No fuel price risk

In contrast to the uncertainties surrounding supplies of conventional fuels, and volatile prices, wind energy is a massive indigenous power source which is permanently available in virtually every country in the world. Other than new gas, coal or even a nuclear power plants, the price for fuel over the total lifetime of a wind turbine is well known: it is zero. For conventional generation technologies, the volatility of fuel price developments are a significant risk factor, with oil prices recently fluctuating between 50 and 150 USD in the course of just one year.

Wind farm owners, however, know how much the electricity they generate is going to cost. No conventional technology (except hydro – the ‘established’ renewable power generating technology) can make that claim. This is of 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

In addition, at many sites, wind power is already competitive with new-built conventional technologies, and in some cases much cheaper. Although nothing can compete with existing, embedded conventional generation plant that has already been paid off (and was mostly constructed with significant state subsidies: governments still subsidize conventional technologies at the rate of about 250 billion USD/year), wind power is commercially attractive, especially when taking into account the price of carbon, which is a factor in a growing number of markets.

For more information on the cost of wind energy, see The Economics of Wind Energy (EWEA).

 

Investment and jobs

lready in 2008, over €36.5 billion were invested in wind energy worldwide, and the sector is now employing well over 400,000 ‘green collar’ workers. According to the GWEC scenario, the annual value of global investment in wind energy would reach €149.4 bn by 2020 and account for over 2.2 million jobs.

Although these figures may appear large, they should be seen in the context of the total level of investment in the global power industry. During the 1990s, for example, annual investment in the power sector was running at some €158-186 billion each year.

Especially at times of economic uncertainty and high unemployment rates, any technology which demands a substantial level of both skilled and unskilled labour is of considerable economic importance, and likely to feature strongly in any political decision-making over different energy options.

For more information on employment in the wind energy sector, see Global Wind Energy Outlook 2008 (GWEC) and Wind at Work (EWEA).

 

Regional economic development

Regional economic development is also a key factor in economic considerations surrounding wind energy. From Schleswig-Holstein in northern Germany, to Andalucía in Spain; from the US Pacific Northwest to west Texas to Pennsylvania; and from Xinjiang and Inner Mongolia in China to Tamil Nadu and Gujarat in India, the wind power industry is revitalising regional economies, providing quality jobs and expanding tax bases in rural regions struggling to keep their economies moving ahead in the face of the global flight to the cities.

 

No geo-political risk

There are no fuel costs, no geo-political risk and no supply dependence on imported fuels from politically unstable regions.

Every kilowatt/hour generated by wind power has the potential to displace fossil fuel imports, improving both security of supply and the national balance of payments, which is not only an issue for the United States which sends more than half a trillion dollars a year out of the country to pay its oil bill. This is an even larger issue for poor countries in Africa, Asia and South America whose economies have been devastated by recent oil price hikes.

 

Speed of deployment

Wind power also has the advantage that it can be deployed faster than other energy supply technologies. Building a conventional power plant can take 10 or 12 years or more, and it is not producing power until it is fully completed. Wind power deployment is measured in months, and a half completed wind farm is just a smaller power plant, starting to generate power and income as soon as the first turbine is connected to the grid.

Even large offshore wind farms, which require a greater level of infrastructure and grid network connection, can be installed from start to finish in less than two years, a crucial asset given the pressing threat of climate change.

 

Emissions

Wind energy emits neither climate change inducing carbon dioxide nor the other air pollutants, and as a result has none of the high external costs related with conventional energy sources. Within three to six months of operation, a wind turbine has offset all emissions caused by its construction, to run carbon free for the remainder of its 20 year life. In an increasingly carbon-constrained world, wind power is risk-free insurance against the long term downside of carbon intense investments.

More information on wind energy and climate change.