Developing Wind Energy in Indiana.ppt by handongqp

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									  Developing Wind Energy in
           Indiana:
A Case Study of Benton County


          Ian Van Lieu
         April 25th, 2008
          Presentation Overview
•   National Wind Energy Overview
•   Indiana Wind Energy Activity
•   Wind Energy Basics
•   Development of Benefit Cost Model
•   Results
•   Conclusions
         National Wind Energy
• Wind Energy is currently the fast growing
  technology in electricity generation
• Current installed capacity is 16,819 MW
• Capacity under construction 3,627 MW
Source: American Wind Energy Association
Installed Capacity
         Drivers of Wind Energy

•Declining Wind Costs
•Fuel Price Uncertainty
•Federal and State Policies
•Economic Development
•Green Power Marketing
•Cap and Trade Program
        Presentation Overview
•   National Wind Energy Overview
•   Indiana Wind Energy Activity
•   Wind Energy Basics
•   Development of Benefit Cost Model
•   Results
•   Conclusions
        Benton County Projects
• Indiana Winds Project
  – 130 MW facility by Earl Park
• Fowler Ridge Project
  – 750 MW in 2 phases
                                          Monthly Wind Speed Averages
                   10

                   9

                   8

                   7
Wind Speed (M/S)




                   6
                                                                                                90 Meters
                   5
                                                                                                49 Meters
                                                                                                10 Meters
                   4

                   3

                   2

                   1

                   0
                        Jan   Feb   Mar   Apr   May   Jun   Jul   Aug   Sep   Oct   Nov   Dec
          Indiana Development
•   Adams
•   Boone
•   Jay
•   Randolph
•   Wayne
•   White
          Presentation Overview
•   National Wind Energy Overview
•   Indiana Wind Energy Activity
•   Wind Energy Basics
•   Development of Benefit Cost Model
•   Results
•   Conclusions
                   Wind Speed
• Wind speeds increase with height above the ground
• It is not only about wind speeds
   – Wind Power is the amount of energy produced by the
     wind
• Wind Power=(Wind Speed)3
• Wind Speeds are often best described using a
  Weibull Distribution
        Wind Speed Distribution
           March Hourly Wind Speed Histogram
 0.05

0.045

 0.04

0.035

 0.03

0.025

 0.02

0.015

 0.01

0.005

   0
        10
        12
        14
        16
        18
        20
        22
        24
        26
        28
        30
        32
        34
        36
        38
        40
        42
        44
         0
         2
         4
         6
         8
     Wind Turbine Power Equation
  Turbine Power = 0.5 AC PVWind
                            3


• ρ: The density of the air measure in kg/m3

• A : The area swept by the turbine

• CP: Turbine power coefficient
            PTurbine
       CP 
             PWind
• VWind : The wind speed in meters per second
                        GE 1.5 MW SE Power Curve
               1600
               1400
               1200
Output (kWh)




               1000
                800
                600
                400
                200
                  0
                      0 2 4 6 8 10 12 14 16 18 20 22 24 26 28
                               Wind Speed (m/s)
          Presentation Overview
•   National Wind Energy Overview
•   Indiana Wind Energy Activity
•   Wind Energy Basics
•   Development of Benefit Cost Model
•   Results
•   Conclusions
   Benefit Cost Model Assumptions
Factor                    Baseline Value
Project Life                 25 Years
Nominal Interest Rate         7.00%
Inflation Rate                2.5%
Project Debt Percentage       60%
Loan Repayment Period        10 Years
Price Per kW Installed      $1127.00
Number of Wind Turbines        67
                     Project Cost
Factor                          Baseline Value
Total Project Cost              $113,263,500.00
Project Equity                  $45,305,400.00
Debt Payments                    $9,675,704.57
   Benefit Cost Model Assumptions
Factor                         Baseline Value
Operation & Maintenance Cost   $24.08 per kW
Power Purchase Agreement       $0.045 per kW
Production Tax Credit          $0.019 per kW
Annual Turbine Lease Payment     $5,000.00
Property Tax Abatement
   Year      Abatement Factor
    1
                  100%
    2
                   90%
    3
                   80%
    4
                   70%
    5
                   60%
    6
                   50%
    7
                   40%
    8
                   30%
    9
                   20%
   10
                   10%
County Property Tax Revenue
        Year        Property Taxes

