Wind Energy Economical Aspects & Project DevelopmentWith Real Case Studies

Gävle UniversityRenewable energy courseSupervisor: Prof. Göran WallShahriar GhahremanianOctober 2006

1- Economical Aspects

1-1 Total investment cost

1-2 Effective life time of system

1-3 Operation & Maintenance Cost

1-4 Physical properties of wind and wind turbine output energy

1-5 Technical availability

1-6 Total Production cost

1-7 Cost Comparison with Other Energy SourcesConclusion

1-1 Total investment cost

• Total investment of wind turbine is divided to:– Turbine manufacturing (ex-work)

– Construction like foundation, building and engineering

– Connecting to grid

Region Power (kWe) Turbine cost (US$ per kWe)

United states[1] 200 1000 - 1200

European community[2] 100 - 400 1000 – 1300

The Netherlands[3] 250 800

• Approximately % 75 - 80 of total investment is related to turbine (reported by USA and the Netherlands )

•The total investment is about 900 – 1300 US$ per kWe

•Making the turbine should be more cost effective than construction but connecting to grid are increasing

1-2 Effective life time of system

• For economic considering, wind turbines often have 20 years economic life time and this time is equal to system design

• Although we should notice that the best turbines have proven life time around 10 to 15 years

1-3 Operation / Maintenance Cost• O & M costs are often considering as a percentage of total investment or electricity production cost per kilowatt hour:

RegionO & M Cost US cent/kWh

Europe ( scientific experiences)[2] 0.5

European community study 1

US department of energy & SERI[1] 1

Danish energy agency (1990) [3]0.6 (for first 2 years)0.8 (for next 3 years)

1 (after 5 years)

• The percentage of the total investment attributed to operation and maintenance costs rises as wind turbines become older

• Operation and maintenance costs are divided into parts such as:

• services

• consumables

• repair

• insurance

• administration

• lease of site

Machine Size Year 1-2 Year 3-5 Year 6-10 Year 11-15 Year 16-20

150 kW 1.2 2.8 3.3 6.1 7.0

300 kW 1.0 2.2 2.6 4.0 5.0

500-600 kW 1.0 1.9 2.2 3.5 4.5

Annual operational and maintenance costs in % of the investment in the wind turbine (Danish Energy Agency, 1999, p.19)

1-4 Physical properties of wind and wind turbine output energy

Average output energy per square meter of rotor swept per year is the below form:

KWh/m2/yrb: efficiency Coefficient (this factor is an efficiency quality of wind turbines, is

not constant around the world and depends on average velocity of wind in a year and wind distribution)

v: velocity average in a year

)( 3vbE

Efficiency Factor

00.5

1

1.52

2.53

3.54

1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991

Year

Distribution function of wind velocity [4] Improvement of efficiency factor of wind turbines [4]

1-5 Technical availability• System availability is the portion of a year that turbine can produce energy.

A turbine may not produce energy all the year because of maintenance, unpredictable events and repairing.

Technical Avaiability %

0

20

40

60

80

100

120

1981 1982 1983 1984 1985 1986 1987 1988 1989

Year

Technical availability of best US wind turbines [5]

• There are no records or reported experiences about unavailability

• Only US (as figure 5-1) showed that:

• Medium sized wind turbines (250 KWe) probably reached to desired availability

• Large scale wind turbines (> 300 KWe) are in first steps

• The best wind turbines in US reaches to %95 availability level after 5 years operation.

Sample Wind Farm Costs For example an indicative capital cost for a "turn-key" contract to supply, install and commission a large wind farm, as shown in the table, based on 400 kW wind turbines (and UK experience), is about A$850 - $1,050 per square metre of rotor swept area or A$1.8 - $2.7 million per MW

Project Initiation  

Financing Planning Consent

Project development/ management

1% project cost $10,000 to $50,000

$50,000

Capital Costs Ex-factory cost of machines Install and commission

Infrastructure & connect

$550/sq.m swept area 15% ex-factory cost45% ex factory cost

Annual costs Operation and maintenance Metering

reactive power Insurance

Land rental Rates

1.5% of capital cost 0.64 c/kVArh

0.5% of capital cost1.5% of gross revenue$13 per installed kW

Wind Energy Project Analyses (Data from Renewable Energy Technology Screen case studies, Canada), [11]

