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Mar. 17, 2025

Economics and Incentives for Wind - WINDExchange

Economics and Incentives for Wind

Wind energy projects provide many economic benefits, including direct and indirect employment, land lease payments, local tax revenue, and lower electricity rates'plus other financial incentives. Although these benefits depend on factors such as location, size, and ownership, the overall economic impacts of wind energy development are easy to see.

If you are looking for more details, kindly visit our website.

Wind energy projects create jobs and provide a revenue source for farmers and ranchers'which can be spent in the neighboring community. Learn more about wind energy's economic impacts to communities.

An essential element of planning any energy development project is estimating and understanding project costs and benefits, while exploring location siting (including ordinances. WINDExchange provides information related to the economic impacts from wind energy development, including wind energy's ability to offset energy costs, federal energy subsidies and other project financing incentives, policy effects on project economics, analysis tools to help interested parties assess projects, and the economic impacts to neighboring communities.

What Are the Costs to Develop Wind Energy?

Purchasing a wind turbine is one cost to developing a wind farm, along with other installation expenditubres, but there can be many fincancial benefits to wind energy development. Photo from Werner Slocum, National Renewable Energy Laboratory

A wind turbine typically pays for itself after a number of years, but it will have high upfront costs. The average cost of a wind energy project depends on the size of the project (e.g. how many square feet or square miles the project occupies and how many turbines the project uses), the size of the turbines used, and the project location. Average wind energy project costs typically fall into two categories: turbine cost and installed project cost. To then run the wind energy project requires ongoing operations and maintenance costs.

How Much Do Wind Turbines Cost?

Land-based wind turbine prices fell in 50% between and , with a slight increase to about $850 to $950 per kilowatt in .

How Much Is the Installed Project Cost?

Installed project costs include capital expenditures, meaning one-time costs related to designing, setting up, and installing a new asset (here, a wind farm or distributed wind system).

According to the latest market reports from the U.S. Department of Energy Wind Energy Technologies Office, capital expenditures for:

Land-based wind energy was about $1,200 to $1,800 per kilowatt (kW), roughly equal to costs in the early s after a 40% dip from a peak.
Offshore wind energy was about $3,500/kW to $4,000/kW.
Distributed wind energy was about $7,850/kW for small systems and $4,050/kW for those over 100 kW in size.

How Much Do Operations and Maintenance Cost?

Sites also require costs to operate a wind farm, including paying wind energy workers and land leases, and maintain it, including attending to safety, repowering equipment, and servicing any other issues. These costs can vary between projects, depending on factors such as size, location, age, and wind resources in the area.

In , land-based wind farms cost operators, on average, >$40/kW annually. According to the International Energy Agency, in , offshore wind farms costed 22.15 cents per kilowatt hour in operations and maintenance, compared with 8.66 cents per kilowatt hour for land-based wind farms. Costs are expected to decrease with increasing efforts to improve offshore wind energy technology and transmission.

The Windfarm Operations and Maintenance cost-Benefit Analysis Tool from National Renewable Energy Laboratory researchers allows owners and operators to estimate these costs and evaluate the benefit of a potential project.

What Is the Price of Wind Energy?

Researchers at the National Renewable Energy Laboratory reported that, in , the cost of levelized energy (the average minimum price the power must be sold at to offset production costs in the technology's lifetime) for:

Land-based installations was $39 per megawatt-hour (MWh), with a range of landbased estimates from the single-variable sensitivity analysis covering $30'$57/MWh.
Fixed-bottom offshore wind farms was $95/MWh, with a range of $52'$184/MWh.
Floating offshore wind farms was $145/MWh, with a range of $52'$184/MWh.
Small distributed wind system was $235/MWh and $163/MWh, for residential and commercial, respectively
Large distributed wind energy was $78/MWh.

What Is A Power Purchase Agreement?

A power purchase agreement (PPA) is a legal contract between a buyer and a seller, typically a utility company and a renewable energy project developer, respectively. Under a PPA, the buyer agrees to purchase electricity generated by the renewable energy project over a specified period of time at a predetermined price and the seller commits to supplying the agreed-upon amount of electricity to the buyer. PPAs provide financial certainty for the project developer, enabling them to secure financing for the construction and operation of the renewable energy facility, while the buyer benefits from a long-term, fixed-price supply of clean energy.

In , the national average price of wind power purchase agreements dropped to below 2 cents per kilowatt-hour, dropped to below 2 cents per kilowatt-hour, meaning that, including financial incentives like the Production Tax Credit, new wind energy facilities provided some of the cheapest available forms of new electricity generation available at that time.

Utility-scale wind power can also be sold at fixed prices for long periods (e.g., 20 years), providing a hedge against volatility in commodity fuels such as natural gas.

