Wind Energy
Stephen R. Lawrence
Leeds School of Business University of Colorado Boulder, CO
1
Acknowledgement
Adapted from a presentation by
Keith Stockton
Environmental Studies University of Colorado Boulder, CO
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Ancient Resource Meets 21st Century
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Wind Turbines
Power for a House or City
4
Wind Energy Outline
History and Context Advantages Design Siting Disadvantages Economics Project Development Policy Future
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History and Context
6
Wind Energy History
1 A.D.
~ 400 A.D.
Hero of Alexandria uses a wind machine to power an organ Wind driven Buddhist prayer wheels Golden era of windmills in western Europe – 50,000 9,000 in Holland; 10,000 in England; 18,000 in Germany Multiblade turbines for water pumping made and marketed in U.S. Thomas Edison commissions first commercial electric generating stations in NYC and London Competition from alternative energy sources reduces windmill population to fewer than 10,000 Heyday of the small multiblade turbines in the US midwast
1200 to 1850 1850’s
1882
1900
1850 – 1930
1936+
As many as 6,000,000 units installed
US Rural Electrification Administration extends the grid to most formerly isolated rural sites
Grid electricity rapidly displaces multiblade turbine uses
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Increasingly Significant Power Source
coal petroleum natural gas nuclear hydro other renewables wind
coal petroleum natural gas nuclear hydro other renewables wind
Wind currently produces less than 1% of the nation’s power.
Source: Energy Information Agency
Wind could generate 6% of nation’s electricity by 2020.
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9
Manufacturing Market Share
Source: American Wind Energy Association
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US Wind Energy Capacity U.S. Wind Energy Capacity
10000 8000 6000 MW 4000 2000 0 2000 2001 2002 2003 2004 2005
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Installed Wind Turbines
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Colorado Wind Energy Projects
Wind Energy Development
Project or Area
1. Ponnequin (EIU) (Phase I) 1. Ponnequin (Xcel) Project Info 1. Ponnequin (Phase III) Peetz Table Wind Farm Colorado Green, Lamar (Prowers County) Prowers County (Lamar) Prowers County (Lamar)
Owner
K/S Ponnequin WindSource & Energy Resources Xcel
Date Online
Jan 1999
MW
5.1
Power Purchaser/User
Xcel
Turbines / Units
NEG Micon (7) NEG Micon (22) Vestas (15) NEG Micon (33) GE Wind 1500 (108) GE Wind 1500 (1) GE Wind 1500 (3)
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Feb-June 1999 2001
16.5
Xcel
New Century (Xcel) New Century (Xcel) Xcel Energy / GE Wind Wind Corp. Arkansas River Power Authority Lamar Utilities Board
9.9 29.7
New Century (Xcel) New Century (Xcel)
Dec 2003 2004 2004
162.0 Xcel 1.5 4.5 Arkansas River Power Authority Lamar Utilities Board
New Projects in Colorado
New Wind Projects in Colorado
Project
Spring Canyon Wray School District NA
Utility/Developer
Xcel Energy / Invenergy Wray School District RD2 Xcel Energy / Prairie Wind Energy
Location
Near Peetz Wray Near Lamar
Status
Construction to begin in June
MW Capacity
60 1.5
On Line By/ Turbines
2005 / GE Wind 1500kW (87) 2005 / 1500kW (1) 2005 / 1500kW (46)
PPA Signed
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Ponnequin – 30 MW
•Operate with wind speeds between 7-55 mph •Originally part of voluntary wind signup program •Total of 44 turbines •In 2001, 15 turbines added •1 MW serves ~300 customers •~1 million dollars each •750 KW of electricity each turbine •Construction began Dec ‘98 •Date online – total June 1999 •Hub height – 181 ft •Blade diameter – 159 ft •Land used for buffalo grazing
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Wind Power Advantages
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Advantages of Wind Power
Environmental Economic Development Fuel Diversity & Conservation Cost Stability
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Environmental Benefits
No air pollution No greenhouse gasses Does not pollute water with mercury No water needed for operations
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Pollution from Electric Power
