Can renewable energy sources power the world?
Can renewable energy sources power the world?

Start this free course now. Just create an account and sign in. Enrol and complete the course for a free statement of participation or digital badge if available.

7 Calculating the costs of wind energy

The costs of electricity from wind depend principally on:

  • the annual energy production from the wind turbine installation
  • the capital cost of the installation
  • the discount rate being applied to the capital cost of the project
  • the length of the contract with the purchaser of the electricity being produced
  • the number of years over which the investment in the project is to be recovered (or any loan repaid)
  • the operation and maintenance costs, including maintenance of the wind turbines, insurance, land leasing, offshore leasing etc.

Taking all these factors into consideration, the UK Government as part of its 2013 Energy Bill set up a system called ‘Contracts for Difference’ which introduced ‘strike prices’ for various renewable and non-renewable electricity generators from 2015, see Figure 18.

Strike prices for onshore and offshore wind in £ per megawatt-hour as set from 2015
Figure 18 Strike prices for onshore and offshore wind in £ per megawatt-hour as set from 2015

If the prevailing market price for electricity is lower than the strike price, the generator will be paid the difference; and if higher, the generator will have to refund the difference.

In the next section you will take a look at offshore wind energy.

Take your learning further

Making the decision to study can be a big step, which is why you'll want a trusted University. The Open University has 50 years’ experience delivering flexible learning and 170,000 students are studying with us right now. Take a look at all Open University courses.

If you are new to University-level study, we offer two introductory routes to our qualifications. You could either choose to start with an Access module, or a module which allows you to count your previous learning towards an Open University qualification. Read our guide on Where to take your learning next for more information.

Not ready for formal University study? Then browse over 1000 free courses on OpenLearn and sign up to our newsletter to hear about new free courses as they are released.

Every year, thousands of students decide to study with The Open University. With over 120 qualifications, we’ve got the right course for you.

Request an Open University prospectus371