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page 5
          07/2005 - issue 10 ..... (New)
               page 5

Wind Power Project Costs


Investment Costs

Wind turbine constitutes the largest share of wind power project costs.  The share ranges from 74 to 80 %, based on wind projects in the UK, Spain, Germany and Denmark.  The other cost items with important shares include grid connection, electrical installation and foundation (Table 1).  There are however considerable variations of these costs per country and per size of the turbine.

Table 1: Cost structure for a typical Medium Sized Wind Turbine (850 kW � 1500 kW)


Share of total cost(%)

Typical share of other costs(%)

Turbine (ex works)






Electric installation



Grid connection









Financial costs



Road construction




The total cost per installed capacity for onshore projects ranges between US$1,000 per kW to US$1,500 per kW for onshore wind power plants in 9 western European countries and the US.  One project reported by the IEA in Czech Republic costs slightly higher at around US$1,600 per kW.  Offshore wind power projects in Denmark, Germany and the Netherlands have investments costs which range from US$1,500 per kW to US$2,600 per kW.

In general, wind power investment costs declined since the past two decades.  Data from Denmark show that the average investment cost in 1989 was around �1000 per kW for 150 kW turbine.  This had progressively declined in the 1990s reaching around �700 per kW for 600 kW machines in late 1990s.  Investment costs per kW however had increased with the entry in the market of 1 MW turbines.  The average investment cost per kW for these turbines in early 2000 was around �900 per kW.  This is mainly attributed to larger rotor diameters and higher hub heights for turbines with more than 1 MW capacities.  Also, 1 MW turbines were also new in early 2000.  With economies of scale, investment costs will eventually decline over time.

Operation and Maintenance Costs

O&M costs are estimated to represent between 20-25% of the total levelized costs per kWh over the lifetime of the wind power project.  O&M costs share may be low at around 10-15% when the plant is relatively new but may increase to 20-35% towards the end of the project life.  Wind power projects in Germany, Spain, the UK and Denmark have O&M costs at around 1.2-1.5c�/kWh.

O&M costs include insurance, regular maintenance, repair, spare parts and administration.  A three-year-old 600 kW wind turbine in Denmark has O&M cost structure as follows: insurance � 35%; regular service � 28%; administration � 11%; repair and spare parts � 12%; and other purposes � 14%.  Insurance, maintenance, and administration are fairly uniform throughout the project life while repair and spare parts costs are influenced by the age of the turbine, starting low and increasing over time.

Study in Germany shows that the O&M costs for the first two years were relatively low at 2-3% of total investment costs corresponding to 0.3-0.4 c� per kWh.  After six years, the share increases to almost 5% of total investment costs, which is equivalent to 0.6-0.7 c� per kWh.  Data for 55 kW turbines in Denmark reveal that O&M costs rapidly increases right from the start and reaching a high but stable level of 3-4 c� per kWh after 5 years.  O&M costs therefore appear to be correlated with age.  In the first few years, these costs are relatively low since manufacturers provide technology warranty.  After 10 years, large repairs and reinvestments could be expected.

Another interesting experience in Denmark is that newer and larger wind turbines have O&M costs lower than the older and smaller turbines. Old 55 kW wind power plants have O&M costs of around 3.5 c� per kWh while those of the new 500 and 600 kW turbines are less than 1 c� per kWh.  One could expect that O&M costs of new multi-megawatt wind turbines will be significantly lower than those experienced at present for 55 kW machines.

Levelized Generation Cost

Levelized generation costs is calculated by discounting and levelizing investment and O&M costs over the lifetime of the wind energy project, divided by the annual electricity production.  The levelized generation cost is an average cost over the lifetime.  In reality, the actual costs may be lower than the average cost at the beginning of the project due to low O&M cost but will increase over the project period.

In addition to investment and O&M costs, other variables that influence the estimation of the levelized cost include wind availability/capacity factor, turbine lifetime and discount rate.

The availability/capacity factors of 19 wind power plants in Europe and USA in the recent IEA study are the following: 17-38% for onshore wind power plants and 35-48% for offshore projects.  The economic lifetime of the wind power plants used in the same study is 20 years, except for one case study in Denmark and the US where the lifetime is 25 and 40 years respectively.  The investments costs for both onshore and offshore projects were already presented earlier.  At 5% discount rate, the levelized generation costs for wind power plants were estimated to range between US$ 0.35 and 0.95 per kWh.  At 10% discount rate, the levelized costs range between US$ 0.45 and 1.40 per kWh.

The above results are also consistent with the EWEA study on levelized generations costs for land-based medium sized wind turbines (800-1,500 kW).  Other assumptions made in the study are the following: investment costs range from � 900 � 1,100 per kW; O&M costs are assumed to be 1.2 c� per kWh; wind turbine lifetime is 20 years.  At 5% discount rate, the levelized generation costs are the following: 6.5 c� per kWh for low wind areas (load factor of around 17%); 5.5 c� per kWh for medium wind areas (load factor of 24%); and 4 c� per kWh for coastal areas (load factor of 33%).  At 10 % discount rate, the costs are 9.0 c� per kWh for low wind areas; 6.5 c� per kWh for medium wind areas; and 5.5 c� per kWh for coastal areas.

Sources:; IEA (2005), Projected Costs of Generating Electricity, 2005 Update.

Last modified 26/07/05    Top