A new study of the costs of onshore wind energy predicts that the technology will become even cheaper in the coming years.

According to the study by Agora Energiewende, a German market analysis firm, recent auctions for renewable energy around the world show that the costs of onshore wind energy are falling. However, there is potential for further cost reductions due to the use of larger turbines.

“The technical potential of wind power has yet to be fully tapped,” says Matthias Deutsch, co-author of the new study, entitled ‘Future Cost of Onshore Wind’. “The considerable cost reductions that have been achieved with competitive bidding for solar energy and offshore wind are also possible for onshore wind projects.”

Recent auctions in countries such as Morocco, Peru and Mexico have achieved electricity production costs as low as 2.7 to 3.4 cents per kWh, making wind power is one of the world’s cheapest forms of energy.

By comparison, Germany’s most recent onshore wind auction attracted bids of 5.25-5.78 cents/kWh.

The difference in price reflects Germany’s “opaque and complex” onshore wind cost structure, and does not take into account the differences in the quality of wind resources and local factors such as cost of capital, Agora Energiewende says. Its study concludes that the full cost of electricity at top sites in Germany could fall to between 3 and 4.5 cents per kWh, it adds.

The cost decline will be propelled by further growth in rotor surface area and turbine capacity, says the study, and will be important for maintaining investor confidence in the sector.