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SUPPORTING WIND POWER

POWER TAKETAKE-OFF IN THE


SARI/ENERGY REGION
Energy Security Report
USAID South Asia Regional Initiative for Energy
(USAID SARI/Energy)
Contract Number 386-C-00-07-00033-00; Task Order 2.8

April 7,
7, 2011
This publication was produced for review by the United States Agency
for International Development. It was prepared
prepared by Tetra Tech.

SUPPORTING WIND POWER TAKEOFF IN THE SARI/ENERGY REGION


Energy Security Report
USAID South Asia Regional Initiative for Energy
(USAID SARI/Energy)
Contract Number 386-C-00-07-00033-00; Task Order 2.8
April 7, 2011
Prepared for:
Prepared by:
USAID/India
American Embassy
New Delhi - 110 021, INDIA
Tel: +91-11-2419-8000
www.usaid.gov

Tetra Tech
DLF Cyber City
Building No. 9B, 11th Floor
Gurgaon 122 002, INDIA
Tel: +91 124 473 7400
Fax: +91 124 473 7444
Tetra Tech, Inc.
4601 North Fairfax Drive
Suite 601
Arlington, VA 22203, USA
Tel: + 1 703- 387-2100
www.tetratech.com

Disclaimer
The authors views expressed in this publication do not necessarily reflect the views of
the United States Agency for International Development or the United States
Government.

EXECUTIVE SUMMARY
While over 11,807 MW of wind power installed (that is, commissioned) capacity have been
developed in India, the combined installed capacity of the remaining SARI/Energy countries
Pakistan, Bangladesh, Afghanistan, Nepal, Sri Lanka, Bhutan and Maldives is less than 40 MW.
The lack of a supportive renewable energy policy framework and knowledge of how to develop,
finance and build wind projects accounts for much of South Asias paucity of wind power
projects.
As the regions non-India project development pipeline grows to some 3,000 MW, the
likelihood of wind power projects moving into the construction phase will be influenced by at
least four factors:






The presence of supportive government policies promoting the development of wind power
(these include, for example, policies on access to wind resource data and ease of permitting
for wind masts)
Interest by developers
The availability of capital for wind power projects
Whether developers have access to sufficient knowledge and experience in wind project
development.

This third issue of the Energy Security Report white paper series is devoted to the
implementation of wind power projects in SARI/Energy countries. It was conceived by the
USAID/SARI Energy team as a result of discussions with energy sector policy makers in the
region, notably Maldives, Nepal, Pakistan, and Sri Lanka, all of whom are launching wind
programs. In addition, USAID sponsored a regional workshop, Supporting Wind Power Takeoff in the SARI/Energy Region, in September 2010 in Colombo, Sri Lanka, which brought
together developers, equipment supply firms, and other wind power stakeholders who
discussed the issues they are facing.1

This workshop not only resulted in an increased understanding of these issues but also moved key stakeholders
to take the first steps towards implementing wind farms in their countries. An additional outcome was progress
towards the development of national wind energy maps. Each country delegation worked with instructors and
other workshop participants to develop a high-level road map together with the Asian Development Bank
speakers. The highest priority actions for governments and donor agencies are to focus on improving wind

Supporting Wind Power Take-off in the SARI/Energy Region

The paper provides policy and technical insights on the development process and
implementation guidance for onshore wind power projects for governments, project
developers and other stakeholders. It is intended to serve as a guide to current and upcoming
wind developers in the SARI region on how to navigate through the various technical,
commercial and policy issues involved in setting up a wind farm, both to spur development and
reduce development times.
The wind power project development process is highly involved, requires inputs from experts
across many disciplines, and can take a few years to complete (less if clear policies and
guidelines are in place). The project lifecycle is not set in stone it will vary for each country
and project site, but the basic steps outlined in this report are applicable for any developer.
This report is designed to provide information on a number of topics and hence, each section
can be viewed as a topic briefing and may be reviewed individually. The topics covered include:










An overview of wind power in the SARI/Energy region


A discussion of the wind power project development cycle
A step-by-step approach to site and wind resource assessment, including basic
calculations to determine annual energy output
Basics of wind turbine technology and turbine selection issues
An overview of grid connection issues, including the technical and process issues for
interconnecting wind power plants
Standard grid codes and connectivity standards
Typical financial model requirements
Use of the Clean Development Mechanism in project development.

The annexes provide additional information and checklists that are useful for project
developers and government agencies seeking to promote projects.

resource assessment and capacity development for government policy makers around policies and regulations to
foster project implementation.

Supporting Wind Power Take-off in the SARI/Energy Region

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ACKNOWLEDGEMENTS
This report provides prospective developers, professional service organizations, and
government stakeholders with a picture of the complexities and steps required to develop a
wind project in South Asia. The impetus for this study came from two sources. The first was
India, which developed a wind industry only in the 1990s, but has now installed almost 10,000
MW of wind energy capacity and built an institutional infrastructure for wind that allows for
further growth. The second was the Asian Development Banks conference: Quantum Leap in
Wind Power in Asia: Context, Barriers and Objectives, held in Manila during June 2010. This
conference showed that proper project formulation results in much shorter development cycles
and strong investments.
The task team comprised Shri. V. Subramanian (Secretary General), Shri Manish K. Singh
(Secretary) and other staff from the Indian Wind Energy Association (InWEA); and Amit Dalal,
Ajay Jain, Michael Hajny, Mustafa Jamal, and Wynne Cougill (Tetra Tech ENE). The report
benefited from suggestions by members of the Asian Development Banks team, including
Jitendra Shah and Soren Krohn, as well as Pramod Jain of Innovative Wind Energy, Inc.
The team would also like to acknowledge the many wind energy specialists and practitioners
from Tetra Tech, Inc. and particularly, Ms. Anntonette Alberti, Vice President for Commercial
Energy, for sharing their insights, case studies and information that contributed to the
development of this document.
Special thanks to Srinivasan Padmanabhan, Senior Advisor Energy to USAID and the Regional
Program Director of USAIDs SARI/Energy Project.
Finally, the team members would like to express their gratitude to Ms. Bhakti Narang Bhowmik
of Tetra Tech for organizing and delivering the successful workshop Supporting Wind Power
Take-off in the SARI/E Region, which was held in Colombo, Sri Lanka, on September 22 - 24,
2010.

