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The Real Cost Of Wind Power

October 18, 2015

By Paul Homewood  




We saw the headlines last week of claims that wind power is now the cheapest source of electricity. As I pointed out at the time, such claims ignore the fact that wind needs back up capacity, and therefore cannot be directly compared with conventional, dispatchable capacity.

I have now had a chance to do some detailed costing, based on the EIA calculations that they published in June.





My costings are derived from this table:




First, let’s convert these unit costs back to annual costs per MW capacity.

So using Advanced CCGT for instance, the capital cost of $15.9/MWh equals an annual cost of $121177. (EIA assume 30 yrs life span for all technologies, so we can project this to a total capital cost of $3.292 million per MW).


The calculation is :-

$15.9 x 8760 (hours/yr) x 87% (capacity factor)


We can do a similar calculation with fixed costs. Before variable costs, therefore, we get the following annual cost per MW in $.


  Adv CCGT Offshore Wind Onshore Wind
Capital 121177 561236 181962
Fixed 15242 74898 40366
Total 136419 636134 222328



Capacity Factors

Although the EIA have set assumptions for capacity utilisation, they don’t necessarily apply to the UK. For instance, according to DECC, onshore wind only produces 26% of its theoretical capacity.

Also, because of large variations in overall demand, conventional power does not always run at anywhere near its technical capability.

DECC data suggest that CCGT was operating at around 58% of capacity back in 2010, before subsidised renewables began to seriously distort the grid.

Using this figure, we can build up a cost for gas only, based on 1MW of capacity:


Advanced CCGT $
1 MW @58%= 5080 MWh/yr  
Capital+Fixed Costs/yr 136419
Capital+Fixed Costs/MWh 26.85
Variable Costs/MWh 53.60
Total Cost /MWh 80.45



Similarly for wind:


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


Offshore Wind S
1MW @37% = 3241 MWh/yr  
Capital+Fixed Costs/yr 636134
Capital+Fixed Costs/MWh 196.27
Variable Costs/MWh
Total Cost/MWh 196.27





Standby Capacity

As we can see, even onshore wind is still more expensive than CCGT, but that is only half the story.

As wind power is inherently unreliable, every megawatt of wind capacity effectively needs to be backed up with something that is reliable. For the sake of this exercise, let us assume this will be in the shape of new advanced CCGT.


So the real capital and fixed cost to provide that 1MW of onshore wind capacity is:


Onshore Wind 222328
CCGT 136419
Total Capital+Fixed/yr 358747
@26% capacity = 2277 MWh/yr  
Cost/MWh 157.55


And offshore:


Offshore Wind 636134
CCGT 136419
Total Capital+Fixed/yr 772553
@37% capacity = 3241 MWh/yr  
Cost/MWh 238.37



Compared with the CCGT cost per MWh of $80.45, claims that wind power is now the cheapest source of electricity are utterly ludicrous.




1) The EIA notes that transmission costs are higher for wind power. While this is certainly also true in the UK, I have not included these in the analysis because the costs may be different.

2) We are obviously comparing on a new for new basis. Given that the UK already has a certain amount of existing capacity to back up wind, the comparative costs of CCGT would be even lower.

3) Running gas turbines on an intermittent basis is an inherently costly thing to do, and would add more costs to the wind options outlined above.

4) EIA assume a life of 30 years for all technologies. This may well be an overestimate for wind, and is almost certainly an underestimate for CCGT.

5) Capacity assumptions are from DECC:

  1. Knute permalink
    October 18, 2015 3:49 pm


    The effective messaging of this is in terms of the personal. What does it cost the average Brit ? How much does his average energy bill increase ? Is it hidden in a tax ? Is it hidden in a “thing” he can’t have ?

  2. October 18, 2015 5:03 pm

    Thanks, Paul. The wind-power subsidies are supposed to be “free”, not to the tax payers, they are not.

  3. October 18, 2015 5:33 pm

    Planning Engineer (a practicing grid capacity engineer) and I did a guest post on this at Judith Curry’s Climate Etc on May 15? this year. True cost of wind electricity. We corrected for actual capacity factors and plant lives, took out the hidden coal penalty, and used the actual incremental backup costs experienced by Texas ERCOT grid. Bottom line, onshore US wind is a bit more thand twice the true levelized cost of CCGT or coal. Not the deliberately deceptive grid parity claimed by EIA. You might want to provide a link to the additional analysis for your interested readers. Highest regards.

    • October 18, 2015 8:05 pm

      Have you got the link?

    • Knute permalink
      October 18, 2015 10:40 pm

      So how is this 2x cost passed on to the consumer ? Does he see it ? Is it covered by rebates so that the cost gets picked up as government debt ?

      • October 18, 2015 11:21 pm

        In the Uk it goes straight onto electricity bills

      • Knute permalink
        October 19, 2015 12:05 am

        Thanks Mr H

        Do you have a link to a reputable site in Britain that shows this trend ? I would like to use it to draw attention to what this is costing the average consumer in over there.

