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 in wind-rich regions. While project-specific impacts depend on factors such as location, size, and ownership, the overall economic impacts of utility-scale wind energy development are easily identified.
An essential element of planning any energy development project is estimating and understanding project costs and benefits. 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.
Average Wind Energy Costs
The average cost of wind energy depends on turbine size, project size, and location. Average wind energy costs typically fall into two categories: turbine cost and installed project cost.
Energy Department researchers report that in 2017, wind turbine prices fell from their highs in 2008 to $750 to $950 per kilowatt. In 2017, the national average price of wind power purchase agreements dropped to around 2 cents per kilowatt-hour, meaning that—including federal incentives such as 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.
Offsetting Energy Use and Costs
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. 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. Any power that is not used by the home is credited to the customer as it flows back on to the electricity system. Net metering policies vary; see DSIRE’s net metering page to learn about policies in your area.
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.
A wind turbine typically pays for itself after a number of years, but it will have high upfront costs. Discover federal energy subsidies and other financial incentives that are available for those ready to invest in wind energy.
Projecting costs and benefits of new installations, including the economic development impacts, is a key element in evaluating potential wind projects. WINDExchange provides links to software applications and publications to help individuals, developers, local governments, and utilities make economic decisions about wind power.
Economic Impacts to Neighboring Communities
Wind energy projects attract jobs, increase tourism, 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.
- Planning for Wind Energy
- Wind Energy Finance in the United States: Current Practice and Opportunities
- 2016 Cost of Wind Energy Review
- An Assessment of the Economic Potential of Offshore Wind in the United States from 2015 to 2030
- 2017 Wind Technologies Market Report
- 2017 Distributed Wind Market Report
- 2017 Offshore Wind Technologies Market Update