Supporting Wind Power Take-off in the SARI/Energy Region

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Supporting Wind Power Take-off in the SARI/Energy Region

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ACRONYMS
ADB
AEDB
AEP
BOO
BPTA

Asian Development Bank


Alternative Energy Development Board (Pakistan)
annual energy production
build-own-operate
bulk power transmission agreement

CDM
CDM EB
CFD
CER
CERC

Clean Development Mechanism


Clean Development Mechanism Executive Board
computational fluid dynamics
certified emission reduction
Central Electricity Regulatory Commission of India

CIGRE
CO2
CUF
DANIDA
DFIG

Conseil International des Grands Reseaux Electriques / International Council


on Large Electric Systems
carbon dioxide
capacity utilization factor
Danish International Development Agency
Doubly fed induction generator

DNV
DPR
DSCR
EIA
EHV

Det Norse Veritas


detailed project report
debt service coverage ratio
environmental impact assessment
extra-high voltage

EPC
FIT
GBI
GHG
GtZ

engineering, procurement and construction


feed-in tariff
generation-based incentives
greenhouse gas
(Deutsche) Gesellschaft fr Technische Zusammenarbeit; German Socieity
for Technical Cooperation

HV
IEA
IEC

High Voltage
International Energy Agency
International Electro-technical Commission

Supporting Wind Power Take-off in the SARI/Energy Region

INR
IPP

Indian Rupee
independent power producer or project

IRR
JI
kV
kW
kWh

internal rate of return


joint implementation
kilo Volt
kilo Watt
kilowatt hour; same as units

LDC
LKR
LVRT
m
MEASBET

Load dispatch center


Sri Lankan Rupees
Low-voltage ride through
meter (length, height)
the International Network for Harmonized and Recognized
Wind Energy Measurement

MIGA
MNRE
MV
MW
NPV

Multilateral Investment Guarantee Agency (of the World Bank)


Ministry of New and Renewable Energy of India
Medium Voltage
Mega Watt
Net present value

O&M
OEM
ONGC
NOC
PCN

Operations and maintenance


Original equipment manufacturer
Oil and Natural Gas Company of India
No objection certificate
Project Concept Note

PDD
PERT
PLF
PMG
PPA

Project Design Document


Project Evaluation and Review Technique
plant load factor
Permanent magnet generator
power purchase agreement

Pxx, P50, etc.


R&D
RCEMH
RE
REC

Exceedance probability
research and development
Regional Centre for Excellence in Micro-Hydropower (Nepal)
renewable energy
Renewable Energy Certificate

ROE
RPS
Rs
SARI/Energy

return on equity
Renewable Portfolio Standards
Indian Rupees, same as INR.
South Asian Regional Initiative for Energy

Supporting Wind Power Take-off in the SARI/Energy Region

vi

SCADA

Supervisory Control and Data Acquisition

SIL
SMB
SO2
S3IDF
SWOT

surge impedance loading


social merchant bank
sulfur dioxide
Small-Scale Sustainable Infrastructure Development Fund
Strength, weakness, opportunity, and threat

TSO
TSP
TSU
Unit
UNFCCC

Transmission system operator


transmission service provider
transmission system user
same as kWH
United Nations Framework Convention on Climate Change

WAsP
WEG
WRA
WTG

Wind Atlas Analysis and Application Program


wind electric generator
wind resource assessment
wind turbine generator

Supporting Wind Power Take-off in the SARI/Energy Region

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Supporting Wind Power Take-off in the SARI/Energy Region

viii

CONTENTS
1.

Introduction / 1
1.1
1.2
1.3
1.4

2.

The Challenges to Wind Energy Development in South Asia / 1


The Benefits of Wind Energy Development / 3
The Future for Wind Energy Development / 4
Report Organization / 5

Status of Wind Power in SARI/Energy Countries / 7


2.1
2.2
2.3

Installed Base and Development Pipeline / 7


Policy Status and Trends / 9
Policy Road Map / 11

3.

Wind Power Lifecycle/ 15

4.

Site Selection and Wind Resource Assessments / 19


4.1
4.2
4.3
4.4

5.

Basic Calculations to Determine Wind Power / 20


Making Accurate Wind Speed Measurements / 21
Availability of Infrastructure / 26
Climatic and Environmental Considerations / 28

Technology/Turbine Selection / 31
5.1
5.2
5.3
5.4
5.5
5.6
5.7
5.8
5.9

Wind Turbine Technology / 35


Wind Turbine Selection / 35
Site Selection / 36
Computer Modeling / 36
Constraints / 36
Commissioning, Operation and Maintenance / 35
Scope of Routine Operation / 37
Preventive and Predictive Maintenance / 38
Ranking Methodology / 38

Supporting Wind Power Take-off in the SARI/Energy Region

ix

5.10

6.

Grid Interconnection / 43
6.1
6.2
6.3
6.4
6.5
6.6
6.7
6.8
6.9
6.10

7.

Cost Structure / 55
General Parameters of a Wind Financial Model / 56

Financial Model for Wind Power Projects / 67


8.1
8.2
8.3
8.4

9.

Transmission / 44
System Impact Study / 46
Frequency Control / 47
Reactive Power Management / 48
Harmonics and Voltage Flicker / 49
Protection Scheme / 49
Metering and Communication Requirements / 49
Supervisory Control and Data Acquisition / 50
Balancing and Settlement Code / 50
Regulatory Requirements / 51

Grid Code and Connectivity Standards / 55


7.1
7.2

8.

The Economics of Wind Power / 39

Feasibility Report / 67
Detailed Project Report / 68
Preparing the Bid Document / 69
Evaluating Bids / 71

CDM for Wind Projects 73


The CDM Project Cycle / 74
9.2
Baseline / 75
9.3
Wind Energy and CDM / 75
9.4
Current Issues / 76
9.5
Voluntary Emission Reductions: A Feasible Alternative / 78
9.6
CDM Best Practices / 79

Supporting Wind Power Take-off in the SARI/Energy Region

Appendices
A.
B.
C.

Wind Project Development Checklists / 81


The SARI/Energy Program / 99
Case Studies / 103

D.

Offshore Installations / 107

E.
F.

Selected References / 111


Vendor Contact Information / 115

Supporting Wind Power Take-off in the SARI/Energy Region

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Supporting Wind Power Take-off in the SARI/Energy Region

xii

Section 1
INTRODUCTION
This third issue of the Energy Security Report white paper series is devoted to wind power
project implementation in SARI Energy countries. It was conceived by the USAID/SARI Energy
team as a result of discussions with energy sector policy makers in the region, notably
Maldives, Nepal, Pakistan, and Sri Lanka, all of whom are launching wind programs. In addition,
USAID sponsored a regional workshop Supporting Wind Power Take-off in the SARI/E Region
in September 2010 in Colombo, Sri Lanka,2 which brought together such wind power
stakeholders as developers and equipment supply firms. This white paper also addresses many
of the issues raised at the workshop.
The papers main objective is to provide policy and technical insight on the development
process as well as implementation guidance for onshore wind power projects for governments,
project developers and other stakeholders. It I intended to serve as a guide to current and
upcoming wind developers in the SARI region on how to navigate through the various technical,
commercial and policy issues involved in setting up a wind farm, both spurring development
and reducing development times.

