The Cost of Generating Electricity

On-shore wind technology is one of the most cost-effective renewable technologies, and is close to being competitive with fossil fuel generation. The graph below illustrates its cost versus other renewable and conventional generation technologies.

(Source: Royal Academy of Engineering)

The cost of coal and gas-fired generation varies considerably with the price of their respective fuels.  The above analysis assumes a long term cost of gas of 35 pence per therm whereas the 2006 through 2008 forward price is currently upwards of 50 pence per therm.  Were gas prices to remain at their current levels, the estimated cost of gas-fired generation would rise from £33 to £46/MWh, increasing wind’s relative competitiveness.