Wind Power as Renewable Energy: Cost, Reliability & Environment

Introduction to Wind Power

Wind, defined as moving air, can produce power because of the kinetic energy inherent in its high speeds. High winds are caused by solar heat: the heating of large swathes of land creates pressure imbalances between heated and cooler areas, resulting in the movement of air. This kinetic energy can be harnessed to generate electricity. The use of wind for energy production is increasingly popular because it does not harm the environment in the way that oil extraction or nuclear power production does.

Windmills, or wind turbines, are used to generate power; the rotating motion of the shaft turns a turbine within the mill, enabling the conversion of kinetic energy into electricity. To produce electricity on a large scale, a significant number of turbines must be installed over an area with sufficiently high wind speeds — a minimum of 15 kilometers per hour. A location where windmills have been set up to harness wind energy is referred to as a wind energy farm (Provey, 2009).

Cost of Wind Energy

The costs of setting up wind farms and operating them are relatively straightforward. The cost of power generated using wind energy is significantly lower than that of other energy production methods, since it does not entail high maintenance costs. Once a wind farm has been established, ongoing maintenance costs are generally very low. That said, some turbines do require more money to maintain than others. Overall, the generation of electricity using wind power remains one of the most competitively priced forms of renewable energy available today, typically costing between 4 and 6 cents per kilowatt-hour (KWh), depending on the initial investment and the location of the wind farm (Doherty, Outhred & O'Malley, 2005).

It is also important to note that the equity and debt associated with initial project financing are often quite substantial. A typical wind farm project financing structure involves a combination of equity provided by the project owners and debt supplied by creditors. Equity investors, as shareholders of the business, share in the profits generated. In an ordinary wind farm project, creditor debt is used to finance between 70 and 80% of the total project cost, and such debts are repaid with interest. Additionally, some experts have expressed doubts about the cost-competitiveness of wind energy (U.S. Department of Energy, n.d.; Bergmann, Hanley & Wright, 2006).

Both small and large wind farms depend on significant initial investments — often necessary to install enough turbines to compete favorably against more established energy sources such as hydrocarbons and nuclear power. Nonetheless, wind power should still score highly on a cost basis if it is to serve as a substitute for conventional electricity sources. Cost competitiveness is, however, dependent on the location of the wind farm. Even though the cost of setting up wind power stations has fallen considerably in recent decades, the technology still requires substantial upfront investment to compete against hydrocarbon sources (Denny & O'Malley, 2007; Dale, Milborrow, Slark & Strbac, 2004).

Conclusion

Even though the cost of setting up wind farms is very high, the energy produced by wind farms is much cheaper compared to other energy sources. Wind being generated by natural forces — solar heat and the rotation of the earth — makes it a sustainable energy source. However, the availability of wind remains unpredictable and its power output is not constant, meaning it is not well-suited as a base-load source in its current form.