Microsoft UWIG_Economicsx AW 7720/00 UWIG Economics

User Manual: AW 7720/00

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Distributed Renewable Economics

5/23/2013

1

Economics of Distributed

Renewable Projects

Wind Interconnection Workshop

Golden, CO

May 22, 2013

Tom McDermott, tom@meltran.com

MelTran, Inc.

2

Power Wind Speed Cubed

= relative air density

R = swept area radius

v = wind speed

Cp= coefficient of

performance

G= generator eff.

B= bearings/gearbox eff.

-k= tip speed ratio

2 3 4 5 6 7 8 9 10 11 12 13 14 15

0.1

0.2

0.3

0.4

0.5

0.5

0

Cp-k4



Cp-k2



Cp-k1



Cp-k0



Cp-k1



Cp-k2



Cp-k5



Cp-k7.6



Cp-k10



Cp-k15



Cp-k25



Cp-k45



152 -

k

BGp

CRP



 32

2

1

Distributed Renewable Economics

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3

Sample WTG Power Curves

4

Top Turbine Suppliers

Source: AWEA 2012 Executive Summary Report

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5

Turbine Power Curve Library

Model kW Model kW Model kW

Acciona AW77 / 1500 1500 Gamesa G52-850 850 Northwind 100/19 100

AOC 15/50 65 Gamesa G80-2.0 2000 Northwind 100/20 100

Clipper C100 / 2500 2500 Gamesa G83-2.0 2000 NorthWind 100/21 100

Clipper C89 / 2500 2500 Gamesa G87-2.0 2000 RePower MD77 / 1500 1500

Clipper C93 / 2500 2500 GE 1.5 s/se 1500 RePower MM70 / 2000 2000

Clipper C96 / 2500 2500 GE 1.5 sle 1500 RePower MM82 / 2000 2000

Entegrity EW15 / 65 65 GE 1.5 xle 1500 RePower MM92 / 2000 2000

Fuhrlander 1500/70 1500 GE 2.5 xl 2500 Suzlon S64 / 1250 1250

Fuhrlander 1500/77 1500 MWT 92 / 2400 2400 Suzlon S64 / 950 950

Fuhrlander 2500/100 2500 MWT 95 / 2400 2400 Suzlon S66 / 1250 1250

Fuhrlander 2500/80 2500 NEG Micon 48 / 750 750 Suzlon S88 / 2100 2100

Fuhrlander 2500/90 2500 NEG Micon 52 / 900 900 SWT-1.3-62 1300

Fuhrlander FL100 100 NEG Micon 54 / 950 950 SWT-2.3-82 2300

Fuhrlander FL1250 1250 NEG Micon 72 / 1500 1500 Vestas NM82 / 1650 1650

Fuhrlander FL250 250 Nordex N100 / 2500 2500 Vestas V15 / 75 75

Fuhrlander FL30 30 Nordex N60 / 1300 1300 Vestas V27 / 225 225

Fuhrlander FL600 600 Nordex N80 / 2500 2500 Vestas V47 / 650 660

Fuhrlander MD 70 / 1500 1500 Nordex N90 / 2300 2300 Vestas V80 / 1800 1800

Fuhrlander MD 77 / 1500 1500 Nordex S70 / 1500 1500 Vestas V90-3.0 / 3000 3000

Nordex S77 / 1500 1500

Wind Production

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7

Distributed Wind Economics

•Capacity Factor: Determines Energy Production

•Look at Wind as an Energy Source, not Capacity

•Tax Incentives: Enhance the cash flow

– Production Tax Credit (PTC)

– Clean Renewable Energy Bonds (CREB)

•Grants and other incentives may be available

•Plus the usual considerations

– Debt and Equity financing

– Insurance, O&M, tax requirements

– Evaluate by net present value (NPV), internal rate of return (IRR),

payback period, etc.