1.1 The Challenges to Wind Energy Development in South Asia


While over 11,807 MW of wind power installed (commissioned) capacity have been developed
in India, the combined installed capacity of the remaining SARI/Energy countries Pakistan,
Bangladesh, Afghanistan, Nepal, Sri Lanka, Bhutan and Maldives is less than 40 MW. The lack
of a supportive renewable energy policy framework and knowledge of how to develop, finance
and build wind projects accounts for much of the paucity of wind power development in the
region.

The Sri Lanka Sustainable Energy Authority (SEA) co-hosted this event and the Asian Development Bank provided
speakers, which drew some 55 attendees from government, developers and equipment suppliers, policy
organizations, NGOs and project sponsors in the wind power sector of SARI countries.

Supporting Wind Power Take-off in the SARI/Energy Region

SARI/Energy recently completed two related studies: a report3 that identified barriers limiting
the development of new grid-integrated utility-scale renewable energy projects in South Asia
and proposed policies to mitigate these barriers; and, a reliability and stability study that
included wind power integration4 for the Ceylon Electricity Board (Sri Lanka). These reports
illustrate ways to overcome certain policy and project barriers.
The second SARI/Energy Energy Security Report was published in 2009. It contained a robust
analysis and evaluation of existing and recommended government policies for the promotion of
renewable energy development in SARI/Energy countries. The institutional issues are
particularly important in getting wind power projects off the ground. They include overcoming
the lack of well defined incentive structures, limited expertise and information, and other
obstacles that require concerted efforts. Although several successful models for promoting
wind through universally applicable policies are now available, the experience from a number
of countries shows that large-scale wind energy projects require a number of policy, regulatory
and utility initiatives to be executed simultaneously.
Another cross-cutting policy challenge is human resource development needed to spur a large
scale wind power development for several SARI/Energy countries. While the industry is ready
for a take-off, only India appears to have conducted a detailed assessment of the human
resource and training needs for personnel to support large scale wind project development.
This human resource can be employed directly in the industry (wind developers, turbine
manufacturing and assembly, engineering, O&M etc.) or involved through indirect means
(component manufacturing and materials supply, transport, software development, etc). A
national skills survey conducted in 2005 by The Center for Wind Power, WISE, Pune, assessed
six stages of wind power development: pre-siting activities, infrastructure, manufacturing,
assembly and erection, commissioning and O&M.
The survey found that the human resource need is influenced by three main factors:
Size of wind turbine larger machines are far more complex and need advanced
training
Advanced materials and communication equipment recent advances in metering and
communication interfaces indicate need for more advanced training and access to
technology platforms
Wind resource characterization/need for research and development adapting wind
power for local situations requires a skill in modeling, measurement and reporting
According to the survey, each MW of wind power generated about 5.7 direct jobs and 22.9
indirect jobs, with jobs related to O&M being in most demand. The survey concluded that the
main areas of policy support should be to increase applied undergraduate and graduate
3

Policy and Market Options to Increase Adoption of On-Grid Renewable Energy in SARI Countries, the report can be down loaded
from the SARI/Energy website, http://www.sari-energy.org/PageFiles/EnergyLibrary/SariResources.asp.

India Sri Lanka Submarine Cable Interconnection Project, Interconnection Reliability and Stability Study, October 12, 2010,
Chapter 12, Wind Penetration: Study of Frequency and Voltage Control Aspects; the report can be down loaded from the
SARI/Energy website, http://www.sari-energy.org/PageFiles/EnergyLibrary/SariResources.asp.

Supporting Wind Power Take-off in the SARI/Energy Region

programs in energy and renewable technology, on-the-job training by newly formed


manufacturing/assembly companies and expanding the train-the trainers approach.
In discussions with developers and renewable energy associations, it became evident that
several project barriers and bottlenecks to wind power development still persist. This report
identifies and makes recommendations on how to mitigate these risks, both spurring
development and reducing development times. From discussions with developers and other
wind power stakeholders in South Asia, the following topics were identified as being of special
interest:
Main Concerns

Stakeholders
Government
Department of
Renewable Energy
Power utility off-taker
Power project developers

Regulatory commissions
Equipment Suppliers

Project Support firms

Wind power lifecycle


Policy design to scale up investment
Technology deployment
Project performance Grid code and interconnection
Pricing
Wind Resource measurement
Incentive package
Project development rights
Land acquisition
Wind turbine testing
Financial model
Project preparation steps
Competitive and fair project procurement/bidding
Rates determination
Market access
Incentive package
Transport options
Protection of intellectual property
Modelling tools
Engineering and construction permitting
Commissioning

Where Covered in the


Report?
Chapter 1, 2, 3, 8, 10
Appendices
Chapter 4, 5
Chapter 3, 4, 5,8, 9, 10

Chapter 5, 9
Chapter 1, 2
Appendices

Chapter 3, 4, 5, 6, 7, 8

This paper is designed to provide current data, insights and best practices to stakeholders on
each of the above subjects and issues. In addition, it outlines country-specific priorities and
international best practices in wind power project preparation and development to overcome
implementation challenges.

1.2 The Benefits of Wind Energy Development


Wind power in the SARI/Energy region holds much promise. For South Asian countries that
have implemented such projects, many economic and environmental benefits are already
flowing to owners, utilities and governments. These include:

Supporting Wind Power Take-off in the SARI/Energy Region

Increased incremental energy supply without adding to the fuel import bill. Wind projects
can reduce supply/demand deficits, which seriously constrain economic growth.

More economic opportunities in rural areas. Often, wind projects are located in remote or
rural areas. This presents coincident opportunities to increase economic growth and
support infrastructure development in these areas.

Lower carbon dioxide (CO2) emissions. For countries with a large number of thermal
plants, using wind to generate electricity reduces CO2 emissions for the utility and the
nation.

Reduced sulfur dioxide (SO2) emissions. SO2 is a byproduct of burning fossil fuels like coal
and oil. In the atmosphere it reacts with other chemicals to form compounds that can cause
acid rain and other air pollutants. By displacing a 20 MW fossil-fired plant, a 20 MW wind
project can cut SO2 emissions by 120 tons each year.

Reduced use of non-renewable energy. Wind is renewed every day as the earth heats and
cools. Every kilo Watt hour of energy generated by wind saves about one pound of coal.

Reduced land use. About 5% of a wind farm site is used for the turbines, equipment and
access roads. Existing land uses, such as farming and grazing, can continue unaffected.
Conventional electricity generation requires larger footprints to obtain the fuel (e.g.,
mining, pipelines, and transportation) and generate electricity (power plants).

