years, according to the latest report from the International Energy Agency.

The IEA’s Renewable Energy Medium Term Market Report outlines the pace and scale of cost reduction for wind energy toward 2021. These trends are based on a combination of sustained policy support, technology progress and expansion into newer markets with better renewable resources.

In addition, improved financing conditions will play a particularly important role, driven by the use of long-term power purchase agreements (PPAs) and government-backed auction systems.

Giles Dickson, CEO of WindEurope, said: “The wind industry is reducing costs rapidly. In offshore wind, we’ve seen tender prices this year in Denmark and the Netherlands well below €100/MWh. It’s now very close to being competitive with conventional power.

“Onshore wind is already the cheapest form of new power generation. It’s good to see the IEA confirm that costs will continue to fall significantly. Long term cost reduction needs a healthy pipeline of projects. We don’t have that today. Only 7 out of 28 Member States have clear plans for renewables beyond 2020. Half the Member States have invested nothing in wind in the last year.”

Dickson added: “The Commission needs to ensure the imminent proposals for the ‘Renewables Package’ drive increased ambition at national level – and that Member States clarify as soon as possible the volume of renewables they intend to deploy up to 2030. New deployment in Europe is receding as many countries have scaled back support and imposed punitive and retroactive measures on the industry.”

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