8

Economic Screening Applet

•Based on NREL’s WindFinance

– http://analysis.nrel.gov/windfinance/login.asp

•UWIG Added:

– Power Curve download for the Feeder Simulator

– Sensitivity Analysis: 1 output vs. 2 inputs

– Almost 60 Power Curves

– Temperature Effect on Air Density

– Grant Effect on PTC and Depreciation

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Economics: Base Case

•7 Input

Screens

•Saves Data

on the

Server

•Sample

Files on the

Server

10

Wind Cost Guidelines

•Capital: $2.2 (+/- 50%) million per MW capacity

•O&M: either $15-25/kW, or $0.005-0.01/kwhr

•Site Royalty: either $2.5-4.0 thousand per MW, or

3% of annual revenues

•Insurance: 0.25-1.0% of capital cost, annually

•Property Tax: check state and local laws

•Local Incentives: enter a Grant Percentage under

“Financing Assumptions”

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11

Wind Capacity Factor

•Energy = CF * (8760 hrs/yr) * (kW rating)

•Wind speeds are variable

– Power depends on speed3

– Actual site measurements are best

•Electrical power output depends on the turbine

and interface design

– Complicated function of aerodynamics and controls

– Controls are generally considered proprietary

12

Wind Capacity Factor Projections

Capacity Factor by Installed Year and Wind Class

0.00

10.00

20.00

30.00

40.00

50.00

60.00

2000 2005 2010 2015 2020

Installed Year

Capacity Factor

Class 3 Class 4 Class 5 Class 6 Class 7

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Wind Capacity Factor Module

•Wind Data:

– Actual Measured

Distribution

– Measured Average

Annual Speed

– Average Annual

Speed from a Map

•Power Curve:

– Specific

» From Library

» Uploaded

– Generic

14

Heights, Elevation, and Shear Factor

Elevation (A) [km]

exp( /8.6)A





Wind Speed

Height

Shear

hub

hub ref

ref

H

VV

H



















Hhub

Relative Air Density: Href

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Shear Factor Guidelines

•0.10 Water

•0.14 Low grass or steppe

•0.20 Rural with obstacles

•0.25 Suburbs and woodlands

•Measurements at 100 m reference height can look

much better than at 50 m reference height

16

Relative Air Density

•Power Curves are for standard 1.225 kg/m3

– Elevation is 0 m, Temperature 15 °C or 288.15 °K

•Correction for Elevation only:

5.2588

288.15 0.0065

1.225 288.15

h















•m) = 1.000

•m) = 0.887

•“Lapse Temperature” at 1000 m is 281.65 °K

•Earlier version used 4.256 exponent

–m) = 0.9074

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Effect of Temperature w/ Elevation

•Correction for both Elevation and Temperature:

exp

1.225

o

P

gh

R

TRT









 



•P0=101325, R=287.05, g=9.80665, T=273.15 + °C:

288.15exp 29.271

h

TT











Example T = 0 °C T = 15 °C

h = 0 m 1.0549 1.0000

h = 1000 m 0.9309 0.8882

18

www.windpoweringamerica.gov/pdfs/wind_maps/us_windmap.pdf

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Wind Capacity Factor Data Sources

•Wind Speeds

– www.nrel.gov/wind/resource_assessment.html

– Links to state maps, or national map if no state map

•Elevation

– earth.google.com (requires a download)

– www.earthtools.org (no download)

•Temperature

– www.weatherbase.com (by month)

•Turbine Power Curves

– Google for the vendor’s brochure

– www.inl.gov/wind/software/ (Excel spreadsheets)

Solar Production

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Photovoltaic Generation

Inverter Based Interface

•Control Interactions?

•Cloudy Day Variability

•Limit Secondary Unbalance

to 20% of Transformer Rating

Source: Charlie Williams, S&C

22

Distributed PV Economics

•“Capacity Factor” still crucial:

– Technology and cell type

– Latitude, azimuth, tracking systems

– Temperature dependence

– Summer peaking vs. typical winter peaking for wind

– Daytime peaking vs. typical night peaking for wind

•No Production Tax Credit

•Other Tax Credits May Apply

•Financing and Cash Flow Considerations

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PV Angle Effects

•Best elevation depends on latitude and season

•Best azimuth depends on time of day

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PV Cell

0exp 1

pv L

qV

III kT























•p-n junction (diode)

