Market and prices

Wind power is on course to be competitive on the liberalised market. Production cost per kWh has been reduced by more than 80% within the last 20 years and this trend is expected to continue resulting in a fully competitive technology in 7-10 years. Today wind turbines on good wind sites can already compete with new combined heat and power plants (CHP), but wind cannot yet compete on the present market terms.

 

Fair market terms

The prices at the European power exchanges reflect the current overcapacity and that the majority of the production facilities are already depreciated and paid by the consumers. Hence, neither wind power nor any other new capacity can penetrate the market without political backing. In addition, health and environmental costs are not calculated into the kWh-price for the individual energy technologies. Wind power would be fully competitive today, if they were.

 

Environmental premium

Many countries have a payment system, which ensures an environmental bonus in addition to the market price in order to promote the installation of wind power. Previously Denmark had a fixed feed-in tariff for wind power, but today all power is sold on the liberalised electricity market. In addition to the market price, which is set by the Nordic power exchange, Nord Pool, wind power investors get an environmental premium of 0.10 DDK/kWh (approx. 0.013 EUR/kWh). This development from fixed to market based prices is natural in a liberalised market system. But the Danish Wind Industry Association deems the current premium too low – considering the environmental benefits and the necessary rate of return for the investors in wind power.

 

Related links:

More about health and environmental costs

Overview of payment systems

Economics and investment in wind power