1.3 The Future for Wind Energy Development


The uncertainty stemming from the global financial crisis has led to a drop in new wind
installations in 2010 (see Figure 1). But surveys indicate strong growth in wind projects in
emerging markets, e.g., China, India, North Africa. Global projections for future long-term
growth are strongly positive as wind power continues to be seen as a mature, yet improving,
renewable energy technology that can increase energy security and help mitigate climate
change.

Supporting Wind Power Take-off in the SARI/Energy Region

The outlook for wind power in the SARI/Energy region looks especially promising. Many
SARI/Energy countries are facing
Figure 1. Wind Power Additions Worldwide
high costs to produce electricity and
have strong wind resources in close
proximity to their demand centers,
which strengthens the case for
large-scale wind power deployment
as a means to address long-term
energy security. In addition, these
countries are beginning to put in
place the right policies to support
their growing wind power sectors
(as Pakistan and Sri Lanka are doing)
and to complete high-level
assessments for wind power (as
Nepal and Bangladesh are doing).

1.4 Report Organization


This report is based on a review of needs expressed by South Asian project developers and
country experiences in wind power project development, and draws heavily from the
experience of India over the last ten years. Please note that this report is not meant to be
comprehensive or provide sufficient information for commercial decision making.
Each of the following sections is stand-alone and may be reviewed individually. Section 2
provides an overview of wind power in the SARI/Energy region. Section 3 describes the wind
power project development cycle. Section 4 provides a step-by-step approach to site and wind
resource assessment, including basic calculations to determine annual energy output. Section 5
discusses wind turbine technology and turbine selection issues. Section 6 gives an overview of
grid connection issues and covers the technical and process issues for interconnecting wind
power plants. Section 7 describes grid codes and connectivity standards. Section 8 describes
typical financial model requirements, and Section 9 describes the use of the UN FCCCs Clean
Development Mechanism in project development. The annexes contain additional information
and checklists that are useful for project developers and government agencies seeking to
promote projects.

Supporting Wind Power Take-off in the SARI/Energy Region

Supporting Wind Power Take-off in the SARI/Energy Region

Section 2
STATUS OF WIND POWER IN
SARI/ENERGY COUNTRIES
All SARI/Energy countries have strongly expressed their intent to harness their wind resources
for power generation. Many have completed the first phase in the development process (wind
resource mapping) and have made institutional announcements and enacted policies in
support of wind power generation.

2.1 Installed Base and Development Pipeline


Excluding India, which is now among the worlds five-largest wind power producers, Pakistan
and Sri Lanka are the SARI/Energy countries considered to be at a more advanced stage in the
wind power development process. Afghanistan, Bhutan, Nepal, Bangladesh and Maldives have
also conducted high-level wind resource assessments and are examining policies to promote
wind power project development.
Table 1 shows the 2009 installed wind power capacity and potential for each of the regions
markets.
As the project development pipeline in the South Asian region grows (see Table 2), the
likelihood of wind power projects moving into the construction phase will be influenced by at
least four factors:





The presence of supportive government policies promoting the development of wind


power (these include, for example, policies on access to wind resource data and ease of
permitting for wind masts)
Interest by developers
The availability of capital for wind power projects

Supporting Wind Power Take-off in the SARI/Energy Region

Whether developers have access to a resource pool of knowledge and experience in


wind project development.

Table 1. 2009 Installed Wind Power Capacity and Potential


Country

Wind Power Installed


Wind Power Potential
(MW)
(MW)
Afghanistan
Under 1
15,8001
Bangladesh
2
1,0002
Bhutan
Under 1
5423
India
11,807
48,561
Maldives
N/A
N/A
Nepal
Under 2
448
Pakistan
6
15,2001
Sri Lanka
33
20,0004
1
From wind class 7 (>8.5m/s) alone, 2Power cell target for 2020, 3Moderate scenario,
4
Onshore only
Source: Tetra Tech, Inc, 2010.

Table 2. Estimated South Asia Wind Project Pipeline (MW)

Country
Afghanistan

National
Target
NA

Projects
Development
Advanced
Under
Announced
Initiated
Development Construction
0
0
0
0

Bangladesh

NA

2-3

Bhutan

NA

10

50

Maldives

NA

50

50

Nepal

NA

2-3

0.3

Commissioned
0.7

Pakistan

5,000

4,850

900

150

50

Sri Lanka

34

120

80

43

20

33

10,500

3,800

850

600

NA

11,807

India*
th

Current 11 Plan target and projects announced are from the Indian Renewable Energy Development Agency,
June 2010 (projects in India are often captive and not always announced in the public domain).
Source: Indian Wind Energy Association and Tetra Tech estimates, 2010.

Supporting Wind Power Take-off in the SARI/Energy Region

2.2 Policy Status and Trends


Wind power today is increasingly price-competitive, and in some cases is cheaper than thermal
generation. This holds particularly true in countries with higher average costs of electricity
production, or where demand for electricity has overtaken supply. Both these conditions are
present in most SARI/Energy countries, which result in lost productivity, investment and
growth. Given the confluence of several market forces and regulatory incentives in the form of
attractive tariffs and other benefits, wind power development is about to take off in the
SARI/Energy region.
In Bangladesh, renewable energy is seen as a possible route to bridge the demand/supply gap,
which persists due to lack of new generation and high losses in the distribution systems. The
Renewable Energy Policy of 2008 discusses the tariff fixation for renewable energy technology,
but the methodology adopted for fixing tariffs is not yet clear enough for developers to take
interest. Further, a dedicated organization responsible for promoting wind energy is still to be
formed. Various wind power assessment studies have been conducted by Bangladesh Power
Development Board and the engineering department of an educational institute. Based on
these studies, two projects of 80 kW and 400 kW have been developed.
In Maldives, electricity tariffs range from 17 US cents/kWh for the smallest domestic consumer
to a 58 US cents/kWh marginal tariff for the largest commercial consumer (source: STELCO).
These figures exclude fuel surcharges, which can add as much as another 5 US cents to the
tariff. Further, the small diesel-powered generation plants in Maldives are inefficient, have
high emissions and pose a significant energy security risk for the country, which relies 100% on
imported fuel. The main impetus for wind power is the governments objective to have a
carbon-neutral energy sector by 2020. Two concerns prospective developers face are (a) the
risk of cyclones and (b) the inability to use long-blade turbines because of very high wind
speeds during extreme wind conditions.
In Pakistan, the government is putting much greater emphasis on renewable energy and wind
energy in particular. In May 2003, it announced that it had set a target of 10% for renewable
energy (nearly 2,700 MW) of the countrys energy mix by 2015. Pakistans Alternative Energy
Development Board (AEDB) has issued generation licenses to six projects of 50 MW each and
has concluded tariff negotiations for four wind independent power projects (IPPs) for which
NEPRA (the regulator) has announced tariffs between 10 and 13 US cents/kWh (source: AEDB).
Today, several independent power developers are negotiating energy purchase and
implementation agreements, and financial closure is expected for these by the end of 2010.
However, power supply shortages persist and power from the oil-fired Rental Power Plants
Programme, which was meant to ease a current national electricity shortfall of approximately
3,000 MW, is costing consumers between 13 and 22 US cents/kWh (source: Asian Development
Bank, ADB).