Sulfur Dioxide Carbon Dioxide Nitrous Oxides Particulate Matter Toxic Heavy Metals 0% 20% 34% 33% 28% 23% 40% 60% 80% 70%
Percentage of U.S. Emissions
Source: Northwest Foundation, 12/97
Electric power is a primary source of industrial air pollution
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Economic Development Benefits
Expanding Wind Power development brings jobs to rural communities Increased tax revenue Purchase of goods & services
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Economic Development Example
Case Study: Lake Benton, MN
$2,000 per 750-kW turbine in revenue to farmers Up to 150 construction, 28 ongoing O&M jobs Added $700,000 to local tax base
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Fuel Diversity Benefits
Domestic energy source Inexhaustible supply Small, dispersed design
reduces supply risk
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Cost Stability Benefits
Flat-rate pricing
hedge against fuel price volatility risk
Wind electricity is inflation-proof
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Wind Power Design
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Power in the Wind (W/m2)
= 1/2 x air density x swept rotor area x (wind speed)3 A V3
Density = P/(RxT)
P - pressure (Pa) R - specific gas constant (287 J/kgK) T - air temperature (K)
Area = r2 m2
Instantaneous Speed (not mean speed)
kg/m3
m/s
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Wind Energy Natural Characteristics
Wind Speed
Wind energy increases with the cube of the wind speed 10% increase in wind speed translates into 30% more electricity 2X the wind speed translates into 8X the electricity
Height
Wind energy increases with height to the 1/7 power 2X the height translates into 10.4% more electricity
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Wind Energy Natural Characteristics
Air density
Wind energy increases proportionally with air density Humid climates have greater air density than dry climates Lower elevations have greater air density than higher elevations Wind energy in Denver about 6% less than at sea level
Blade swept area
Wind energy increases proportionally with swept area of the blades
Blades are shaped like airplane wings
10% increase in swept diameter translates into 21% greater swept area Longest blades up to 413 feet in diameter
Resulting in 600 foot total height
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Betz Limit
Theoretical maximum energy extraction from wind = 16/27 = 59.3% Undisturbed wind velocity reduced by 1/3 Albert Betz (1928)
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How Big is a 2.0 MW Wind Turbine?
This picture shows a Vestas V-80 2.0-MW wind turbine superimposed on a Boeing 747 JUMBO JET
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Wind Turbine Power Curve
2500
Vestas V80 2 MW Wind Turbine
2000
KW
1500
1000
500
0
10
20
30 MPH
40
50
30
Recent Capacity Enhancements
2006 5 MW 600’
2000 850 kW 265’
2003 1.8 MW 350’
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Nacelle Components
5
10
16 17
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. Hub controller Pitch cylinder Main shaft Oil cooler Gearbox Top Controller Parking Break Service crane Transformer Blade Hub
12 12
11. Blade bearing 12. Blade 13. Rotor lock system 14. Hydraulic unit 15. Machine foundation 16. Yaw gears 17. Generator 18. Ultra-sonic sensors 19. Meteorological gauges
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Turbines Constantly Improving
Larger turbines Specialized blade design Power electronics Computer modeling
produces more efficient design
Manufacturing improvements
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Improving Reliability
Drastic improvements since mid-80’s Manufacturers report availability data of over 95%
100 % Available 80 60 40 20 0 1981 '83 '85 '90 '98 Year
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Wind Project Siting
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Wind Power Classes
10 m (33 ft) ft) 50 m (164
Wind Power Class
1 2 3 4 5 6
Speed m/s (mph)
0 4.4 (9.8) 5.1 (11.5)
Speed m/s (mph)
0 5.6 (12.5) 6.4 (14.3)
5.6 (12.5)
6.0 (13.4) 6.4 (14.3) 7.0 (15.7) 9.4 (21.1)
7.0 (15.7)
7.5 (16.8) 8.0 (17.9) 8.8 (19.7) 11.9 (26.6)
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Wind speed is for standard sea-level conditions. To maintain the same power density, speed increases 3%/1000 m (5%/5000 ft) elevation.
