Page 315 - Fluid Power Engineering

Financial Modeling of W ind Projects 281

Operations and Maintenance Costs %ofTIC $ per kW
Labor
Personnel
Field salaries 14.3 2.86
Administrative 2.3 0.46
Management 5.7 1.14
Labor/personnel subtotal 22.3 4.47
Materials and services
Vehicles 2.2 0.44
Site maint/misc. services 0.9 0.17
Fees, permits, licenses 0.4 0.09
Utilities 1.7 0.35
Insurance 16.6 3.33
Fuel (motor vehicle gasoline) 0.9 0.17
Consumables/tools and misc. supplies 5.6 1.13
Replacement parts/equipment/spare parts 49.3 9.86
Inventory
Materials and services subtotal 77.7 15.53
Total O&M cost 100.0 20.00

∗ For dollar cost, total O&M annual cost of $20/kW is used.

TABLE 13-2 Detailed Categories of O&M Costs and the Approximate
Breakdown in Percentage (%) and Dollars($) ∗

Taxes are country- or state-specific. The norm is to pay a sales

or value-added tax in addition to property tax. With respect to
property tax payments to local jurisdictions, in order to elimi-
nate the variability of property tax payments (tax rate change
or the assessment change) to local jurisdictions during the life
of the project, a payment-in-lieu-of-taxes (PILOT) agreement
is negotiated with the local taxing entities. PILOT allows a de-
veloper to pay a negotiated annual amount over a specified
7
period. The amount is locale-specific; as a guideline, $5,000–
$6,000 per MW per year for 15-year period may be used for
US-based projects.
Other costs include transactions cost for selling energy in

the futures market and selling carbon credits, depending on
where the energy and credits are sold.

Depreciation and Taxes
In the United States, as in most countries, tax incentives play a big role
in the financial modeling of a wind project. In the United States, there
are three main incentives: