ECONOMICS $2008Vaughn Nelson

Cost of Energy $0.06-0.08/kWh

Landowner $4,000-6,000/MW/yrLand removed from production 1-3 acres per turbine, primarily roads

Construction jobs/100 MW 100

O&M Jobs/100 MW 10-14

Renewable Energy Credits $3/MWh

Carbon trading ? $20/metric ton/yr

Green pricing $0.03/kWh

INCENTIVESRegulations Federal: PURPA 1978,

open transmission 1997

Production Tax Credit (PTC) $0.21/kWh1985, $0.015/kWh for 10 years (inflation factor), extended a number of times, now through 2011

Green pricing; ~$3 per block of 100 kWh

Tax breaks; PILOT, payment in lieu of taxesTX: Renewable Energy Credits (1 REC = 1 MWh) Utilities must acquire % of sales, 08 values ~ $53

INCENTIVESDatabase of State Incentives for Renewables & Efficiency (www.dbsireusa.com)

Renewable Portfolio Standard (RPS)TX, 1999; 900 MW by 2003: 2005; 5,880 MW by 2015 (500 MW from other renewables) plus goal of 10,000 MW by 2025 (will surpass in 2010)

NM: RPS, investor utilities, 20% (wind 4%) by 2020, wind; rural coops, 10% by 2020

OK: RPS, none

04/10/23

LEVELIZED COST OF ENERGY

COE = (FCR * ICC) + LRC + AOM

AEP

COE = LEVELIZED COST OF ENERGY, $/kWh or $/MWh

FCR = FIXED CHARGE RATE, per year

ICC = INITIAL CAPITAL COST, $

LRC = LEVELIZED REPLACEMENT COST, $/yr

AEP = NET ANNUAL ENERGY PRODUCTION, per/yr

AOM = ANNUAL OPERATION & MAINTENANCE, $/yr

PERCENT ICCTurbine 74-82

Foundation 1-6

Electric 2-9

Connection to grid 2-9

Finance 1-5

Land 1-3

Roads 1-5

Consultants 1-3

WIND FARMS, COST OF ENERGY

04/10/23

COE EXAMPLE50 MW WIND FARM, 1 MW TURBINESFCR = 8% = 0.08ICC = $2,000/kW = $2,000,000LRC = $15,000AOM = $0.01/kWh availability elevationAEP = 2,700,000 98% 1000 mCOE = (0.08 * 2,000,000) + 15,000 + 27,000

2,700,000COE = $0.065 / kWh

04/10/23 AEI

WIND FARM EXAMPLE50 MW WIND FARM, IC = $100,000,000

AEP = 50 * 2.7 *106 = 1.35*108 kWh/yr$.025-.03/kWh, with PTC $.045-.05/kWh Project Income $6-6.5 million/yr Land Owner royalty on $3-4 million/yr

4% = $120,000 - 160,000/yr$4,000-6,000/MW/yr = $200,000 - 300,000/yr

3,000 acres, 5 X 10 D spacing, Land removed from production 2 acres/turbine

@ $4,000/turbine = $2,000/acre/yr

ESTIMATED ANNUAL ENERGY

AEP = CF*GS*8760

CF = Capacity factor (0.30-0.45)

GS = Generator rated power

8760 = # hours in year

AEP = 0.35 * 1000 kW * 8760 hr/yr

= 3,060,000 kWh/yr

Then adjust for elevation and availabilityAEP = 0.9*0.98*3,000,000 = 2,700,000 kWh/yr

CAPACITY FACTOR = AVG POWER/RATED POWER

CALCULATED ANNUAL ENERGYSpeed Power Hours Energy m/s kW kWh

1-4 0 1051 0

5 34 868 29,538

6 103 914 94,060

7 193 904 174,381

11 748 531 396,855

14 1000 234 233,943

20 1000 40 39,540

SUM 8760 3,060,545

04/10/23 AEI

WIND FARM EXAMPLE

SPACING, based on terrain and prevailing wind direction

Plains, row 3 - 5 D, row-row 8 -10 D

Mesa, row 1.5 - 2 D, 1-3 rows

General, row 2 - 5, row-row 5 - 7 D D = rotor diameter

Land removed from production, 1 to 5 %

1-2 acres/turbine in plains

Satellite view, part of Sweetwater Wind Farm

Aerial view, White Deer Wind Farm, yellow lines, 1 sq mile

WIND FARM SALESFixed $0.025-0.035/kWh or $25-35/MWh

Market (time of day?), Fuel CostsPrice of natural gas at Henry Hub

FERC (quarterly reports, MWh, $); have to know official wind farm name.

http://eqrdds.ferc.gov/eqr2/frame-summary-report.asp

To calculate capacity factor, need wind farm capacity, MW; time period.

EXAMPLE INCOMEGreen Mountain Holdings, Lamar, CO

162 MW, 2008 by quarter

# $1,000 1,000 MWh $/MWh

1 4,333 131 33.00

2 4,415 134 33.00

3 4,726 130 36.36

4 5,347 147 36.36

$18,821,000

INSTITUTIONALNOISE, VISUAL, ENVIRONMENTAL

(birds, bats, habitat)

15% in favor, 10% opposed, rest neutral

$$$$ Landowner

maximum - medium - none

RURAL ECONOMIC DEVELOPMENTBIG BUCKS, BILLIONS OF DOLLARS

20,000 MW, Installed cost ~ $40 BB

O&M 2,000 – 3,000 jobs