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Siting a Wind Farm
Winds
Minimum class 4 desired for utility-scale wind farm (>7 m/s at hub height) Distance, voltage excess capacity
Transmission
Permit approval
Land-use compatibility Public acceptance Visual, noise, and bird impacts are biggest concern
Economies of scale in construction Number of landowners
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Land area
Wind Disadvantages
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Market Barriers
Siting
Avian Noise Aesthetics
Intermittent source of power Transmission constraints Operational characteristics different from conventional fuel sources Financing
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Wind Energy and the Grid
Pros
Small project size Short/flexible development time Dispatchability
Generally remote location Grid connectivity -- lack of transmission capability Intermittent output
Cons
Only When the wind blows (night? Day?)
Low capacity factor Predicting the wind -- we’re getting better
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Birds - A Serious Obstacle
Birds of Prey (hawks, owls, golden eagles) in jeopardy Altamont Pass – News Update – from Sept 22
shut down all the turbines for at least two months each winter eliminate the 100 most lethal turbines Replace all before permits expire in 13 years
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Wind – Characteristics & Consequences
Remote location and low capacity factor
Higher
transmission investment per unit output
Small project size and quick development time
Planning
mismatch with transmission investment
Intermittent output
Higher
system operating costs if systems and protocols not designed properly
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Balancing Supply & Demand
4500
Gas
4000
Gas/Hydro
3500
Base Load – Coal
3000
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Energy Delivery
Lake Benton II Storm Lake
Lake Benton & Storm Lake Power February 24, 2002
200000
Combined
180000
160000
140000
120000
(kW)
100000
80000
60000
40000
20000
0
10:00 11:00 12:00 13:00 14:00 15:00 16:00 17:00 18:00 19:00 20:00 21:00 22:00 23:00 0:00 1:00 2:00 3:00 4:00 5:00 6:00 7:00 8:00 9:00
(HH:MM)
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Energy Delivery
Lake Benton II Storm Lake
Lake Benton & Storm Lake Power July 7, 2003
180000
Combined
160000
140000
120000
100000
(kW)
80000 60000 40000 20000 0
10:00
11:00
12:00
13:00
14:00
15:00
16:00
17:00
18:00
19:00
20:00
21:00
22:00
(HH:MM)
23:00
0:00
1:00
2:00
3:00
4:00
5:00
6:00
7:00
8:00
9:00
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Wind Economics
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Wind Farm Design Economics
Key Design Parameters
Mean wind speed at hub height Capacity factor
Start with 100% Subtract time when wind speed less than optimum Subtract time due to scheduled maintenance Subtract time due to unscheduled maintenance Subtract production losses
Dirty blades, shut down due to high winds
Typically 33% at a Class 4 wind site
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Wind Farm Financing
Financing
LIBOR
Terms
Interest rate
+ 150 basis points
Loan term
Up
to 15 years
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Cost of Energy Components
Cost (¢/kWh) = (Capital Recovery Cost + O&M) / kWh/year
Capital Recovery = Debt and Equity Cost O&M Cost = Turbine design, operating environment kWh/year = Wind Resource
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Costs Nosedive Wind’s Success
38 cents/kWh
$0.40 $0.30 $0.20 $0.10 $0.00 1980
3.5-5.0 cents/kWh
1984 1988 1991 1995 2000 2005
Levelized cost at good wind sites in nominal dollars, not including tax credit
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Construction Cost Elements
Financing & Legal Fees 3% Development Activity 4% Interconnect/ Subsation 4% Interest During Construction 4% Towers (tubular steel) 10% Construction 22% Design & Engineering 2% Land Transportation 2%
Turbines, FOB USA 49%
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Wind Farm Components Wind Farm Cost Component Costs
100%
80% Balance of System 60% Transportation Foundations Tower 40% Control System Drive Train Nacelle 20% Blades and Rotor
0% 750 kW 1500 kW 3000 kW
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Wind Farm Economics
Capacity factor
Start with 100% Subtract time when wind speed 35% at good sites Examples (Year 2000)
Big Spring, Texas
37% CF in first 9 months
36% CF in first 9 months
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Springview, Nebraska
Wind Farm Economics
Key parameter
Distance from grid interconnect
≈ $350,000/mile for overhead transmission lines
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Wind Farm Economics
Example
200 MW wind farm
Fixed costs - $1.23M/MW 33% capacity factor
Class 4 wind site
10 miles to grid 6%/15 year financing
100% financed
20 year project life
Determine Cost of Energy - COE
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Wind Farm Economics
Total Capital Costs
$246M + (10 x $350K) = $249.5M 200 MW x 1000 x 365 x 24 x 0.33 = 578,160,000 kWh 578,160,000 x 20 = 11,563,200,000 kWh
Total Annual Energy Production
Total Energy Production
Capital Costs/kWh
3.3¢/kWh
1.6¢/kWh Wind – 4.9¢/kWh Coal – 3.7¢/kWh Natural gas – 7.0¢/kWh
Operating Costs/kWh
Cost of Energy – New Facilities
@ $12/MMBtu
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Wind Farm Development
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Wind Farm Development
Key parameters
Wind resource Zoning/Public Approval/Land Lease Power purchase agreements Connectivity to the grid Financing Tax incentives
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Wind Farm Development
Wind resource
Absolutely vital to determine finances
Wind is the fuel Daily and hourly detail Preferably at projected turbine hub height Multiple towers across proposed site Correlate long term offsite data to support short term onsite data
Local NWS metrological station
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Requires historical wind data
Install metrological towers
Multiyear data reduces financial risk
Wind Energy Variability
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Source: Garrad Hassan America, Inc.
