The world’s leading experts opine on future wind energy costs and cost drivers

Introduction

Wind energy supply has grown rapidly over the last decade. However, wind‘s ultimate contribution to the future energy mix depends on the underlying costs of wind energy. Substantial uncertainty remains about both the degree of cost reductions and the associated enabling conditions, in part reflecting the methodological limitations of past approaches. Learning curves have been criticized for being overly simplistic and rigid, focusing often on upfront capital costs, and requiring reliable historical data to compute cost forecasts, and have shown strong limitations particularly offshore. Engineering assessments in contrast involve detailed modelling, but often emphasize incremental medium-term advances and rarely assess probabilities.

To address some of these issues, and provide new insights into future wind energy cost and cost drivers, IEA Wind Task 26 on the “Cost of Wind Energy” conducted an innovative survey of the world’s leading wind energy authorities.


Approach

The IEA Wind Task 26 survey represents the first formal global expert elicitation conducted for onshore, fixed-bottom offshore, and floating offshore wind applications. With 163 respondents from around the world, it is the largest elicitation ever performed on an energy technology. It emphasizes costs and cost-reduction drivers for 2030, but offers additional insights into 2020 and 2050.

Our analysis focuses on changes in the levelised cost of energy (LCOE), asking for probabilistic (low, median, and high) estimates for a “typical” project. For both our baseline year 2014 and the focus year of 2030 we solicited not only LCOE values but also five core LCOE input components: capital expenses (CapEx), operating expenses, capacity factors, project design life, and weighted-average cost of capital. We also asked about expected turbine design characteristics and the underlying drivers most likely to impact LCOE reductions. Because of the large number of respondents, we are able to summarize the results as a whole, but also by respondent group.

Main body of abstract

Results show significant opportunities for cost reductions: under the median scenario, experts anticipate 24%–30% reductions by 2030 and 35%–41% reductions by 2050 across all three wind subsectors. Experts predict a 10% chance that LCOE will fall by more than 40% by 2030 and more than 50% by 2050. In absolute terms, onshore wind is expected to remain cheaper than offshore—and fixed-bottom offshore less expensive than floating. However, absolute LCOE reductions are greater for offshore than onshore wind, and the gap between fixed-bottom and floating offshore narrows, with especially sizeable LCOE reductions of floating offshore wind between 2020 and 2030.

For onshore wind, CapEx (-12%) and capacity factor improvements (+10%) constitute the largest drivers of LCOE reduction by 2030, the latter also reflected in expectations of growth in nameplate capacity, hub height, and rotor diameters. For fixed-bottom offshore wind, CapEx reductions (-14%) and improvements in financing costs (-10%) are the largest contributors to LCOE reduction, mirrored by expected growth in turbine capacity and hub heights, while roughly maintaining specific power. Capacity factor improvements (+9% relative to current fixed-bottom offshore) play a large role for floating offshore wind, reflecting deployment capabilities in particularly windy sites. Financing cost reductions are especially important for offshore wind—more so than for onshore wind.


Conclusion

Our insights complement previous tools and offer significant value to policy and planning communities, R&D, and industry strategy development. They enable energy system and integrated assessment models to explicitly represent uncertainty in future wind energy costs to better understand the ultimate role of wind in climate change mitigation and future energy supply.


Learning objectives
1) Show that, despite the maturity of onshore wind and the limited evidence of historical cost reductions for offshore wind, experts anticipate significant future LCOE reductions.

2) Demonstrate that capital-cost improvements are only one means of achieving LCOE reductions: extrapolations of past capital-cost-based learning models ignore major drivers and likely understate future cost reduction opportunities by about 50%.

3) Confirm that the “opportunity space” for cost reductions is sizeable, implying substantial potential upsides to wind energy technology policies that drive LCOE lower.