Project name UnitRemote

CommunityWind farm Repowering

Green Power Production

Grid-Connected Wind farm

Large Wind Turbines

Offshore Wind farm

Isolated Island Community

Wind Power on Hydro Central-Grid

Grid-Connected Wind Farm

Project location ---Yukon, Canada

Alberta, Canada

Alberta, Canada

Andhra Pradesh, India

Niedersachsen, Germany

Copenhagen, Denmark

Newfoundland, Canada

Kennewick, WA

Wigton, Jamaica

Annual average wind speed m/s 6 6.5 6.2 6.2 6.4 7.2 6.5 6.6 8.3

Grid type --- Isolated-grid Central-grid Central-grid Central-grid Central-grid Central-grid Isolated-grid Central-grid Central-grid

Number of turbines --- 1 32 1 80 6 20 6 49 23

Wind plant capacity kW 150 19200 600 20000 9900 40000 390 63700 20700

Unadjusted energy production MWh 585 65375 1933 43022 18848 110599 908 181128 82133

Pressure adjustment coefficient --- 0.84 0.9 0.9 0.93 1 1 0.98 0.96 0.89

Temperature adjustment coefficient --- 1.08 1.03 1.03 0.96 1.02 1.02 1.04 1.03 0.98

Gross energy production MWh 530 60603 1792 38410 19225 112811 926 179100 71637

Losses coefficient --- 0.88 0.94 0.95 0.9 0.9 0.89 0.87 0.9 0.77

Renewable energy delivered MWh 469 57044 1704 34679 17372 99839 562 161842 55235

Renewable energy delivered GJ 1687 205360 6134 124845 62540 359422 2022 582630 198846

Base case GHG emission factor tCO2/MWh 0.472 0.513 0.491 0.559 0.861 0.898 0.925 0.559 1.019

Net annual GHG emission reduction tCO2 210 25772 770 17045 13767 82513 494 79547 47044

Initial Costs                    

Feasibility Study % 5 0.1 2.9 0.3 0.5 1.3 2.4 0.3 0

Development % 4.6 0.2 4.5 0.8 3.5 4.1 4 1.1 0

Engineering % 6.9 0.2 4.5 0.6 0.3 0 7.2 0.8 11.3

Energy Equipment % 38.4 81.6 63.9 77.5 69.4 49.8 50.6 74.6 69.6

Balance of Plant % 36.5 12.2 16.3 11.8 21.5 41.7 30 12.1 10.1

Miscellaneous % 8.5 5.7 7.9 9.1 4.8 3.1 5.7 11.1 9

Feasibility Study $ 4 3,500 1 9,100 3 5,300 47413 36487 548804 30,000 245,200 -

Development $ 4 0,000 5 4,700 5 4,900 132604 281631 1735190 50,000 835,500 -

Engineering $ 5 9,800 5 9,300 5 4,600 112578 24334 - 90,000 610,500 195,000

Energy Equipment $ 331,750 2 4,250,400 7 82,200 13607274 5539156 21064398 632,040 59,275,016 1,206,192

Balance of Plant $ 315,000 3 ,635,000 2 00,000 2071877 1716806 17626301 375,000 9,638,000 175,500

Miscellaneous $ 73,576 1 ,702,904 9 6,437 1595178 386016 1299375 71,211 8,829,119 156,093

Initial Costs - Total $ 863,626 29,721,404 1,223,437 17566925 7984431 42274068 1,248,251 79,433,335 1,732,785

O&M Annual Costs - Total $ 26,074 81968 47662 319831 230 725 22.071 2,557,215 50,050

Simple Payback yr 41.6 11.4 13.8 6.3 7.4 7.3 7.2 11.3 7

Year-to-positive cash flow yr more than 25 20.1 15.6 7.6 6.8 7.1 6.9 immediate 5.4

Annual Life Cycle Savings $ 69489 464025 2 ,012 1220962 253446 1472728 2861 1,229,164 37,231