Wind Farm Development
Zoning/Public Approval/Land Lease
Obtain local and state governmental approvals
Often includes Environmental Impact Studies
Impact to wetlands, birds (especially raptors)
NIMBY component
View sheds
Negotiate lease arrangements with ranchers, farmers, Native American tribes, etc.
Annual payments per turbine or production based
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Wind Farm Development
Power Purchase Agreements (PPA)
Must have upfront financial commitment from utility 15 to 20 year time frames Utility agrees to purchase wind energy at a set rate
e.g. 4.3¢/kWh
Financial stability/credit rating of utility important aspect of obtaining wind farm financing
PPA only as good as the creditworthiness of the uitility Utility goes bankrupt – you’re in trouble
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Wind Farm Development
Connectivity to the grid
Obtain approvals to tie to the grid
Obtain from grid operators – WAPA, BPA, California ISO Especially since the grid is operating near max capacity
Power fluctuations stress the grid
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Wind Farm Development
Financing
Once all components are settled…
Wind resource Zoning/Public Approval/Land Lease Power Purchase Agreements (PPA) Connectivity to the grid Turbine procurement Construction costs
…Take the deal to get financed
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Financing Revenue Components
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Source: Hogan & Hartson, LLP
Closing the Deal
Small developers utilize a “partnership flip”
Put the deal together Sell it to a large wind owner
e.g. Florida Power & Light, AEP, Shell Wind Energy, PPM – Scottish Power Shell and PPM jointly own Lamar wind farm
Large wind owner assumes ownership and builds the wind farm
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Wind Policy
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Wind Farm Economics
Federal government subsidizes wind farm development in three ways
1.9 ¢/kWh production tax credit
33.5% subsidy
5 year depreciation schedule
29.8% subsidy
2.6% subsidy
Depreciation bonus
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Tax Incentives Issues
Small developers can’t fully use federal tax credits or accelerated depreciation
They don’t have a sufficient tax liability Example
A 200 MW wind farm can generate a $12.6M tax credit/year
Small developers don’t have sufficient access to credit to finance a $200M+ project
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Production Tax Credit
1.9¢/kWh Production Tax Credit
First 10 years for producing wind generated electricity Wind farm must be producing by 12/31/07 PTC has been on again/off again since 1992 Results in inconsistent wind farm development
PTC in place – aggressive development PTC lapses – little or no development
The PTC puts wind energy on par with coal and significantly less than natural gas
When natural gas > $8.00/MMBtu
Current prices: $10 – $15/MMBtu
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Wind Power Policy
Renewable Portfolio Standard
21 States have them Colorado’s Amendment 37
Passed by voters November 2004 3% of generation from 2007 - 2010 5% of generation from 2011 - 2014 10% of generation by 2015 and beyond
4% of renewable generation from solar PV 96% of renewable generation from wind, small hydro and biomass Small utilities can opt out of program
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Renewable Energy Credits
You subsidize wind energy when produced by another utility
CU pays $0.006/kWh to Community Energy
To power the UMC, Wardenburg and the Recreation Center
Community Energy uses these funds to subsidize wind energy at wind farms in Lamar and in the upper Midwest Although CU isn’t getting the electrons from these wind farms, it is in effect buying wind energy The three new buildings (Business, Law, and Atlas) will also be powered by wind energy
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Inconsistent Policy Unstable Markets
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Source: American Wind Energy Association
Future Trends
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Expectations for Future Growth
20,000 total turbines installed by 2010 6% of electricity supply by 2020
100,000 MW of wind power installed by 2020
