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Wind turbine Key economics drivers Capacity factor Onshore: 25-45% Offshore: 40-60% PTC revenue ~$27/MWh base 10-year term Curtailment risk Transmission constraints cut actual output Wake losses Turbine spacing affects yield 5-15%Wind energy economics are driven by one variable above all others: how much the wind blows at your specific site. A wind farm with a 40% capacity factor generates twice as much energy — and twice as much revenue — as an identical farm at a 20% capacity factor site. Getting the wind resource assessment right is the foundation of every wind project investment decision.
Beyond the resource, wind project economics depend on the offtake structure (PPA vs. merchant), transmission access and curtailment risk, turbine spacing and wake losses, and the production tax credit regime. The combination of falling turbine costs, strong PTCs under the IRA, and growing corporate PPA demand has made onshore wind one of the cheapest sources of new electricity generation in the US.
PTC vs. ITC election — but the window is closing. The One Big Beautiful Bill Act (July 2025) terminated the 45Y PTC and 48E ITC for wind facilities placed in service after December 31, 2027, with an exception for projects that begin construction within 12 months of enactment (before July 4, 2026). High-capacity-factor sites that race to qualify still prefer the PTC; lower-capacity-factor sites prefer ITC certainty. Projects beginning construction after the BOC window face a hard 2027 PIS deadline. Wind projects that began construction before 2025 are generally unaffected and remain under the pre-IRA Section 45 PTC and Section 48 ITC framework.
A wind turbine's capacity factor is the ratio of actual annual output to what it would produce running at full nameplate capacity 8,760 hours per year. Onshore wind in the US averages 25–45% depending on site quality. The best onshore sites in the Great Plains and mountain passes approach 50%. Offshore wind achieves higher and more consistent capacity factors — 40–60% — because ocean winds are stronger, more consistent, and not disrupted by terrain.
Capacity factor directly determines revenue per installed MW. At a $30/MWh PPA price, a 35% capacity factor generates $91,980/MW-year; a 45% CF site generates $118,260/MW-year — a 29% revenue difference from the same installed capacity at the same price.
Wind generation must be curtailed when transmission capacity is insufficient to move power from wind-rich areas to load centers. In ERCOT West Texas and MISO's wind corridor, curtailment rates have historically been 5–20% of potential output, directly eroding project economics. Transmission investment and regional coordination have improved curtailment in mature markets, but it remains a material risk in areas with rapidly expanding wind capacity.
Offshore wind offers superior capacity factors and proximity to high-value coastal load centers, but at substantially higher capital costs — historically $3,000–$6,000/kW installed vs. $1,000–$1,500/kW for onshore. The US offshore wind industry has faced significant headwinds since 2022: supply chain inflation, rising interest rates, and fixed-price PPAs signed before cost escalation forced several major project cancellations and contract renegotiations. The long-term fundamentals remain strong, but near-term development economics are challenging.
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