In this chapter, we illustrate how to perform an economic analysis of energy investments from a private as well as a social point of view. In the first part of the chapter, we present the most important investment criteria that can be applied in the evaluation of private investments, i.e., the net present value and the internal rate of return. Because of their importance in the energy sector, we also discuss the computation of the levelised cost of energy (LCoE) and the concept of the learning curve. In the last part of the chapter, we introduce social cost–benefit analysis, highlighting the differences between this approach oriented to choose projects which maximize society’s welfare, with respect to private cost–benefit analysis. At the end of the chapter, we discuss issues in developing countries related to the topics discussed in the chapter.

Improvements in wind technology and reductions in cost mean that wind energy is now one of the most important sources of new electricity generation. This chapter looks at the history, physics and technological improvements leading to current wind turbine technology. Longer turbine blades and taller hub heights have played a key role in improving wind turbine performance. It also covers the development process required to build a wind farm including monitoring, energy assessment and financing aspects. A summary of pricing of recent wind energy projects from around the world demonstrates the economic competitiveness of the technology. We consider Denmark, and how it deals with the variability of obtaining more than 30% of its electricity from wind. Finally, it is demonstrated that a modest increase in wind installations to 72 gigawatts per year could see the world obtaining about 20% of electricity from wind power by 2040.