Page 339 - Fluid Power Engineering

Financial Modeling of W ind Projects 299

From a revenue standpoint, a 2.5 MW turbine with 7 m/s

average wind speed and shear of 0.24 will produce 7.26
million kWh per year with 80-m tower. The same turbine
with a 100-m tower will produce about 0.7 million kWh of
additional energy. Assuming revenue is 7 cents/kWh, this
will produce $49,000 per year. In an alternate scenario, if
the shear at site is 0.15, then the additional energy is 0.44
million kWh per year and additional annual revenue is
$30,800 with a 100-m tower.
The NPV with 8% discount rate of additional revenue

with shear of 0.24 is $481,090. For shear of 0.15, the NPV
is $302,400. When compared with the additional cost of
$360,000, the choice is clear.
Size and number of turbines. Should there be a 75 MW wind farm

with fifty 1.5 MW turbines or thirty 2.5 MW turbines? This
decision requires detailed computation of wind farm layout,
average annual energy production, wake losses, and related
analysis. In addition, it requires a detailed cost model with
sufficient degree of certainty that allows a decision maker to
make a choice.

The most difficult alternatives to analyze are ones that are difficult
to quantify. Examples are, buying 20-year warranty from a new man-
ufacturer with weak balance sheet versus buying from an established
manufacturer that offers only a 5-year warranty.
As the above examples illustrate, the process of choosing among
dozens of alternatives requires rigorous analysis in order to make
optimal selections.

References
1. DSIRE-Database of State Incentives for Renewables & Efficiency. Illinois-
Incentives/Policies for Renewables & Efficiency. DSIRE [Online] 2010.
http://www.dsireusa.org/incentives/incentive.cfm?Incentive Code=
IL04R&re=1&ee=1.
2. Wiser, R., and Bolinger, M. 2008 Wind Technologies Market Report, Berkeley,
CA: Lawrence Berkeley National Laboratory, Berkeley, CA, 2009.
3. Porter, K. Feed-In Tariffs, California Energy Commission, IEPR Workshop.
Sacramento, CA, 2006. http://www.energy.ca.gov/2007 energypolicy/
documents/2006-08-22 workshop/presentations/4-FEED-IN TARIFFS-
K-PORTER.PDF.
4. Holt, E. A., Wiser, R., and Bolinger, M. Who Owns Renewable Energy Certifi-
cates?AnExplorationofPolicyOptionsandPractice,ErnestOrlandoLawrence
Berkeley National Laboratory, Berkeley, CA , 2006. LBNL-59965.
5. Milborrow, D. “Annual Power Costs Comparison: What a difference a year
can make.” WindPower Monthly, 2010, January.