The cost of wind power generation has dropped to the point that onshore wind is now competitive with coal-fired electrical power in certain regions, according to a report by Bloomberg New Energy Finance.

"The latest edition of our Wind Turbine Price Index shows wind continuing to become a competitive source of large-scale power," Michael Liebreich, chief executive of Bloomberg New Energy Finance, said in a statement.

The Bloomberg report, which analyzed confidential data provided by 28 major purchasers of wind turbines, found that expanding scale, improved efficiency and over-capacity among wind energy hardware manufacturers have combined to push the average price of onshore wind turbines below one million Euros per megawatt.

"For the past few years, wind turbine costs went up due to rising demand around the world and the increasing price of steel. Behind the scenes wind manufacturers were reducing their costs, and now we are seeing just how cheap wind energy can be when overcapacity in the supply chain works its way through to developers," Liebreich explained.

This news comes on the heels of reports that a Southern California utility is preparing to buy solar power for less money than gas-fired electric power over the life of a 20-year contract.

According to the Bloomberg New Energy report:

• The cost of electricity generated from wind is now at record lows: several projects in high resource areas (US, Brazil, Sweden, Mexico) display a levelised cost of energy – excluding the impact of subsidies but after including the cost of capital and maintenance – below EUR 50/MWh ($68/MWh). This compares to current estimated average costs of $67 per MWh for coal-fired power and $56 per MWh for gas-fired power.

• Low-priced power-purchase-agreements in markets with exposure to electricity prices – rather than fixed feed-in tariffs – seem to have put further pressure on turbine contracts: Italy, the UK and the US all display average pricing well below €1m/MW for contracts signed in 2010 for delivery in H2 2011. The US presents the lowest pricing of all markets so far with values averaging $1.27m/MW (€0.93/MW).

• Global turbine contracts signed in late 2010 display very aggressive pricing, with average values at €0.98m/MW. This is a 7% decrease compared to contracts signed in 2009 (€1.06m/MW) and 19% down from peak values in 2007-08 (€1.21m/MW).

The Wind Turbine Price Index is based on a sample that includes more than 150 undisclosed turbine contracts, totaling nearly 7GW of capacity in 28 markets globally – with a main focus on Europe and the Americas.

Monte Paulsen researches sustainability for the nonprofit Tyee Solutions Society.