        Project management often points to pilot studies and I think Britain is perhaps the best example of what’s to come in other economies such as the USA.

  4. Billy Liar permalink
    October 18, 2015 11:12 pm

    Isn’t it pretty obvious that the EIA under Obama/Holdren would be fiddling these calculations to make ruinables look attractive? I think even if you only had half a brain you would be able to work that out.

    Obama did say “Under my plan of a cap and trade system, electricity rates would necessarily skyrocket.” (January 2008)

    • October 19, 2015 12:05 pm

      In 2008, a neighbor who is an engineer for a mining equipment company put an “Obama” sign in his yard. I thought, “what are you thinking?” Then a statewide morning radio show played the clip of Obama before the San Francisco Chronicle editorial board promising to kill coal. The next day the sign was gone.

  5. October 19, 2015 5:51 am

    Wind power must cost more than coal or gas power simply because wind power does not respond to demand. Either demand must respond to the wind or more capacity must be brought online.

    The cost analysis can be simplified by saying that wind power needs an equal amount of installed capacity (megaWatts) of fossil-fuel power as backup.

    When the wind blows the backup power must stand idle. But the owners of the backup plant must still pay for the cost of the idle capital.

    Thus the capital cost of wind power is ADDITIONAL to the capital cost for fossil fuel. The capital cost to get one megaWatt is equal to the capital cost for one megaWatt of wind power PLUS one megaWatt of fossil-fuel power.

    The only savings from wind power is the operating cost, i.e. the cost of fossil fuel per megaWatt-hour of energy produced.

    And the cost saving in fossil fuel is not enough to offset the cost of having double the installed capacity (megaWatts).

    This is so simple that only enormous efforts could have seduced the public into believing otherwise.

    What I find mind-boggling is that the UK has thousands of scientists and engineers for whom such a calculation is a doddle. Why have they not spoken out?

    • October 19, 2015 4:13 pm

      ‘”Only enormous efforts could have seduced the public…” or some really gullible or stupid people. Another reason that our educational system has undergone a tremendous downturn was to be able to sell the people stupid programs.

  6. Andrew Duffin permalink
    October 19, 2015 11:45 am

    Wind power now Britain’s cheapest source of power?

    Oh goody, so they don’t need subsidies any more then.

    Er, wait….

  7. songhees permalink
    October 19, 2015 3:24 pm

    I would like to tell you of my latest book and documentary.
    ‘The Deliberate Corruption of Climate Science’.
    My latest documentary and video of my presentation.

    My website is
    Thank you.

    Debate between Dr Tim Ball and Elizabeth May
    Scroll down to Ian Jessop part 1

  8. CheshireRed permalink
    October 20, 2015 1:10 pm

    Great work Paul. It’s obvious to anyone without an agenda that the true cost of ‘renewables’ has to include all back-ups and existing capacity that is shovelled into second or third place in the queue behind wind. Without such back-up or capacity a wind system is unfit for purpose, so back-up must be included.
    It’s like buying a PC and not including the cost of a monitor and keyboard for the true total cost.

  9. October 21, 2015 6:20 pm

    The real cost of wind energy,based on the lie that CO2 is a pollutant,is the loss of our coal,steel, and aluminium industries.Other high energy users will follow,and the aim of the United Nations to de-industrialise the developed nations will at least be successful in the UK.
    The wilful and deliberate destruction of UK.plc,will probably cause other nations to draw back from the brink of this insanity,and perhaps wait to pick up the pieces of what little will remain.
    The Climate Change Act brought in by previous Labour Govt. and supported by the LibDemCons is in my mind the most criminally insane action ever carried out by a Govt. on the people it is supposed to represent.
    And so ,to those in Redcar,and Scunthorpe,and other areas where you have been thrown into the gutter by those pushing the big Green Lie,do not ever stop fighting to get your industries and jobs back.Good luck,and God bless you all.

  10. Tobi K permalink
    October 24, 2015 7:07 am

    the calculations above make the assumption that for every MW of wind power installed you need a MW of *additional* dispatchable (controllable, e.g. gas) capacity.
    This is absolutely not the case. Even if we assume that wind provides no “firm capacity”, i.e. it can suddenly drop to zero, that would merely mean that you still need to keep all your existing coal/gas power stations on standby and then ramp them up whenever wind output goes down.
    Yes, there is cost to this – additional wear on the backup capacity, reduced efficiency of the fossil fuel power stations if they run intermittently. But that’s nowhere near as expensive as you’ve calculated.
    Please amend your calculations. Thank you

    • October 24, 2015 10:52 am

      You are right of course, but given we already have the “backup capacity”, we clearly do not need extra wind/solar, in which case the “wind option” becomes a great deal more expensive

      But my exercise was in response to the original Bloomberg study comparing new wind, with new gas, and therefore is still valid. If the study had compared new wind with existing gas, the costs of wind would have been seen to be much greater.

  11. November 1, 2015 6:11 pm

    Reblogged this on Climatism and commented:
    Like the old sailors say, “The wind is free … but everything else costs money.”

    (Handy analysis. Tks Paul)


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