Today the U.S. Energy Information Administration released its annual comparison of generation options: the  'Levelised Cost of Energy (LCOE)' analysis. And it confirms what many investment banks and others have been saying for a long time: wind energy is the cheapest form of new generation currently on the market.  The following graph is taken from the EIA's 2015 LCOE. For each generation option the most recent 2015 data is shown in the right-hand column (with the price data) while the left-hand column shows the comparable 2014 LCOEs. 


Source: US Energy Information Administration - 2015 Annual Energy Outlook (Levelized Cost Comparison). NB: Cost for wind assumes 40% capacity factor (which is common in Southern Saskatchewan).
* CCS: Carbon Capture & Sequestration


Of note is that the LCOE of natural gas has risen substantially in the last year. This has been caused by sharp increases in fuel prices and this fact illustrates one of the principle weaknesses of that generation option: the single largest cost component of electricity from a natural gas power station is the cost of the fuel and that cost highly volatile (and unpredictable). 

Incumbents will note that wind energy, because it is dependent on the vagaries of the wind, needs to be balanced with a controllable source of electricity (such as natural gas). That is certainly true however the cost of providing that 'back-up' capacity (typically gas-fired) is substantially less than most people expect. The reason is that back-up capacity is needed regardless of whether or not wind energy is being used. The reason is that back-up has to be available to respond to instances when gas, coal or even hydro-electricity is suddenly unavailable (really: it does happen - and more often than most people think!). The back-up capacity also needs to respond to sharp swings in electricity demand and these can happen at any time.


Very detailed studies have been undertaken which have calculated the cost of this 'back-up' capacity (see below) for wind energy. They have found it to be about $5 per megawatt hour of generation once wind energy is providing about 20 percent of total electricity (FYI - today in Saskatchewan wind generates less than 3 percent of our electricity).


In other words: even if one adds $5 to wind's cost ($65.6 per megawatt-hour), it is still cheaper than natural gas at $72.60 per megawatt-hour). 

Now we're talking!