Rising Oil Prices Make Wind Cost-Competitive


Economic theory works! The unprecedented rises in oil prices over the past few months have had at least one positive environmental consequence: Wind energy is now cost-competitive with fossil fuels. At least in Spain. Sort of.

Reuters is reporting that in Spain the cost of producing a megawatt-hour of energy from wind turbines now is 80-85 euros, versus 80 euros/MWh for gas-fired plants and 85 euros/MWh for oil-fired plants.

That said, according to Xabier Viteri of Iberdrola (Spain’s largest utility), feed-in tariffs would have to remain in place in the medium term if Spain is to meet its EU obligation of supplying 20% of its energy needs from renewable sources by 2020. The reason for this is that up to 25% of Spain's electricity may be traded in a deregulated marketplace, where the price of electricity is currently at 55 euros for immediate delivery and 65 euros for delivery next year. Without the price guarantees currently in place, the ambitious expansions planned will be that much more difficult...Even when oil is trading around $135 per barrel and is expected to go much higher.

Currently, Spain has 16,000 MW of installed wind capacity, or 10% of its total annualized electric demand, and plans to expand renewable generation to 40,000 MW over the next twelve years. Ten percent may not seem like much, but based on daily calculations Spain has set records with its wind farms, with up to 40.8% of demand being satisfied.

via :: Reuters.

photo: Elena Romera via flickr.