Wind Innovations Drive Down Costs, Stock Prices

by Tom Randall. Data Visualization by David Yanofsky |

March 14, 2012 9:43 PM |

The world’s wind-power capacity increased 113-fold over the past 20 years. As installations increase, turbines become more efficient and electricity prices decline. For a growing number of countries, this means wind power is now cheaper than conventional energy sources, even without government subsidies.

Wind's ‘Learning Curve’

This chart shows how the cost of producing a wind turbine falls as more turbines are produced. The improved efficiencies of technology and scale -- the industry's learning curve -- reduce wind-power prices by 7 percent every time installed capacity doubles. The price for a megawatt of wind power dropped by almost half since 1991.

The global turbine price is currently lower than the industry's historic learning curve by about 60,000 euros ($78,000) per megawatt. Oversupply and competition from China have led manufacturers like Vestas, the world's largest turbine maker, to cut prices. The company's shares tumbled 68 percent in the last year.

Onshore Wind Turbines

Note: Price data is unavailable for 2001, 2002, and 2003

Data compiled by Bloomberg New Energy Finance.

Wind's Golden Goal

Year: 2012

Annual Return on Investment*: 6%

Wind electricity providers have begun to reach what energy experts call the "golden goal" of grid parity, when operating fields of wind turbines is as cheap as burning coal or natural gas. Falling natural gas prices makes it harder for wind to compete in the US, despite its good wind resources. However, rising natural gas prices in Europe are making wind more competitive

Countries with high power prices and strong winds are already past parity: Brazil, Italy, Argentina, Canada, the U.K. and Portugal. As time passes, the country bubbles expand to represent growing capacity and shift right to reflect increased turbine efficiency.

"The cost of producing wind energy needs to come down to reach parity," said Stefan Linder, an analyst at Bloomberg New Energy Finance. "However in the best locations onshore wind is already competitive with fossil fuel electricity, and most wind farms in fair resource areas will be at parity by 2016."

Use the sliders above to calculate when wind power is competitive with fossil fuels without subsidies.

Golden Goal

Countries Meeting Golden Goal

Countries Missing Golden Goal

*Annual return on investment is the weighted average cost of capital, a measure of the minimum expected return of investing in other assets

Data compiled by Bloomberg New Energy Finance.