THE COMPETITIVENESS OF WIND, 1

Learning From Kansas: Why Utilities Are Embracing Wind Energy, Part 1

Alan Claus Anderson, Britton Gibson, Luke Hagedorn & Scott W. White, 20 November 2012 (North American Windpower)

“In Kansas, wind energy generation is at least equivalent in cost - and often cheaper - than traditional sources of energy, according to academic studies that analyzed the costs of various types of generation in the state.

“The best standard for this type of analysis is known as a levelized cost of energy (LCOE) comparison, which takes into account the following cost components for each type of generation source: investment and installation costs; operations and maintenance costs; fuel costs; life of the generating unit; and energy generated by the unit…”

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“Based on [a number of LCOE studies by a variety of different governmental and non-governmental entities], the average LCOE for wind generation is $68.25/MWh if the federal production tax credit (PTC) is taken into consideration, or $90.25/MWh if the PTC is not included. This compares very favorably to the average LCOE for combined-cycle natural gas, at $74.55/MWh; conventional coal, at $104.35/MWh and natural-gas peaking facilities, at $177.20/MWh.

“One of the main reasons that wind energy costs in Kansas are so low is that the state has an excellent wind resource. Therefore, wind projects in the state have capacity factors that far exceed the national average. Projects with high capacity factors see a marked decline in their total levelized costs. Thus, Kansas’ excellent wind resource leads to markedly lower wind generation prices than can be found in other areas across the country…”

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