Approximately 75% of the total cost of energy for a wind turbine is related to upfront costs such as the cost of the turbine, foundation, electrical equipment, grid-connection and so on. Obviously, fluctuating fuel costs have no impact on power generation costs. Thus a wind turbine is capital-intensive compared to conventional fossil fuel fired technologies such as a natural
gas power plant, where as much as 40-70% of costs are related to fuel and O&M. Table 0.1 gives the price structure of a typical 2 MW wind turbine.

TABLE 1: Cost structure of a typical 2 MW wind
turbine installed in Europe (€ 2006)

Operation and maintenance (O&M) costs for onshore wind energy are generally estimated to be around 1.2 to 1.5 c€ per kWh of wind power produced over the total lifetime of a turbine. Spanish data indicates that less than 60% of this amount goes strictly to the O&M of the turbine and installations, with the rest equally distributed between labor costs and spare parts. The
remaining 40% is split equally between insurance,  land rental and overheads.
The costs per kWh of wind-generated power, calculated as a function of the wind regime at the chosen sites, are shown in Figure 0.1 below. As illustrated, the costs range from approximately 7-10 c€/kWh at sites with low average wind speeds, to approximately 5-6.5 c€/kWh at windy coastal sites, with an average of approximately 7c€/kWh at a wind site with average wind speeds. The figure also shows how installation costs change electricity production cost.

Calculated costs per kWh of wind generated power as a function of the wind regime at the chosen site (number of full load hours).

Source: Risø DTU

* Full load hours are the number of hours during one year during which the turbine would have to run at full power in order to produce the energy delivered throughout a year (i.e. the capacity factor multiplied by 8,760).

The costs of wind produced power as a function of wind speed (number of full load hours) and discount rate. The installed cost of wind turbines is assumed to be 1,225 €/kW.

The rapid European and global development of wind power capacity has had a strong influence on the cost of wind power over the last 20 years. To illustrate the trend towards lower production costs of wind-generated power, a case (Figure 0.3) that shows the production costs for different sizes and models of turbines is presented. Due to limited data, the trend curve has only been constructed for Denmark, although a similar trend (at a slightly slower pace) was observed in Germany. The economic consequences of the trend towards larger turbines and improved cost-effectiveness are clear. For a coastal site, for example, the average cost has decreased from around 9.2 c€ /kWh for the 95 kW turbine (mainly installed in the mid 1980s), to around 5.3 c€ /kWh for a fairly new 2,000 kW machine, an improvement of more than 40% (constant €2006 prices).

Wind energy investments 2000-2030 (€ mio)

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