How Can Wind Energy Offset Power Use and Costs for Users?

An additional way that wind energy projects can make a positive economic contribution is by offsetting energy costs.

Distributed wind turbines can be used to directly offset customer electricity usage. A system of this type can be used for homes or farms, schools and other community buildings, and large business or industrial facilities using many megawatts of electrical energy. Generating your own electricity can also provide a hedge against possible rising retail electricity rates.

For example, in remote villages in Alaska, installing wind turbines are an effective offset to the costs of transporting fossil fuels into the community, while also helping their energy system become more resilient, reliable, and independent.

This concept, called net metering, allows for a wind turbine to be installed close to a load and supply energy directly to that load, thus reducing the energy purchased by the consumer at retail rates. In some setups, power that is not used by the home can also be credited to the customer as it flows back on to the electricity system see DSIRE's net metering page to learn more about policies.

How Can I Estimate the Economics of a Potential Wind Energy Project?

Projecting costs and benefits of new installations, including the economic development impacts, is a key element in evaluating potential wind projects. Visit our [Economic Impacts page] to learn more about the economic development potential wind energy projects offer communities.

Our Land-Based Wind Energy Economic Development Guide is a comprehensive resource for community decision makers (such as county commissioners, local decision makers, economic development corporations, businesses, landowners, and interested community members) about economic considerations regarding land-based, utility-scale wind energy. To help readers better understand the economic development potential during the development, construction, and operation of wind energy projects, the guide covers the following five topics: wind energy basics, local government revenue sources, community development information, landowner and development considerations, and the business and local workforce.

We also provide links to software applications and publications to help individuals, developers, local governments, and utilities make economic decisions about wind power.

What Are the Economic Impacts of Wind Farms to Neighboring Communities?

7 Ways to Save Money in Renewables Development - Transect

Renewable energy is a two-thumbs-up proposition, and while it does have its detractors, most people want to see faster clean energy generation, like, yesterday. The more renewable energy sources we can get into the mix, the faster we can meet America's ambitious energy goals.

However, it's no secret that the cost of renewables development is pretty intense. This partly explains why, although the vast majority of Americans favor wind and solar power as the support for our power grid, as well as taking steps to lower our carbon emissions and eventually reach net-zero emissions, only a minority believe we should phase out fossil fuels completely.

'Many foresee unexpected problems in a major transition to renewable energy,' the Pew Research Center explains. 'Economic concerns are also front of mind for many when asked to think about what a transition away from fossil fuels could mean for their own lives.'

Though we will experience an energy transition, leaning on renewable sources doesn't mean everything has to change, right?

Because let's not lie: while we don't want the world to warm, we do still want warm showers.

For that reason ' and other more pressing ones, such as energy equity ' it's important we pave the way to fast, affordable renewables development. Not only does this help the people who will ultimately use that power in their everyday lives, it's a boon for developers themselves.

The good news? There are a number of ways to shorten the time between starting a project and celebrating ' i.e. seeing a return on renewable power generation. Especially in today's jumpy economy, when cutting back on costs is top of mind for everyone, it's time to talk about ways to save money during renewables development.

Here are seven smart steps to take today.

1. Go in With a Plan

As they told us back in middle school shop class: measure twice, cut once. Having a plan always helps to ensure you account for variables that a speedier approach might miss. Before ever even looking at sites, you should draw up a comprehensive plan that includes:

Site selection considerations
Potential environmental challenges
Architectural design
Safety and regulatory planning
A schedule and budget

Whether you are building massive utility-scale wind farms or solar energy power plants, having a plan will take up some time in the short-term but save you in the long run. By knowing what you're looking for, where you're looking, how you'll address challenges, and what your resource limits are upfront, you'll have a much better chance of avoiding sites that simply won't work in the long run. That not only allows you to avoid wasting time and energy, but it also helps you zero in on the sites that actually stand a chance of meeting your renewable energy development needs.

Speaking of sites '

2. Complete Your Environmental Due Diligence ASAP

Pop quiz time: what's the smartest way to approach environmental due diligence on a potential site?

Don't worry; we'll give you a multiple-choice question here. Do you:

New Energy Era supply professional and honest service.

Find a really great site, fall in love with it, write a Shakespearean ode to its charms, plan a family, draw up some plans and get investors onboard, start the design-build process, and at some point get around to environmental due diligence? OR
Perform your environmental due diligence from the beginning, during the site selection process?

If you answered B, good job. You can pick up on heavy sarcasm via text, which is a high-level skill and one that will take you far in life. Yet funny jokes aside (at least, we think they're funny), way too many developers are still taking the Option A approach.

Yes, it's tempting to leap at a site that looks good, especially given the crazy competition present when you're trying to secure a wind or solar property. However, striking a deal with a landowner and investors only to discover that mitigation costs are truly insurmountable is ' disappointing.

