“Those coal retirements do require us to have some excess capacity or an increase in capacity,” he said yesterday in an interview. “If you strip away everything from all generation resources, I think wind is more competitive.”
Wind turbines typically cost about $1 million for each megawatt of capacity, making the deal worth more than $1 billion for Siemens, Markus Tacke, chief executive officer of the company’s wind power division, said without providing an exact price.
Power from wind is now cheaper than power from newly built natural gas plants, said Amy Grace, a wind analyst for Bloomberg New Energy Finance.
“Most people expect gas to become more expensive,”she said in an interview. “I think in most windy areas in the U.S it will be competitive by 2020.”
The industry is expected to install about 32 gigawatts of new wind capacity worldwide this year, down 28% from last year, according to New Energy Finance, in part because of low demand in the U.S. in the first half after the production tax credit lapsed. It was renewed at the start of 2013. Demand next year will rebound to about 43.7 gigawatts.
Power from coal costs about $78.30 a megawatt-hour to produce and gas costs $69.71, compared with $82.61 for onshore wind farms, according to data compiled by Bloomberg.
The cost of wind power has declined about 90% in the past two decades, and 30% in the past three years, Kiernan said.
The cost and reliability of coal will ensure that it remains part of the energy mix, Vic Svec, head of investor relations for St. Louis-based Peabody Energy, the biggest U.S. coal producer, said in an e-mailed statement.
Siemens will supply hubs and nacelles, the car-sized units that house the gears, electronics and gearboxes for turbines, from its plant in Hutchinson, Kansas, and rotors and blades from the Fort Madison facility.
Siemens has also agreed to supply turbines for Cape Wind, the proposed offshore wind farm off the coast of Massachusetts that faced opposition from local residents including the Kennedy family. The company said the project will qualify for a key federal credit, the investment tax credit, which is also set to expire Dec. 31.