•Trapped photons

create electron/hole

pairs and current

26

Maximum Power Point Tracking

0 100 200 300 400 500 600

0

4

8

12

16

20

24

100%

80%

60%

40%

20%

Vpv [Volts]

Ipv [Amps]

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MPPT In Steady State

0 100 200 300 400 500 600

0

210

3



410

3



610

3



810

3



110

4



1.2 104



100%

80%

60%

40%

20%

Vpv [Volts]

Power [Watts]

28

PV System

•Bypass failed modules and strings

•Performance degraded by temperature, shading, dirt

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MPPT Almost Linear Output

0 20 40 60 80 100

0

210

3



410

3



610

3



810

3



110

4



1.2 104



Irradiance [%]

Max Power [W]

30

PV Capacity Factor Data Sources

•HOMER, www.homerenergy.com

•NREL In My Back Yard (IMBY)

www.nrel.gov/eis/imby/

•SEPA Solar Tools at www.solarelectricpower.org

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Incentives

32

Types of Incentives

•Fixed Quantity

– United Kingdom, Australia, Italy, Netherlands

– State Renewable Portfolio Standards (RPS) would fall into this

category

•Fixed Price

– European “Feed-In” laws, guaranteed % of retail price

•Production Tax Credit

– United States at the Federal level

•Clean Renewable Energy Bond (CREB)

– For non-taxable entities, a zero-interest loan

•Grants – USDA and others

•Check state & local tax incentives

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Production Tax Credit (PTC)

•Energy Policy Act of 1992 – 1.5 ¢/kWhr

•Has been extended eight times

•Adjusted for inflation – currently 2.3 ¢/kWhr for Wind

•Lasts for 10 years

•Must pay federal income taxes in order to use the PTC

– Equivalent REPI for non-taxable entity, under-funded at about

$5M annually

•Currently expires on December 31, 2013

–Project must have started construction by that date

34

Renewable Energy Production

Incentive (REPI)

•Direct payment for public utilities that don’t pay

taxes, and would not benefit from PTC

•“Equivalent” to PTC, currently 2.1 ¢/kWhr

•Congress must appropriate REPI funds annually:

– Competes with other funding priorities

– May not be able to obtain the full REPI payments

– Tier 1 (Wind & Solar) 33% paid in 2009

– Tier 1 last paid 100% in 2003

•Varied from $3.7M to $5M from FY2000 through

FY2009

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Clean Renewable Energy Bonds

•A “tax credit bond” for municipals, cooperatives, tribal governments,

others who can’t use PTC

•Issuer pays no interest; instead the bondholder receives a Federal tax credit

•Energy Tax Incentives Act of 2005 authorized $800M for CREBs issued in

2006 and 2007

– Up to $500M for government organizations

– 786 Applications Filed by April 26, 2006

– 610 Approved; 112 for Wind and 434 for Solar

•Tax Relief and Health Care Act of 2006

– Extended CREB another $400M (Total $1.2B)

– Up to $750M for government organizations

– Extended CREB to December 31, 2008

– Applications Were Due at IRS by July 13, 2007

– Fully Allocated by the end of 2007

36

“New” CREBs

•Two 2008 Acts, plus 2009 Recovery Act

– $800M each for government, cooperatives, public power

– Reduced the payments; may need to offer at discount

•Applications due August 4, 2009; awards made:

– Government: $800M in 739 projects (smallest-to-largest

allocated from $3068M in 997 applications)

– Cooperatives: $609M in 31 projects (may have a followup)

– Public Power: $800M in 35 projects (pro rated from

$1446M in 38 applications)

– So, about $191M was left over (now gone)

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New CREB Credit Rate Schedules

https://

www.treasurydirect.gov/

GA-SL/SLGS/

selectCREBDate.htm

38

Renewable Portfolio Standards (RPS)

(www.dsireusa.org has summary maps of other incentives)

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RPS with Solar/DG Provisions

40

State Net Metering Policies

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3 MW 3 * 1 MW for Net Metering