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Future Cost Reductions
Financing Strategies
Manufacturing Economy of Scale
Better Sites and “Tuning” Turbines for Site Conditions Technology Improvements
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Future Tech Developments
Application Specific Turbines
Offshore Limited land/resource areas Transportation or construction limitations Low wind resource Cold climates
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The Future of Wind - Offshore
•1.5 - 6 MW per turbine •60-120 m hub height •5 km from shore, 30 m deep ideal •Gravity foundation, pole, or tripod formation •Shaft can act as artificial reef •Drawbacks- T&D losses (underground cables lead to shore) and visual eye sore
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Wind Energy Storage
Pumped hydroelectric
Compressed Air Energy Storage
Georgetown facility – Completed 1967 Two reservoirs separated by 1000 vertical feet Pump water uphill at night or when wind energy production exceeds demand Flow water downhill through hydroelectric turbines during the day or when wind energy production is less than demand About 70 - 80% round trip efficiency Raises cost of wind energy by 25% Difficult to find, obtain government approval and build new facilities Using wind power to compress air in underground storage caverns Costly, inefficient
Salt domes, empty natural gas reservoirs
Hydrogen storage
Use wind power to electrolyze water into hydrogen Store hydrogen for use later in fuel cells 50% losses in energy from wind to hydrogen and hydrogen to electricity 25% round trip efficiency Raises cost of wind energy by 4X 82
U.S. Wind Energy Challenges
Best wind sites distant from
Wind variability
population centers major grid connections
Non-firm power
Can mitigate if forecasting improves Debate on how much backup generation is required Cape Wind project met with strong resistance by Cape Cod residents Sea floor drops off rapidly on east and west coasts
NIMBY component
Limited offshore sites
Intermittent federal tax incentives
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North Sea essentially a large lake
Nantucket Project
130 turbines proposed for Nantucket Sound
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Hawaiian Wind Farm “Shock Absorber”
Install on 2.4 MW wind farm on Big Island of Hawaii Utilizes superconducting materials to store DC power “Suddenly” increased and decreased wind power output Likely to loose efficiency due to AC-DC-AC conversions
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"Utility Scale Wind on Islands," Refocus, Jul/Aug 2003, http://www.re-focus.net
Where Can Coloradans Buy Wind?
Clean and Green is a Boulder-based, national membership organization that supports current and future community-based wind farms around the country. Individuals and businesses can sign up for customized levels of wind energy credits based on your unique needs. www.CleanAndGreen.us or call (303) 444-3355 Founded in 1999, Community Energy is one of the nation's leading wind developers and suppliers of renewable energy credits. Community Energy offers NewWind Energy credits from the 7.5 MW wind farm located in Southeast Colorado owned jointly by Lamar Light & Power and Arkansas River Power Authority. Purchase NewWind Energy credits starting at $4 per month for 200 kWh. www.NewWindEnergy.com or call 1 (866) WIND-123
Based in Boulder, Renewable Choice Energy is a leading provider of wind energy credits from wind farms across the country. You can purchase wind credits starting at $5/month (250kWh). We’ve partnered with the local Whole Foods Market to offer a free $20 or $50 gift card for new wind customers. www.RenewableChoice.com or get info at Whole Foods Market in Boulder or call 1 (877) 810-867010-8670
Since 1997, Xcel Energy's Windsource® program has provided customers with a clean renewable energy option that helps protect Colorado’s environment. Xcel Energy’s Windsource program and is the largest wind green pricing program in the United States. Customers pay a slight premium for 100% clean, wind energy from Colorado wind farms. Windsource in Colorado is Green-e certified by the Center for Resource Solutions. Windsource costs $0.97 per 100 kWh block in addition to your regular energy charge. www.xcelenergy.com/windsource-co or call 1(800) 824-1688.
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