Onshore and Offshore Locations for Wind Power Development – What Does the Public Prefer and Should It Matter?

In the renewable energy sector there is continuous striving to develop new and more efficient methods and technologies to reduce the costs of power generation, and wind power generation is no exception. However, besides the continuous effort to develop better and cheaper turbines, wind power generation faces an increasing challenge that has a strong influence on the overall welfare economic efficiency of wind turbines. More specifically, non-wind-resource arguments have emerged and are pointing towards the fact that the external costs of wind power locations can potentially have a significant impact on the costs of wind power generation. An externality or external cost is a cost that a project inflicts on other people but that is not compensated for and, therefore, is not included in the costs of the project. Typical wind power externalities are visual and aural and can have a negative influence on property prices and revenue from recreational activities.

The link between wind power generation (as well as other renewable and non-renewable energy generation sources) and external costs has been recognised for many years. One of the first systematic attempts to assess and quantify these costs was carried out by the External costs of Energy (ExternE) network during the 1990s. However, in the period following this, the information on external costs, people’s preferences and economic assessment of potential sites and turbine configurations (size, grouping and structure, etc.) has increased. In particular, stated preference (SP) surveys aiming at identifying preferences in terms of willingness to pay for different wind turbine/farm outlays have grown in number. SP surveys entail a bundle of economic valuation methods developed to identify and elicit preferences/willingness to pay for nonmarket goods such as the external costs of wind power generation. Since the 1980s, these studies have been used in fields such as marketing, transport, health and environmental economics and as an input in cost–benefit analyses.