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Primers: Wind Energy

Dockside Green, Victoria BC, Canada

Dockside Green, Victoria BC, Canada


Wind is a mature renewable energy technology, with costs that are competitive with other forms of energy. Wind power has applications in residential, rural and offshore areas, with size ranging from individual micro turbines, to an offshore fields producing hundreds of megawatts. Since 2000, the installed capacity of wind generation has seen an average annual growth rate of 25%, and, as of 2012, represented 2.3% of total energy generation worldwide (IEA, 2014). In leading jurisdictions, wind is already contributing a significant share of power generation in the range of 10-20%, and is projected to represent an even greater portion of supply in the future (see figure Projected Installed Wind Power) as new approaches to balancing variable renewable generation are developed. Cities have played a variety of roles in the promotion and deployment of wind energy, including delivering supportive policies and facilitating financing and direct ownership in projects. The largest offshore wind project in the world, for example, is 50% owned by the municipal utility of Copenhagen, while the other half is owned by a cooperative comprised of 10,000 community investors.

Projected installed wind power 2040; IEA, 2014

Projected installed wind power 2040; IEA, 2014

Legislation and Policy

Development of the wind power sector has been supported by a number of policy mechanisms including fiscal incentives, competitive procurement, renewable portfolio standards, and feed-in tariffs. There are some examples of local governments introducing these types of policies for wind, however, in most cases, cities have leveraged the policies that exist at the state or national level to develop or support projects in their jurisdictions. For example, the city of Toronto’s community-owned WindShare project, the first wind turbine installed in a major North American city, was supported by a provincial-level feed-in tariff scheme. The City is an investor in the project through the local municipal utility, and hosts the project on municipal land at Exhibition Place.

Building Political and Citizen Will

Germany's renewable energy stakeholders and share market

Germany’s renewable energy stakeholders and share market

Wind power has led the way in terms of community investment and local ownership. In Germany, over half of wind and solar projects are locally owned. Co-ops and other community groups have mobilized financial resources to build single-turbine projects, as well as large wind projects of hundreds of megawatts. Local impacts and NIMBYism can often make wind power development challenging, and participation in wind projects by the host community can ease these tensions. Local ownership and control can also create higher operating efficiencies, with local residents taking a very active interest in the maintenance and performance of their wind turbines. Local communities can participate in wind projects in a variety of ways, such as through royalty agreements, ownership by the municipal utility, direct ownership by individuals or partnership with the private sector, and investment in a community co-operative.

Finance, Investment and the Business Case

As a mature generation technology, with total system levelized cost of electricity (LCOE) around $80/MWh, wind projects have a strong business case in many jurisdictions, even without the support of a feed-in tariff scheme. The challenges for wind projects are in finding sites with a good wind resource, local support, proximity to the grid, and available capacity on the grid to distribute the energy from the project. The best wind resources are often in remote locations, or in locations that already have wind projects, which can make siting new projects a challenge. Municipalities may have to look in other regions to find the best investment opportunities. The City of Munich, through its municipal utility, is expanding the city’s wind power capacity through investment in projects within the region, as well as in other parts of Germany and Europe, to meet its target of 100% renewable electricity by 2025.

Technology and Infrastructure

Offshore wind is characterized by larger turbines and higher capacity factors in the range of 40-50% compared to the average 30% for onshore wind. However, revenues from higher production levels are offset by higher installation costs. For on-shore wind, the levelized cost of electricity is in the range of 5-10 cents/kWh compared to offshore wind, which is in the range of 10-20 cents/kWh. Offshore construction is more costly than onshore construction, and be challenging from a technical perspective; as well as the expense of underwater transmission lines that are required to connect the wind project to the electricity grid. However, new generations of onshore wind turbines are improving capacity factors dramatically, and these turbines are consistently reaching the 50% capacity factor mark. One challenge in the future of wind energy will be to modernize or replace existing wind turbines with newer, more efficient models.

New turbines are also being designed for low wind speeds. This will open up new areas for wind projects, which is increasingly important in jurisdictions such as Germany and Denmark, where many of the highest wind areas are becoming saturated.


Urban Wind Farm, Europe

Urban Wind Farm, Europe