Economics of Wind Power Generation

Research output: Chapter in Book/Report/Conference proceedingChapter


A discussion of the economics of wind power generation is presented. Sustainable development will depend on whether energy prices of other sources will stay high. Developers of wind power installations are looking at a 20-year investment span. If natural gas prices fall over that period, a project that is presently profitable could become uncompetitive a few years into the future. The growth is driven by tax incentives, utility demand, falling costs, and improved technology, including taller towers and lighter rotor blades.A benchmark calculation of the levelized cost of wind power electricity is presented. The effect of subsidies in the form of the production tax credit (PTC) is considered, and then the depreciation, taxes payments are incorporated into the calculation model. Compared with a benchmark calculation, the PTC can be inferred to contribute a present value of 0.57cent (kWh)-1 to the income stream from the produced electricity.Transmission costs are a major issue in wind energy development. Some of the best locations for generating wind energy are far distant from the consuming industrial and population centers. A massive upgrade of the transmission lines nationwide through the national electrical power grid using high-voltage DC instead of high-voltage AC is needed to tap those distant sources. Where water supplies are abundant, along seashores or internal lakes or rivers, the electricity produced could be used for extracting hydrogen from water through the electrolysis process. Hydrogen then can become the storage medium and energy carrier of wind energy. It would be conveyed or transmitted to the energy consumption sites possibly through the existing natural gas pipeline system which covers the United States. Another alternative is to convert hydrogen with coal into methane gas, CH4 that could be distributed through the existing natural gas distribution grid without significant modifications. Methane itself can be converted into methanol or methyl alcohol, CH3OH as a liquid transportation fuel. To reduce the electrical transmission losses, one can envision superconducting electrical transmission lines cooled with cryogenic hydrogen carrying simultaneously electricity and hydrogen from the wind energy production sites to the consumption sites. Such a visionary futuristic power transmission system could also provide the electrical power for a modern mass transit system using magnetically levitated (Maglev) high-speed trains transporting goods and people supplementing the current highway system in the United States.

Original languageEnglish (US)
Title of host publicationWind Energy Engineering
Subtitle of host publicationA Handbook for Onshore and Offshore Wind Turbines
PublisherElsevier Inc.
Number of pages19
ISBN (Electronic)9780128094297
ISBN (Print)9780128094518
StatePublished - May 16 2017


  • ITC
  • Incentives
  • Intermittence factor
  • Levelized cost
  • PTC
  • Present value
  • REPI
  • Wind cost
  • Wind economics
  • Wind power generation
  • Wind turbine
  • Windmill

ASJC Scopus subject areas

  • General Engineering


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