Supporting Wind Power Take-off in the SARI/Energy Region

Sri Lankas wind regime, which is located at the countrys west coast and central hills, appears
to be attractive, with wind speeds of 6-7 meters per second. A pilot wind power project was
launched in the southern region in 1999 with a capacity of 3 MW using five turbines. Three 10
MW privately owned and operated wind farms have been commissioned, and several more are
under construction or active development.
Despite these encouraging developments, the SARI/Energy region continues to face power
shortages and remains one of the most attractive markets for industrial- and utility-scale oilfired reciprocating engines. The industrial and commercial sectors in many SARI/Energy
countries remain large users of inefficient, expensive and imported diesel gen-sets, which they
perceive as the only way to guarantee reliable power for their operations.
Interestingly, several new policy incentives have been designed to spur the market for
renewable: renewable portfolio standards (RPS), renewable energy certificates (REC) and
generation based incentives (GBI).
RPS is a policy tool used to increase renewable energy generation by means of a cost-effective,
market-based approach that is administratively efficient. An RPS obligates electric utilities and
other retail electric providers to supply a specified minimum amount of customer load with
electricity from eligible renewable energy sources, like such as wind, solar, biomass, and
geothermal. The goal of an RPS is to stimulate market and technology development so that,
ultimately, renewable energy will be economically competitive with conventional forms of
electric power.
Unlike feed-in tariffs which guarantee purchase of all renewable energy regardless of cost, RPS
programs tend to allow more price competition between different types of renewable energy,
but can be limited in competition through eligibility and multipliers for RPS programs. Those
supporting the adoption of RPS mechanisms claim that market implementation will result in
competition, efficiency and innovation that will deliver renewable energy at the lowest possible
cost, allowing renewable energy to compete with cheaper fossil fuel energy sources.
While RPS is a mandate on a utility to purchase renewable energy, renewable energy credits
(REC) is a method for accounting for RPS obligations. REC is a tradable certificate for each unit
of electricity (typically one MWh) that is produced using renewable sources. RECs are sold in an
exchange, thereby monetizing the renewable property of energy generation. Typical buyers
are of RECs are utilities that are unable to meet their own RPS requirements or companies that
wish to offset their carbon footprint. In most cases, the power purchase agreement (PPA)
defines a bundled price for energy and the REC, in which case the buyer of electricity (in this
case, the utility) owns the RECs. In order to verify achievement of RPS standards, the utility
uses RECs as an accounting method. The prices of REC in an exchange is usually very volatile,
therefore it increases the uncertainty of revenue.
GBIs are a method of incentivizing the production of energy from renewable sources. GBI
takes the form of a tax credit or a direct payment for each unit of electricity produced from
Supporting Wind Power Take-off in the SARI/Energy Region

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renewable sources. When GBI is in the form of a tax credit (e.g., the production tax credit
system in the U.S.), the ownership structure becomes complex because tax equity partners are
brought in to monetize tax credits. During tough economic times, the tax liability of equity
partners is significantly reduced, which creates a shortage of funds for renewable energy
projects.
In most situations, the Feed-in Tariff (FiT) based pricing of renewable energy is the most
efficient because it provides a transparent price for a unit of electricity for investors.
Determining the level of FiT and changing it over time requires complex econometric modeling
and forecasting. Many SARI/Energy countries are using FiT principles to launch wind power
programs.
Increasingly, policy makers and developers are realizing that wind power does not create the
large-scale and far-reaching environmental and societal impacts of large thermal plants, but
through a carefully designed policy package can provide a competitive, environmentally clean
solution in many cases.

2.3 Policy Road Map


To explore the policy environment in more detail, the SARI/Energy team held a wind energy
road map session during the September 2010 wind energy conference in Colombo. This
allowed each country to:




Disseminate information on the current policy status around wind development


Rank and prioritize areas of short-term technical focus
Develop a practical roadmap for implementation.

The workshop not only resulted in an increased understanding of these issues but also moved
key stakeholders to take the first steps towards implementing wind farms in their countries. An
additional outcome was progress towards the development of national wind energy maps.
Each country delegation worked with instructors and other workshop participants to develop a
high-level road map together with the Asian Development Bank speakers. The highest-priority
actions for governments and donor agencies are to focus on improving wind resource
assessments and capacity development for government policy makers around policies and
regulations to foster project implementation.
A policy road map template was provided to all government participants from the eight
SARI/Energy countries and the group was asked to provide information on the elements shown
in Table 3.

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Table 3. Policy Road Map Development Exercise Template


10 Road Map Elements

National Wind Program


Action Item

Priority Level (Rating


1=High and 5=Low)

Interagency cooperation
Centralized authority to plan
Refine project technology
Accelerate local supply chain
Set firm targets
Develop human capacity
Work on community level
Fair access to grid
Ensure integration into grid
Assess wind resource
Government policy makers were also asked for suggestions on any additional areas of technical support
for USAID and other donors, including the ADB.

Figure 2. Summary of the Outputs from the Country Wind Project Road Map Sessions

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In summary, countries highest-priority


priority areas are improving on wind resource measurement
and developing better grid integration policies and procedures. Interagency cooperation ranks
high as a cross-cutting
cutting theme, since many of the road map elements need support from
multiple agencies.

