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19 May 2017

Future cost of onshore wind

Recent auction results, long-term outlook and implications for upcoming German auctions


The costs for electricity from renewable generation have been falling significantly in recent years, and record low bids at auctions around the world have grasped the attention of the public. Solar photovoltaics and offshore wind auctions, in particular, have attracted a lot of interest. The results for onshore wind, however, are just as impressive.

The future cost development of onshore wind is of great relevance, since it is a key pillar of the energy system transformation in many parts of the world. However, the estimated long-term cost reductions vary significantly, as different studies value the cost drivers of wind differently. In Germany, the opaque and complex cost structure of onshore wind is the root of much controversy. International auction results with winning bids of less than half of the typical German pay rate left people questioning the costs of domestic wind power. However this discussion often fails to account adequately for differences in the quality of wind resources. In light of the first, German onshore wind auctions, we aim to contribute to the ongoing discussion by providing the necessary context for international auction results, a general outlook on the future cost of onshore wind, and by illustrating the existing potential and hindrances for cost reductions in the German market.

Key findings

  1. Wind power costs are coming down, as auction results around the world show:

     in Morocco, Peru and Mexico, average winning bids ranged between 2.7 and 3.4 EUR ct/kWh in 2015/2016. This fundamental cost reduction trend is projected to continue.

  2. The larger wind turbines are, the cheaper they produce electricity.

    The size of windmills is expected to be the major driver of future cost reductions, as costs for increasing turbine size grow at lower rates than the benefits. The limits to onshore turbine growth are most likely not of a technological nature but rather a question of local political consent.

  3. In Germany, projects at excellent wind sites can be built with only slightly higher generation costs than the most cost efficient auction-winning projects throughout the world.

    The levelized cost of electricity at those sites ranges between 3 and 4.5 ct/kWh for turbines of the latest generation. Major potentials to further improve cost efficiency are reducing land and maintenance costs, which are far higher than the international average.

Bibliographical data

Georg Thomaßen, (Agora Energiewende), Matthias Deutsch (Agora Energiewende)
Publication number
Publication date

19 May 2017

Suggested Citation
Agora Energiewende (2017): Future cost of onshore wind. Recent auction results, long-term outlook and implications for upcoming German auctions.
This publication was produced within the framework of the project Future Cost of Onshore Wind.