And by 'disappointing,' we mean, 'it's time to make that whiskey-spiked hot chocolate bath a reality. Hold my calls.'

Instead, the smart approach is to start your due diligence process upfront as soon as you find a site you like. That way, you won't hit the dreaded permitting bottleneck and find yourself back at the starting line when you thought you were almost done.

3. Make Use of Tax Incentives

Woo, tax incentives! We love 'em.

As energy policy continues to be pumped out by the feds, we are going to keep seeing huge opportunities for energy investment and an increase in renewable technology production. You know what that means? That's right- cash money going toward supporting the electricity grid via megawatts of renewables greatness, lowering electricity bills, and increasing economic growth.

These incentives have more economic benefit than just affordability of electric vehicles and fewer blackouts. Let's break it down.

Step 1: Financially support clean energy technologies and renewables development.

Step 2: Supply developers with access to said incentives. Create more solar projects and wind projects.

Step 3: Improved technologies = energy efficiency within renewables. Further develop hydropower, energy storage, and all green technologies.

Step 4: Develop So. Many. Gigawatts. Of. Renewables. Lower cost of green alternatives. Provide energy security via diversified energy sources.

Step 5: Lower greenhouse gas emissions and energy costs, eventually beat climate change, and have a dance party.

We might have glazed over a few steps, but you get the idea'

Here are a few approaches you should consider posthaste.

Investment (ITC) and Production (PTC) Tax Credits

The investment and production tax credits apply to qualifying renewables projects. The ITC offers a one-time credit as a percentage of installation cost in the applicable year, while the PTC reduces your tax liability based on electricity generated on a 10-year basis, adjusted annually.

Follow Wage and Apprenticeship Guidelines

To receive many of the credits established or reestablished by the new Inflation Reduction Act (IRA), you need to follow wage and apprenticeship guidelines, which will ensure you get the highest tax breaks.

Locate Your Project in an Energy Community

If you site your renewables project in an energy community, you can also receive an additional 10-percent tax credit, again assuming wage and apprenticeship guidelines are met. An energy community is defined as:

A brownfield site
A census tract where a coal mine closed after , a coal-fired generating unit closed after , or a census tract that meets one of these qualifications is located adjacent
A site where employment and taxes were affected by the coal industry as defined by certain metrics

These aren't the only areas in which you can make use of tax incentives, either. Materials matter too.

4. Source Materials Wisely

We look at the difference in fuel costs between gas stations, so why wouldn't we try and save a buck or two when picking our development materials?

Budget-friendly materials can go a long way toward saving you money. Recycled materials such as concrete and steel can help you keep costs down, and even though lots of materials may cost more upfront (such as green options or American-made goods), the tax savings you get down the road can balance that out.

Source Domestic Materials

Listen, y'all, wind turbines and solar panels are high-maintenance items. We aren't saying they are full-blown Great Gatsby-level fancy, but they are known to cost you a penny or two. But just because you're investing in these materials doesn't mean they should break the bank.

The tax breaks for domestic materials via the IRA are considerable. To satisfy domestic content requirements, you must:

Source all iron and steel from the United States
Buy at least 40 percent of your total manufactured project materials (a number that will eventually rise to 55 percent) from US makers

Do so, and you can claim an additional 10 percent investment tax credit on your project, presuming you meet wage and apprenticeship guidelines.

5. Time Your Development Well

How you time a project can impact how much it costs overall. That means:

Don't plan a project for times of year when weather is likely to interrupt the timeline, which can get costly fast
Do avoid, where possible, construction boom prices in midsummer
Opt for fall or early spring in most temperate US climates for the best deal

6. Automate Whenever Possible

It's time to let go of the tired myth that robots replace humans when we bring automation to the fore. That's simply not true. Instead, they create new niches for people to find more enjoyment, creativity and usefulness. Robots = friends, so let's start supporting automation.

Wherever you can use robotics or AI to power your renewables development, do it. It's cost-effective and frees up labor to perform tasks for which humans are still very much needed. Speaking of automation, who's up for an automated environmental due diligence report?

7. Begin Environmental Mitigation Early

The environmental mitigation costs aren't the most expensive of the issues on a site. However, if you're not careful, they can drastically delay the time you can start producing energy and see a return on your project.

The best way to avoid this is to complete your environmental due diligence at the beginning of your site search, skirting the long line for environmental consultants and opting for a ready-in-minutes environmental risks report through Transect. Our software uses machine learning and leverages hundreds of databases to get you the information you need nearly instantly, rather than making you wait weeks or months for an old-fashioned report from a human. (I mean, we're all for wetware, but consultants take it a bit far.)

For more information, please visit Latest Wind Energy News.

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