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Section 3
WIND POWER PROJECT
LIFECYCLE
The wind power project development process (Figure 3) is highly involved, requires inputs from
experts across many disciplines, and can take a few years to complete ((less if clear
cle policies and
guidelines are in place). While the
he project lifecycle will vary for each country and project site,
all developers will need to address the basic 12 steps outlined in Figure 33.
Figure 3. Overview of the Wind Project Development Process

Source: Tetra Tech EC, Inc. Wind Energy Services and Tetra Tech ENE, 2010.
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While all twelve steps are essential, the order of a number of steps can vary, depending on the
project countrys specific rules and regulatory requirements.
Step 1: Assess Wind Resource
The most important factor to consider in the construction of a wind energy facility is the site's
wind resources, and determining these will require a thorough wind resource assessment. To
put it simply, if the wind isnt there, the project isnt feasible.
Step 2: Initial Site Visit / Land Screening
Before investing more money in a project, once the wind resource assessment is complete, it is
important to visit the site to survey the topography and identify other potential risks to the
project.
Step 3: Establish Economics
A preliminary financial model that factors costs and revenues over the projects operational life
will give a picture of the projects returns and its economic feasibility.
Step 4: Secure Access to Land
Landowners, whether private or public, will expect to be compensated for any wind energy
development that occurs on their land. Royalty or lease agreements will need to be discussed,
as will the requirements for roads, transmission equipment, maintenance infrastructure and
turbines, all of which necessitate the use of heavy industrial equipment, and will require the
cooperation of landowners and in some cases, the local community.
Step 5: Transmission Access
A critical issue in keeping costs down in building a wind farm is minimizing the amount of
transmission infrastructure that must be installed. Therefore, availability and access to existing
lines should also be a consideration in site selection.
Step 6: Environmental Impact Assessment
This assessment is needed to demonstrate that there will be no unacceptable, adverse
environmental change brought about by the project.
Step 7: Power Contract / Power Purchase Agreement
Even before investing in a bankable wind resource assessment, a developer should secure
tentative commitments from one or more buyers for the wind plants output over the 10 to 30
years of its operational lifetime. Further down the line, a power purchase agreement (PPA)
that balances risks fairly between the developer and off-taker will need to be negotiated.
Step 8: Acquisition of Required Permits
Many social and environmental factors need to be considered in wind project development.
The developer should be familiar with the regulatory (and political) environment to ensure that
the required permits can be acquired without excessive delay or cost.

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Step 9: Establish Access to Capital / Financing


Building a wind farm is not cheap. In South Asia, the total wind turbine installed costs of
around $1.6-$2.4 million per megawatt (MW) with Indian wind projects coming in substantially
lower in cost. Access to capital and the cost of capital are thus key factors. Since 2004, the
total installed cost has gone up significantly because turbines are more sophisticated and
produce a lot more energy. Hence, the levelized cost of energy, which is the cost of producing
a unit of wind energy, is more indicative of the overall project economics. Most developers and
lenders now assess the levelized cost of energy produced rather than total installed cost.
Since estimating the total energy output from a wind turbine is very different from that of a
thermal plant, lenders need to be advised of the current state-of-the-art in terms of deriving
energy estimates and the probabilities associated with these figures. Bankers without
experience in financing wind power will be hesitant to commit debt financing for projects
where they dont fully understand (and hence cannot quantify) the risks. Usually, they have
required full recourse financing5, thus limiting the pool of projects they can fund.
Step 10: Procure Equipment
Every wind turbine is different despite seemingly similar power ratings. Some machines are
designed to operate more efficiently at lower wind speeds, while others are intended for more
robust wind regimes.
Some turbines operate more quietly than others. Smaller turbines may capture less energy,
but are easier and cheaper to transport and install. A prospective wind power developer
should investigate all the various considerations and compare their performance to existing
machines.
Step 11: Construction
Wind farm construction should be carried out by an experienced engineering, procurement and
construction (EPC) provider with a team that includes civil, geotechnical, structural and
electrical experts. Mounting a 50-70 ton nacelle on tower sections that can be 250 to 300 feet
long leaves little margin for error.
Step 12: Secure Agreement to Meet Operation & Maintenance Needs
Turbine availability (reliability) is a major factor in project success, and the services of
professionals familiar with the O&M of wind turbines is essential. O&M sourced from the
original equipment manufacturer (OEM) is always preferred in new markets, but as experience
develops, non-OEM O&M providers can enter.

Describing a loan for which there is a co-signer. That is, if the borrower defaults on the loan, the cosigner becomes legally liable for repayment. Thus, in addition to any collateral that may secure the loan;
the lender is further protected from default by the existence of the co-signer. No matter what risk event
occurs, the borrower or its guarantors guarantee to repay the debt.
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As regional developers become more familiar with wind technology, the need to understand
the process steps required to implement a project that produces the desired energy becomes
important. Successful development of a wind project requires a number of complex steps and
stages, particularly in the early stages of the development process. Therefore, it is necessary to
understand the project workflow process as described in Figure 4.

Figure 4: Typical Wind Project Process and Task Workflow

Wind Transmission Screening

Land Screening

Public/Government
Acceptability Screening

Environmental/Cultural/
Engineering Screening

Potential Wind Site

Begin Discussions with Turbine


Suppliers

Define Constraints: Land,


Environmental, Cultural, Political,
Wind, & Engineering

Select Preferable Turbine


Technology

Initial Regulatory Strategy


Development
Development
Development

Conceptual Layout

Environmental & Cultural Fieldwork

Engineering Fieldwork/Constructability
Considerations
Constructability
Considerations

Engineering, Constructability,
Environmental, Wind, & Land Owner
Review
Final Horizontal Layout
Final Horizontal Layout

Federal
Permitting

State/Local Environmental
Review/permitting

Continued
Engineering Support

Land

Interconnection

Finalize Procurement of Turbines


and Long Lead Time Items

Final Construction Plans


Drawings/Contracts/Compliance
Plan
Construction

Restoration
Monitoring

Operations

Ongoing Adaptive Management

Source: Tetra Tech EC, Inc. Wind Energy Services, 2010.

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Section 4
SITE SELECTION AND WIND
RESOURCE ASSESSMENTS
Site selection is critical first step in the development cycle. A properly executed wind resource
evaluation at a given site is crucial in correctly projecting turbine performance at that site.
This process begins by consulting regional wind maps to assess sites and locations. These maps
are generated by the countrys own national meteorological service or renewable energy body,
or by organizations like the National Renewable Energy Laboratory (NREL) in the US (available
at: http://www.sari-energy.org/PageFiles/What_We_Do/wwd_solar
WindResourceAnalysis.asp) or the United Nations Environment Programme through the Solar
and Wind Energy Assessment Project (available at: http://swera.unep.net). These maps have
been used for initial resource assessments and are typically useful at the strategic level.
Although they are helpful in finding sites, these maps are generally not accurate enough to
conduct energy calculations at the project level or be used to obtain project financing.
The single-most important characteristic of a wind farm site is the wind speed, and therefore,
the formal energy prediction for a utility-scale wind farm must be modeled on data collected at
that specific site.
The commercial value of a wind farm is highly dependent on energy yield, which in turn is
highly sensitive to wind speed. Therefore, a change in wind speed of a few percent makes an
enormous difference in financial terms for both debt and equity. Thus, every effort should be
made to maximize the duration, quality and geographical coverage (extent) of data collection
across the wind farm site. In the majority of cases, the resource measurement and analysis
program are the responsibility of the wind project developer. The developer must provide a
robust prediction of the expected energy production over the projects lifetime.
During prospecting, the energy production of a wind farm can be predicted using methods such
as the Wind Atlas Methodology within the Wind Atlas Analysis and Application Program
(WAsP), which uses only off-site data from nearby meteorological stations. However, when the
Supporting Wind Power Take-off in the SARI/Energy Region

