The main factors governing wind power economics are: • Investment costs, including wind turbines, foundations and grid connection • Operation and maintenance costs • Electricity production/average wind speed • Turbine lifetime • Discount rate Of these, the most important parameters are the wind turbines’ electricity production and their investment costs. As electricity production is highly dependent on wind conditions, selecting the right site is critical to achieving economic viability. Three major trends have dominated the economics of grid connected wind turbines in recent years: • The turbines have grown larger and taller. The average capacity of turbines installed in Germany and Denmark increased from approxi- mately 00 kW in 1990 to almost 1.5 MW during 2002. Turbines in the 1.5 to 2.5 MW range have more than doubled their share of the global market – from 16.9% in 2001 to 35.3% in 2003. • Turbine efficiency has increased. A mixture of taller turbines, improved components and better siting has resulted in an overall efficiency increase of 2 – 3% annually over the last 15 years. • Investment costs have decreased. The average cost per kW of installed wind power capacity currently varies from 900 €/kW to 1,150 €/kW. The turbine itself comprises about 80% of this total cost. The remainder is contributed by three main items – foundations, electrical installation, grid connection – and then other costs are land, road construction, consultancy and financing costs…

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