Wind Power Makes Economic Sense
No fuel price risk
Wind power, unlike conventional fuels such as oil and gas is immune to fuel-price risk. One of the most important economic benefits of wind power is that it reduces the exposure of any country’s economy to fuel price volatility. The price volatility of conventional fuel sources can stem from the changing balance of supply and demand in the market, geo-political risk arising from the possibility of conflict, rising environmental impact and its costs and political whims.
The fuel cost over the total lifetime of a wind turbine is zero. This takes away a substantial part of any investor’s risk. Wind farm owners know how much the electricity they generate is going to cost prior to its operationalisation. No conventional power generation technology can make that claim.
Fuel cost is a fundamental concern not only to individual utilities and power plant operators, but also to government planners seeking to mitigate their vulnerability to macroeconomic shocks associated with the vagaries of international commodity markets.
The cost of wind energy
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. Fluctuating fuel costs have no impact on wind power generation costs.
The price of wind turbines has steadily decreased in recent years as the technology has improved, with larger, higher, more efficient machines being produced and installed. In many sites globally, wind power is already competitive with new-built conventional technologies and in some cases is actually much cheaper. No new power source can compete with old conventional plant which has already been paid off, and which was probably built with large government subsidies. Governments continue to subsidize fossil fuel production and consumption – to the tune of $409 billion in 2010 and an estimated $630 billion in 2012 alone.
Wind becomes especially competitive when taking into account the price of carbon, which is a factor in a growing number of markets. In countries with strong wind regimes onshore wind is already competitive with fossil fuel based electricity generation.
Investment and jobs
In 2011, over €50 billion (about $68 billion) were invested in wind energy globally, and the sector now employs well over 400,000 people. According to GWEC’s Wind Energy Outlook, the annual global investment in wind energy could reach €140 billion by 2020 and account for over 2 million jobs worldwide.
By 2011 the wind sector employed more than 192,000 people in Europe and over 75,000 people in the United States alone. Moreover the global wind sector creates local jobs and promotes regional economic development.
Especially at times of economic uncertainty and high unemployment rates, a technology which demands a substantial level of both skilled and unskilled labor is of considerable economic importance, and likely to feature strongly in any political decision-making over different energy options.