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Wind and solar energy have experienced significant improvements in the cost of electricity in all major markets, bringing renewable energy to be cost competitive with conventional fossil fuels, despite historically low fuel pricing. In MAKE’s analysis, the robust US wind energy market is the most competitive in the world, in terms of LCOE.

This is due to the tremendous economies of scale that have been established in Texas and the Midwest region. The latest generation of blades that are being deployed are able to realize new levels of productivity. These dynamics place wind power generated in the US in direct competition with the cost position of new natural gas plants, and more competitive in some areas of the country. This bodes well for the looming phase-out of the Production Tax Credit (PTC), providing line-of-site to wind being able to stand competitively without any federal subsidies.

Other regions of the Americas are not far behind the US, in terms of LCOE. Mexico, Brazil and Canada have slightly higher cost positions, due to some of the regional supply chain dynamics present in these markets. In Brazil, significant currency risk threatens to increase LCOE over the long term, but the country currently experiences the 2nd best LCOE position due to very productive wind resources.

The German onshore market tops the list of European countries in terms of LCOE performance. The latest generation of 3MW+ turbines positions the German wind energy market well for the looming auction system of renewables pricing that will replace the feed-in-tariff as part of the German energy policy restructuring. The solar market in Germany has experienced a pilot phase of renewable auctions, and is nearing the position of being cost-competitive with wind energy.

In Asia Pacific, the LCOE of onshore wind in China and India are hampered by significant curtailment that reduces production in these countries. As grid infrastructure improves, MAKE anticipates that the two Asian powers will utilize their local supply chain and favourable cost position to realize significant improvements in LCOE.

The offshore market is set to experience a significant improvement in LCOE, as infrastructure investments in the North Sea and the latest generation of 7MW+ turbines will significantly reduce wind LCOE over the next five years. The rapidly emerging Chinese offshore market is expected to be favourably positioned, versus western rivals’, due to substantial nearshore development and low cost position.

Make’s Research Note examines the evolution of the cost of wind energy as well as other forms of power generation within the top fourteen markets in the world, according to Make’s 10-year forecast. The cost of wind energy is compared to natural gas, coal-fired power, nuclear, hydro and solar, for key markets.

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