Source: Neil LaBrake, Jr., National Grid

42

Performance Based Incentives

•MA – 400 MW Solar Carve Out

– Qualifying facilities sell Solar Renewable Energy

Certificates (SREC) with 30.0¢/kwhr floor price

– Solar Alternative Compliance Payment (SACP) for the

state RPS; 55.0¢ 36.5¢/kwhr over 10 years

•NY – Solar/Biogas Near NYC; Apply for up to 50%

installed costs, up to $3M per applicant

•NJ – has an SREC and SACP program for PV

– 10 – 20% up-front grant for wind, biogas, LFG

•CA – feed-in tariff for PV, around 1.4x CC gas

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Some Other MA Incentives

•Commonwealth Solar II Rebates: 40 – 85¢/W for

1 kW – 15 kW Residential/Commercial PV

•Personal Tax Credit: up to $1K for PV & Wind

•Property Tax Exemption: 20 years for PV, Wind

and Hydro

•Community Wind Grants: $30k for 2 MW, at least

3 turbines

•Sales Tax Exemption: Renewable Energy Equip.

Screening

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PTC In WindFinance

PTC used to be 1.9 cents, is now actually 2.3 cents / kWh

“Incentive Inflation Rate” approximates this growth

46

CREB In WindFinance

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Grants in WindFinance

48

Effect of Grants on PTC

USDA and other Federal grants offset the PTC

– The PTC offset is capped at 50%

Example: project cost of $1.8M with $500K Grant

1800 500

2.1 1.52

1800

PTC 









Most state grants don’t offset the PTC, so you have

to make this adjustment manually depending on the

type of grant

All grants reduce the depreciable basis for MACRS

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49

Discounted Cash Flow Analysis

Future Dollars Worth Less than Present Dollars

– You Could Have Earned Interest on Present Dollars

Net Present Value (NPV) is the sum of all future cash

flows back to the starting year

Internal Rate of Return (IRR) is the interest rate that

makes NPV Zero

Payback is the time period for zero NPV

(1 )n

FV

PV rate



50

Present Value Example

•10 years, 5% interest rate

•(1.05)10 = 1.6289

•FV – multiply by 1.6289

– $1000 today grows to $1628.90 in 10 years

•PV – divide by 1.6289

– $1000 in 10 years has a present value of $613.91 today

•IRR – if you invest $1000 today and then have

$1628.90 in 10 years, your internal rate of return

was 5%

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NPV, IRR, and Payback Example

•NPV

– $3,696K

– @ 15.22%

•Payback

– 5 years

– @ 15.22%

•IRR

– 19.46%

52

Economics: Sensitivity Analysis

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HOMER Modeling

•Started at NREL

•Spun off to www.homerenergy.com

•Free download version 2.68

•Capabilities:

– 8760-hour energy balance simulation of loads and

sources

– Optimization and sensitivity analysis of costs

– Models of PV output, wind output, batteries, and diesel

generator dispatching

– No electrical simulation, CREB or PTC analysis

54

When to Use WindFinance or Homer?

•WindFinance

– More detailed effects on Wind Capacity Factor

– Effects of PTC, CREB, Grants, Taxes, Loans, etc.

– Larger single projects

– More Turbines in the library

•HOMER

– 8760 Energy simulations with Load and Pricing

– How many wind turbines, PV arrays, batteries, etc.?

– PV Capacity Factor estimates

– Hydro, Biomass, and Fuel Cells

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NREL In My Back Yard (IMBY)

•http://www.nrel.gov/eis/imby/ and then click

•“Use IMBY Now”

– Find your home address, choose Solar energy

– Draw a PV panel on your rooftop, Run the simulation

– After the initial results appear, choose a nearby sample

load profile and Run the load profile

– Switch to Wind energy, place a Generic 3-kW wind

turbine nearby, and Run. The capacity factor is your

annual production, divided by (3*8760).

56

Workshop Links for Exercises

•http://www.uwig.org/distwind/Default.htm

•Your login credentials are based on the two-digit

computer number, on the “ETRAIN” label

– User Name = goldnguest??

– Password = guest??#

– Where ?? is the computer number, with a leading zero

if necessary (e.g. goldnguest02 and guest02#)

•For the new toolbox developmental version

–http://www.meltran.com/uwig/DGToolBox.html