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data from nearby stations were taken only at low elevations (e.g., 10 m) or the stations are
located far from the site, such analyses are generally used only to assess the initial feasibility of
wind farm sites. It is also possible to make predictions of the wind speed at a site using a
numerical Wind Atlas Methodology based on a data source such as the re-analysis Numerical
Weather Model data sets. Again, such data are usually used more for feasibility studies than
final analyses.
The analysis for a wind resource assessment described in this section assumes the availability of
on-site wind speed and direction measurements from a relatively tall mast. Figure 5 presents a
simplified view of this process.
In reality, it will also be necessary to also iterate the turbine selection and layout design
process, based on environmental conditions such as compliance with electrical grid
requirements and turbine noise levels, and commercial considerations associated with
contracting for the supply of the turbines and detailed turbine loading considerations.

4.1 Basic Calculations to Determine Wind Power


The energy available in a wind stream is proportional to the cube of its speed, which means
that doubling the wind speed increases the available energy by a factor of eight. Additionally,
wind itself is rarely ever a steady consistent flow; it varies with time of day, season, height, and
surrounding terrain type. Siting wind turbines at a windy location and away from large
obstructions will enhance their performance.
As a general rule of thumb, wind speeds of at least 6 meters per second (m/s) are required for
utility-scale wind farm application. Wind resources exceeding this speed have been measured
in most of the South Asian countries targeted for wind development.
Wind power density, measured in watts per square meter (rotor swept area perpendicular to
the direction of wind flow), is a useful way to evaluate the wind resource available at a
potential site, and indicates how much energy is available at the site for conversion by a wind
turbine. Classes of wind power density at 50 meters above ground are shown in Table 4.
Wind speed generally increases with height above sea level. Because air becomes less dense as
elevation increases, to maintain the same power density, the wind speed at 1,000 meters
elevation would need to be 3% greater than at sea level.

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Table 4. Classes of Wind Power Density at 50 Meters Above Ground


Wind Power Class (1-7)
1
2
3
4
5
6
7

Wind Speed (m/s)


< 5.6
5.6 6.4
6.4 7.0
7.0 7.5
7.5 8.0
8.0 8.8
> 8.8

Wind Power Density (W/m)


< 200
200 300
300 400
400 500
500 600
600 800
> 800

The theoretical equation for determining wind turbine power is:


P = 0.5 * rho * A * C p * V 3 * N g * N b

Where:
P = power in watts (746 watts = 1 hp) (1,000 watts = 1 kilowatt)
rho = air density (this is ~1.225 kg/m3 at sea level, and decreases as altitude increases)
A = rotor swept area, exposed to the wind (m2)
Cp = Coefficient of performance (.35 for a good design, .59 {Betz limit} is the maximum
theoretically possible)
V = wind speed in meters/sec
Ng = generator efficiency (80% or possibly more for a permanent magnet generator or
grid-connected induction generator)
Nb = gearbox/bearings efficiency (as high as 95% for a good design).
The practical energy production is computed by mathematically merging the statistical profile
of wind speed with the power production curve provided by the manufacturer.

4.2 Making Accurate Wind Speed Measurements


4.2.1 Parameters
As stated earlier, responsibility for the resource
measurement and analysis program typically falls on the
wind developer. Where there is significant experience from
nearby (less than 1 km away) wind farms on terrain that is
simple and flat, it may be possible to use performance data
from these wind farms as a substitute for a measurement
program. However, even in these rare cases, for larger
projects it is still advisable to erect anemometry masts and
undertake a measurement campaign.
Supporting Wind Power Take-off in the SARI/Energy Region

Remote sensing is an emerging


technology for measuring wind
speed and direction that is
ground-based (does not require a
mast), and is becoming more
accurate and affordable over
time for wind farm resource
assessment. It bounces either
sound waves (Sodar) or laser
beams (Lidar) off the wind, and
uses the Doppler Shift principle
to infer wind speed at different
heights.
21

Figure 5. Wind Resource Mapping and Net Energy Output Assessment

Source: Garrad Hassan

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Anemometry Mast
A typical mast will have a number of anemometers (devices to measure wind speed) installed at
different heights on the mast, and one or two wind vanes (devices to measure wind direction).
These will be connected to a data logger, at the base of a mast, via screened cables. This whole
system is usually either powered by a battery or a small renewable energy (RE) system (solar
and/or wind). Air pressure measurement at the site is desirable but often not essential. Masts
can also have a modem or satellite link so wind data can be downloaded remotely.

Number of Masts
If the wind farm site is located on complex terrain, it will likely require multiple masts to
accurately measure the wind regime across the site, especially for a medium size or larger
project (>20 MW). On simple, flat terrain, a single mast will usually suffice.

Height of Masts
Wind speed increases with height above ground, which is why it is important to try to measure
the wind speed as close to the turbines hub height as possible. Where a near-hub height
measurement is not available, the wind shear profile (which describes how wind speed
increases with height at a given site) can be estimated in order to extrapolate using lowerheight measurements. Uncertainties are created when extrapolation is used, so efforts should
be made to ensure the gap between measurement height and hub height does not exceed 25%.
The costs of masts rise with height. Tilt-up guyed masts can be raised as high as 60-80 m.
Above that, cranes become necessary to hoist the masts and this increases costs considerably6.

Adhering to Standards and Best Practices


The International Network for Harmonized and Recognized Wind Energy Measurement
(MEASNET), the International Electro-technical Commission (IEC) and the International Energy
Agency (IEA) publish detailed minimum technical requirements for wind measurement
equipment. These resources offer valuable advice to the developer looking to produce a
bankable resource assessment, and avoid common errors like improper sensor mounting and
not individually calibrating anemometers.
In order to demonstrate the quality of the analysis, it is important that all the specifications,
calibration, installation and maintenance requirements of the equipment used for the wind
resource measurement are documented.

6
Met-masts are made of thin aluminum tubes, they are tilted up and use guy wires for support. This is the cheapest configuration.
Taller means risk of bending of these thin towers. Instead of winch, cranes are used.

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Wind Speed Distribution


Wind speed distribution is an important parameter in estimating power output because only
wind blowing at speeds above cut-in speed and below cut-out speed (4m/s and 26m/s,
respectively for a typical modern turbine) can be harnessed for power by the wind farm. Using
average wind speed by itself can be misleading because it does not capture this information.

