Wind Energy Development: Economic Factors

Wind Energy Development: Economic Factors

Whereas solely offering about 1% of U.S. electrical energy wants, wind energy is rising extra quickly than every other power supply. Over 5,000 megawatts of recent wind producing capability was put in within the U.S., in 2007, second solely to new pure gas-fired producing capability. Wind know-how has improved extensively over the previous 20 years; nevertheless wind power nonetheless depends upon federal tax incentives to compete with conventional power sources.

A big impediment for grid parity utilizing wind power is that its manufacturing depends on when the wind is blowing fairly than peak shopper energy wants. This variability creates added bills and complexity for balancing provide and demand on the grid.

A further difficulty is that new transmission infrastructure shall be required to ship wind-generated energy to excessive density inhabitants facilities. As a result of constructing new transmission strains are costly and time-consuming, it’s tough to find out how building prices must be allotted amongst customers and which pricing methodologies to make use of.

To this point, U.S. federal wind energy coverage has centered on the manufacturing tax credit score The Manufacturing Tax Credit score is a enterprise incentive to function wind services. Nonetheless, this credit score expired on December 31, 2008. Coverage analysts and wind business representatives have argued that the on-again off-again nature of the manufacturing tax credit score is inefficient and truly results in larger prices for the business.

In response to the 2008, CRS Report for Congress, “Wind Energy in the USA: Applied sciences, Economic and Coverage Points,” wind generators haven’t any gas prices, and minimal variable operations and upkeep (O&M) bills. Additionally, wind energy doesn’t have the opposite prices that include fossil gas burning, reminiscent of air air pollution management tools.

Nor does wind energy incur the waste disposal prices related to different power technology, reminiscent of scrubber sludge disposal for coal vegetation and waste storage for nuclear vegetation. Nonetheless, though wind vegetation have low variable prices, the mounted O&M prices are excessive, and wind energy vegetation are capital intensive. Due to these mounted prices, challenge prices have risen and averaged over $1,700 per kilowatt in 2007.

Additionally, larger enter costs (metal, cooper, concrete), a scarcity of expert employees, unfavorable forex change, and shortages in key wind turbine elements and manufacturing capability have all contributed to the fee enhance.

When wind makes up a big a part of an influence system’s complete producing capability, maybe 10% to fifteen% or extra, the system should additionally bear extra prices to offer dependable backup for the wind generators. This backup capability is both fossil gas, nuclear, or different renewable power (e.g., hydroelectric, geothermal, and biomass).


CRS Report for Congress, “Wind Energy in the USA: Applied sciences, Economic and Coverage Points,” June 20, 2008.


Wind Energy Development: Economic Factors

Wind power is a type of renewable power that harnesses the ability of wind to generate electrical energy. It is likely one of the fastest-growing types of power on the planet, with many international locations investing closely in wind power growth. On this article, we are going to focus on the financial elements that have an effect on wind power growth.

  1. Value

The price of constructing and working a wind farm is a big think about wind power growth. Whereas the price of wind generators has decreased lately, the price of putting in and sustaining them has not. As well as, the price of land, permits, and transmission infrastructure will also be vital. Governments and builders should weigh the prices of wind power in opposition to the prices of different types of power to find out essentially the most cost-effective possibility.

  1. Authorities incentives

Many governments provide incentives to encourage wind power growth, reminiscent of tax credit, subsidies, and feed-in tariffs. These incentives may help scale back the price of wind power and make it extra aggressive with different types of power. Authorities insurance policies may have an effect on the demand for wind power, reminiscent of renewable portfolio requirements that require a sure proportion of power to return from renewable sources.

  1. Energy markets

Energy markets additionally play a big position in wind power growth. The worth of electrical energy, which is about by provide and demand, can have an effect on the profitability of wind farms. As well as, power markets may be risky, and the worth of electrical energy can fluctuate considerably. Consequently, builders should rigorously analyze power markets to find out the optimum measurement and placement for wind farms.

  1. Financing

Financing is important for wind power growth, as wind farms require vital upfront capital investments. Financing can come from quite a lot of sources, reminiscent of banks, personal fairness, and authorities grants. Nonetheless, the provision of financing may be influenced by financial circumstances, reminiscent of rates of interest and investor confidence.

  1. Native financial affect

Wind power growth can have a big affect on native economies, offering jobs and financial development. Nonetheless, wind farms may have an effect on property values and tourism within the surrounding areas. Consequently, builders should work intently with native communities to mitigate the detrimental impacts of wind power growth and make sure that the advantages are shared with the native financial system.

In conclusion, wind power growth is influenced by a variety of financial elements, together with the price of constructing and working wind farms, authorities incentives, power markets, financing, and the native financial affect. By understanding these elements and dealing to handle them, governments and builders may help promote the expansion of wind power and scale back our dependence on fossil fuels.


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