Wind Power & Avoided Energy Costs

Wind Power & Avoided Energy Costs

In my earlier post, I worked out the total cost of onshore wind, based on a capacity factor of 26%, which is all that is being achieved in the UK according to DECC.


Onshore Wind $
1 MW @26% = 2277 MWh/yr
Capital+Fixed Costs/yr 222328
Capital+Fixed Costs/MWh 97.64
Variable Costs/MWh
Total Cost/MWh 97.64



For every MWh produced by onshore wind, there is an avoided cost of not having to generate by another source. For this scenario, let us assume it is gas fired generation which is avoided. (If we compare to coal or nuclear, the avoided costs are much lower still).

The saving from this will be the variable cost of $57.80/MWh. (This does not take account of the likelihood of extra costs incurred from switching the gas turbines on and off).

In other words, we have to pay $97.64/MWh for wind output, but only save $57.80. Clearly, in any sane world, this would be regarded as a no brainer.

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