Benefit-Cost (B-C) ratio --- 1.15 0.47 1.04 3.18 1.45 1.34 0.98 - 1.34

Avoided cost of energy $/kWh 0.1 0.06 0.08 0.0901 0.075 0.046 0.19 0.0439 0.0033

1-6 Total Production cost

SERI / DOE [3] EC [1,2] DEA [3]

Total investment cost400 – 500 US$/m2 =

1000 – 1200 US$/KWe400 – 600 US$/m2 = 900 – 1100 US$/KWe

5680 DKK/KWe = 770 US$/KWe

Average of wind velocity 6.6 m/s in 25 m height - 6.5 m/s in 30 m height

Total gained energy per year 800 – 1070 KWe / m2 - 1000 KWe / m2

Capacity factor - % 28.5 % 22.3

Availability % 95 %95 -

Total energy loss % 23 - -

O & M 1 cent / KWh % 2 of total investment per year1 - 2 years : % 1.43 – 5 years : % 2

6 – 20 years : % 2.5

Substitution cost of turbines (after 8th & 20th yrs)

27000 – 40000 $ ( for 200 KWe wind turbine)

- -

Lifetime 30 yrs 20 yrs 20 yrs

Interest rate 0.061 - -

Fixed cost rate 0.102 - -

Investment (real) rate of return - % 5 per year % 7 per year

Total Cost 6.8 US cent/KWh 3.5 – 7 US cent/KWh 4.5 US cent/KWh

1-6 Total Production cost ( Cont’d)• EC capacity factor almost considered high and in US long lifetime• Generally Danish study seems more realistic. • As a result, we can conclude total production cost is about 5 – 10 US cent / KWh.• In general, the initial investment for a 1MW wind turbine project is about 1.1 million EUR (S.E.I., 2004, p.4). • As shown in the below table, the most expensive part of the investment is the costs of turbines, accounting for 80 % of the total installation cost.

Average cost of a typical 600 kW turbine project (Danish Energy Agency, 1999)

Component Average DKK (600kW)

Turbine ex-works5 3 146 000

Foundation 149 000

Grid connection 288 000

Electrical Installation 20 000

Tele communication 14 000

Land 103 000

Roads 39 000

ConsultingFinance

36 00020 000

Insurance 94 000

Total 3 909 000

1-7 Cost Comparison with Other Energy SourcesData from 1996 comparing the Levelized (Include all capital, fuel, and operating and maintenance costs associated with the plant over its lifetime and divides that total cost by the estimated output in kWh over the lifetime of the plant)

Plant Fuel Type USD cents/kWh

Coal 4,8 - 5,5

Gas 3,9 - 4,4

Hydro 5,1 - 11,3

Biomass 5,8 - 11,6

Nuclear 11,1 - 14,5

Wind 4,0 - 6,0

Production, external and total costs of different energy fuels (Belgian Ministry of Energy and Sustainable Development: Pauwel and Streydio, 2000, p.18).

Fuels Production cost( EUR cents/kWh)

External cost ( EUR cents/kWh)

Total cost( EUR cents/kWh)

Nuclear 3.1 0.1 3.2

Gas (CHP) 3.2 1.0 4.2

Coal 3.4 2.4 5.8

Wind onshore/inland 7.8 0.3 8.1

Wind onshore/on coast 4.5 0.1 4.6

Wind offshore 5.8 0.1 5.9

(A.W.E.A., 2002, p.1)

Conclusion

It appears that Wind Energy cannot compete in the market with traditional energy sources without the

help of financial support. But if we consider climate change, global warming

and GHG emissions, wind energy will be financially feasible.

Thank You

2- Project Development

2-1 Initial site selection

2-2 project feasibility assessment

2-3 the Measure-Correlate-Predict technique

2-4 site investigation

2-5 Public investigation

2-6 Preparation and submission of planning application

2-1 Initial site selection• The mean power production for a wind turbine is given by:

– P (U): power curve of wind turbine is available from turbine suppliers – f (U): probability density function of the wind speed may be obtained from wind atlas (European wind

atlas, 1989) – T: time period

• Energy yield of a wind turbine can be estimated as shown in below by combining the wind speed distribution with the power curve:

– H (ui): number of hours in wind speed– P (ui): power output at the wind speed

• Road access for transporting the turbines and other related equipment such as main transformer

• A review of the main environmental considerations, the important constraints includes special consideration of areas

– Ensuring that no turbine is located so close to domestic dwellings– Avoiding area of particular ecological value as well as any locations of particular archaeological or

historical interest – Noise– Visual domination – Light shadow flicker

• In parallel with the technical and environmental assessments it is normal to open discussion with local civic or planning authorities to identify and agree the major potential issues.

