IEA Wind Task 26 Survey of Expert Opinions on Future Costs of Wind Energy
- Total capital costs (CapEx)
Total capital expenditures ($/kW), in real 2014 currency. CapEx includes all up-front costs to the plant boundary and excludes all costs beyond the plant boundary. As such, CapEx as defined in this survey includes any electrical cabling with the plant, but excludes any needed substations, any needed transmission lines to access the existing grid network, and grid interconnection costs. For offshore wind projects, within-plant array cabling is included in CapEx, but CapEx excludes the offshore substation, any HVDC collector stations and associated cables, and costs for grid connection to land (e.g., subsea cables, onshore substation, and onshore transmission cables).
- Levelized operating expenditures (OpEx)
Levelized total operating expenditures ($/kW-yr), in real 2014 currency. Levelized operating expenditures represent an annualized estimate of the total operating costs over the project design life, accounting for both the cost escalation with age (in real terms, excluding general inflation) and the time value of money. OpEx includes maintenance and all other ongoing costs (e.g., insurance, land payments, etc.). OpEx, as defined in this survey, excludes any costs associated with grid interconnection, substations, or transmission usage; for offshore wind transmission system use charges (e.g., payments to Offshore Transmission Owner in the United Kingdom) are also excluded.
- Net project-level capacity factor
Average annual wind plant net capacity factor (NCF, in %), which reflects the average annual energy output of the project relative to potential output if the project operated at its maximum capacity for a full year.
- Project design life
The wind project design life (PDL, in years), defined as the design life of a project considered by investors when deciding whether to finance a project.
- Costs of financing (after-tax nominal WACC)
The nominal after-tax weighted average cost of capital (WACC). This represents the average return required by the combination of equity and debt investors to make a project an attractive investment opportunity, where each category of capital (equity and debt) is proportionately weighted. The after-tax WACC used here assumes that interest on debt serves as a tax deduction and that equity investor returns are indicative of the required threshold return after payment of taxes (i.e., sufficient revenue must be taken in to pay taxes and pay the threshold equity returns). WACC is calculated as: WACC = [(cost of equity in %) * (% equity in project)] + [(cost of debt in %) * (% debt in project) * (1 – tax rate)].
Background and additional details on how LCOE is calculated are available