         1             -$7,434

         2            $142,424
         3            $177,226
         4            $258,431
         5            $344,574
         6            $430,718
         7            $516,862
         8            $603,005
         9            $689,149
         10           $775,293

    11 through 25     $861,436
   Depreciation Schedules
                    MACRS    15 Year Schedule
Year 1               0.2           0.1
Year 2               0.32          0.1
Year 3               0.19          0.1
Year4               0.1152         0.1
Year 5              0.1152        0.05
Year 6              0.0576        0.05
Year 7 through 16     0           0.05
          Presentation Overview
•   National Wind Energy Overview
•   Indiana Wind Energy Activity
•   Wind Energy Basics
•   Development of Benefit Cost Model
•   Results
•   Conclusions
                   Baseline Scenarios
Net Present Value          Without Tax Abatement With Tax Abatement
Minimum                         $20,250,880           $23,208,780
Mean                           $25,366, 640           $28,256,650
Maximum                         $30,309,370           $18,849,450
Standard Deviation              $1,383,383            $1, 383,383
Coefficient of Variation          5.49%                  4.91%
P(NPV≤0)                          0.00%                  0.00%
Return on Equity                  14.63%                15.78%
            Cost Overrun Sensitivity
            Scenario 1:    Scenario 2:    Scenario 3:    Scenario 4:

               102%           106%           110%           115%
Minimum     $ 21,566,900   $ 18,455,330   $15,343,770    $11,454,310
 Mean       $ 26,682,660   $ 23,571,090   $ 20,459,530   $ 16,570,070
Maximum     $ 31,625,390   $28,513,830    $25,402,260    $ 21,512,800
Std. Dev.   $ 1,383,383    $ 1,383,383    $ 1,383,383    $ 1,383,383
  C. V.        5.18%          5.87%          6.76%          8.35%
P(NPV≤0)       0.00%          0.00%          0.00%          0.00%
  IRR         15.13%         13.92%         12.79%         11.48%
                Interest Rate Sensitivity
                           Scenario 1    Scenario 2   Scenario 3
Interest Rate                9.00%        11.00%       13.00%
Minimum                    $10,646,290   $1,006,838   $6,557,295
Mean                       $14,974,010   $4,722,915   $3,342,950
Maximum                    $19,155,350   $8,313,308   $201,928
Standard Deviation         $1,269,838    $1,004,887   $874,078
Coefficient of Variation     7.82%        21.28%          -
P(NPV≤0)                     0.00%         0.00%       100.00%
Return on Equity             15.07%       12.20%       11.48%
           Alternate Cost Overrun IRR
                              Before Financing   Before Financing   Before Financing
                   Baseline
                                After Taxes       Before Taxes       Before Taxes




Scenario 1: 102%   15.13%         11.11%             9.84%              7.73%


Scenario 3: 106%   13.92%         10.59%             9.23%              7.16%


Scenario 5: 110%   12.79%         10.04%             8.65%              6.62%


Scenario 6: 115%   11.48%         9.40%              7.98%              6.00%
          Presentation Overview
•   National Wind Energy Overview
•   Indiana Wind Energy Activity
•   Wind Energy Basics
•   Development of Benefit Cost Model
•   Results
•   Conclusions
               Conclusions
• Wind farms in Benton county will be able to
  operate profitably under many of the
  scenarios studied.
• The results of the model are dependent on
  the wind speed estimates and the initial
  values of the model assumptions.
• The project is sensitive to both the debt
  interest rate and total project cost.
                Conclusions
• A 10 percent increase in total cost still allows
  the project to operate with a positive average
  net present value.
• A 10 percent decrease in the wind speeds will
  decrease the quantity of electricity generated
  by 33 percent and also decrease the
  production tax credit by that amount.
Questions

								
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