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2-2 project feasibility assessment

• Once a potential site has been identified then more detailed, and expensive, investigations are required in order to confirm the feasibility of project

• The wind farm energy output, and the financial viability of the scheme, will be very sensitive to the wind speed over the life of the project

• To establish a prediction of the long term wind resource, it is recommended to use the measure-correlate-predict (MCP) technique. (Derrick, 1993, Mortimer, 1994)

2-3 the measure-correlate-predict technique

• MCP approach: linear regression is used to establish a relationship between the measured site wind speed and long term meteorological wind speed data of the form:

Usite = a + b Ulong-term

• Coefficients are calculated for some directional sectors and the correction for the site applied to the long term data record of meteorological station

• Thus, MCP requires the installation of cup anemometers and wind vane at the wind

farm site and one anemometer at the hub height of wind turbine

• Measurements are made over at least 6 month period and correlated with measurements made concurrently at the meteorological station

• Estimate what the wind speed at the wind farm site would have been over the last 20 years (as a prediction of the wind speed during the life of the project )

• Difficulties:1. with modern wind turbines, high site meteorological masts are necessary also with planning

permission2. availability of suitable meteorological station within 50-100 km3. the gaps and quality of meteorological station

2-4 site investigation

• A careful assessment of existing land use • How best the wind farm may be integrated with e.g.

agricultural operations• The ground conditions for ensuring turbine

foundations, access roads and construction areas • Local ground conditions for position of turbines • Hydrological study for determining whether spring

water supplies of wind farm• More detailed investigation like bend radii, width,

gradient and any weigh restrictions on approach roads

• Discussion with local electricity utility concerning the connection to distribution network

2-5 Public investigation

• Prior the erection of the site anemometer the wind farm developer may initiate some form of informal public consultation like local community organizations, environmental societies and wildlife trusts.

2-6 Preparation and submission of planning application

• The purpose of wind farm environmental statement (that is an expensive and time consuming and requires the assistance of various specialists) may be summarized:

1. physical characteristics of wind turbines and their land use requirement

2. environmental character of proposed site and surrounding area

3. environmental impacts of the wind farm

4. measures which mitigate any adverse impact

5. need for the wind farm and allowance for planning authority and general public decision on the application

2-6 Preparation and submission of planning application

• Topics covered in environmental statement will typically include the following (BWEA, 1994)– policy framework– site selection– designated areas– visual and landscape assessment– noise assessment– ecological assessment– archaeological and historical assessment– hydrological assessment– interference with telecommunication systems– aircraft safety– safety– traffic management and construction– electrical connection– economic effects on the local economy– decommissioning– mitigating measures– non-technical summary

Extras: Appendixes

• Sample Wind Farm Costs

• 9 Wind Energy Project Analyses

References

1. J.M. Cohen , Methodology for computing wind turbine cost, American energy association , 1989

2. H.N. Nacfaire, Demonstration program for wind energy, United Kingdom, EWEC, 1999

3. Danish energy agency: wind energy in Denmark, 19994. N.C. van de Borg, The energy production of wind turbines, The

Netherland, 19995. H.J.M Beurskens and E.H.L. Lysen, Perspective of wind energy,

European wind energy association, 2001, www.ewea.org6. British wind energy association, best practice guidelines for wind

energy development, 2001, www.bwea.com7. European wind atlas, Risø national lab, 1999, www.wind-power.dk8. International energy agency, wind turbine, 2000, www.iea.org9. The wind atlas analysis and application program, www.wasp.dk10. D. Taylor, wind energy and the environment, IEEE energy,

www.ieee.com11. Renewable Energy Technologies Screen

International Clean Energy Decision Support Centre, www.RETScreen.net

THANK YOU FOR YOUR ATTENTION