US wind down to $20/MWh

A wind farm near Lake Benton, Minn. (Source)

In the nation's wind corridor, power purchase agreements are being signed for less than 2 cents a kilowatt-hour [$20/MWh]. Even adding transmission costs, wind energy is undercutting competition from existing coal and nuclear plants.

Clean energy advocates and research analysts pointed out the trend in recent reports. A Moody's Investors Service report this spring estimated that 56 gigawatts of coal capacity in the Great Plains is "at risk" from cheaper wind energy. Yesterday, the Union of Concerned Scientists identified 57 GW of coal generation that is uneconomical compared with gas-fired generation.

Utilities are backing it up with their own numbers. Last month, Ameren Missouri, a coal-dependent utility with 1.2 million customers, filed a long-range plan with state regulators that showed the leveled cost of energy from new wind projects, including the federal production tax credit, was below the cost of energy from the company's existing coal and nuclear plants.

The data in the utility's integrated resource plan support the decision to add 700 megawatts of wind energy by the end of the decade. Ameren does not, however, plan to accelerate retirement of any coal plants.

The announcement is just one in a long list of new wind additions by utilities from West Texas to the Dakotas.

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The cost of wind power is reduced by about 1.8 cents/kWh for the first 10 years of operation by the Federal Government's Production Tax Credit.  This tax credit is being progressively scaled back over the next three years.  Even after probable further cost declines in wind (20% plus over the next 3 years), the post-tax cost will rise back towards $30/MWh.  According to the EIA, the running cost of a "fossil steam" power station was 3.7 cents/kWh, or $37/MWh, in 2015.  So the shift to wind will continue after 2020, but perhaps more slowly.  Unless of course, the tax credit is again extended.