Seasonality
Because wind is subject to seasonal variation, 12 months of wind data are an absolute
minimum requirement so that seasonality patterns are captured. A wind rose is a way to
graphically represent wind speed and direction together (Figure 6). Wind farm design is highly
dependent on what the wind rose shows. If the wind is highly unidirectional, the turbines may
be configured in tightly packed rows perpendicular to the wind. However, if the wind blows
from multiple sides for long durations, the turbines should be uniformly spaced in all directions.
Figure 6. Wind Power Rose

A Wind Rose The duration of time wind is blowing in a given direction is


represented by spoke length, and wind speed is represented by spoke
width and color.
Source: Office of the Washington State Climatologist, 2010
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Year-on-Year Variability
Wind speed can vary significantly throughout the year (Figure 7) and from one year to the next.
Hence, having wind speed data spanning a longer duration improves the energy production
estimate.
Figure 7. Typical Monthly Wind Speed Pattern

4.5
4
3.5
3
2.5
2
1.5
1

t
Se
pt
em
be
r
O
ct
ob
er
No
ve
m
be
r
De
ce
m
be
r

Au
gu
s

Ju
ly

Ju
ne

ay
M

Ap
ril

Ja
nu
a

ar
ch

0.5
0
ry
Fe
br
ua
ry

Wind Speed at 10m (m/s)

Monthly wind flow pattern

Months

Other Parameters
There are few parameters that have a direct or indirect impact on energy estimation. These
can be broadly considered as follows:






Site-specific air density


Topographic effect
Availability of grid
Availability of wind turbine
Seasonal wind variation.

4.2.2 Estimation of Power Production


There are many dedicated software programs available for estimating wind energy. The Wind
Atlas Analysis and Application Program (WAsP) developed by RISO lab, Denmark, is the most
widely used wind flow modeling software.
Information on wind resources, topography, turbine locations, site-specific power curves, etc. is
provided in specific file formats to the software. The software simulates climatology within a
Supporting Wind Power Take-off in the SARI/Energy Region

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given topography, considering available generation technology and a projects estimated


energy generation at a given location.
Today, sophisticated software using computational fluid dynamics (CFD) calculations are also
used to estimate energy more accurately. Such CFD simulations offer a virtual test
environment in which turbine designs can be subjected to site-specific operational conditions.
Models can then interpret the simulation data affecting design performance and propose
design modifications. CFD is increasingly cost-effective and is increasingly used by turbine
companies and developers to fine tune their product and support micro-siting.

4.2.3 Probability Analysis


Since wind flow is erratic in nature and sensitive to seasonal variations, significant amounts of
variations are involved in annual energy production (AEP) prognosis. Thus, it is necessary to
plot different scenarios for appropriate fund flow visibility. Financial modeling requires a
comprehensive understanding of the projects assumptions in combination with the
performance of a sensitivity analysis in order to define an agreed base case. The result of an
energy yield prediction in terms of AEP is called the P50. In laymans term, the probability of
reaching a higher or lower annual energy production is 50:50.
A risk assessment includes the quantification of the project-specific uncertainties and the whole
range of exceedance probabilities (Pxx) of the wind farms annual energy production. P75 is
the annual energy production that is reached with a probability of 75% and is lower than the
P50 estimate, to accommodate the uncertainty associated with the energy estimate. The risk
that the annual energy production of P90 is not reached is 10%. Both values are widely used by
banks and investors as the base in their financing decisions. The energy assumptions used in
the owners financial model and estimates of debt service coverage are always subject to
negotiation as part of the financing process, with international banks taking a conservative view
on energy production.

4.3

Availability of Infrastructure

Land
To acquire land with potentially economic wind resources is a major aspect of wind power
project development. It is essential for a project developer to get clear-title (litigation-free)
land for smooth project operation. Typically there are two types of land available for project
developers: private land and government land. Private land can be selected on a point basis
subject to the consent of the owner of the land. Typically, private land is bought or leased by a
developer. Government land is further categorized as forest land and revenue land, which is
typically leased to developers for certain stipulated time periods. Usually lease periods are
more than the life span of a wind power project.
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Power Evacuation
Land availability, along with the wind resource, will determine the size of the wind power
project that can be developed at a particular site.
Electricity generated at the turbine location needs to be transmitted to the substation. For this,
developers usually establish an internal grid network at a lower voltage level; at the substation
level it is stepped up to the appropriate state/province/national voltage level. The next step is
checking the availability of the nearby grid for evacuating power and checking the possibility
and viability of laying the evacuation line from the wind project to the nearest grid substation.
The length of the evacuation line and the total wind power project capacity at the site
determine the technical details for the evacuation line (such as the voltage level and type of
conductor). Since transmission loss is expected during electricity transmission, a very precise
material selection and line design are necessary to optimize the installation cost, maintenance
cost of the evacuation network, and transmission loss.

Accessibility
Accessibility is a very important aspect of developing any wind farm project. A detailed survey
is necessary before considering site development. It is often essential to obtain information on
the curvature of roads, slope of terrain, type of approach roads, and type of soil, etc., to avoid
logistical delays. It is also useful to study rain patterns, as there might be cases when there is
sufficient infrastructure available and the site cannot be assessed due to heavy rains delaying
commissioning schedules.

Permissions Required
Various permissions are required at different project stages; because they vary from region to
region and country to country, they cannot be generalized. Typically, the following permissions
are considered during project execution:










Approval of site
Clearance from the Ministry of Environment and Forests
NOC (no objection certificate, a permit) by the state renewable energy department
NOC by the transmission company
Clearance by the aviation department
Statutory local clearances from municipal corporations, telecom, defense, etc.
Projects need transportation permits
Construction permits
Grid connection approval.

In summary, the wind resource assessment and estimates of annual energy production and the
associated uncertainties are critical for obtaining financing. While the vast majority of projects
Supporting Wind Power Take-off in the SARI/Energy Region

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in South Asia are balance sheet financed, a move to project financing for large projects is likely.
Hence, the lender will require a financial model with multiple estimates of energy production,
or exceedance cases. The mean estimated production of the project (P50) may be used to
decide on the size of the loan, but in most cases a value lower than the mean (for example P84
or P90) is used. Figure 8 shows the central position taken by the wind resource assessment
step.

4.4

Climatic and Environmental Considerations

Lightning
The occurrence of lightning strikes to the candidate site needs to be estimated. Such quantities
as lightning events per year, lighting strikes per event, and magnitude need to be included in
the technical specification for the WTG so that the supplier provides adequate protection.
Earthing (that is, grounding) and bonding provisions need to be included in the construction of
the tower and the foundation.
Corrosion
The nature and the degree of air borne corrosion at the candidate site should be understood
and quantified. Appropriate language needs to be included in the technical specification for
the WTG and the local electrical grid equipment at the site.
Sea salt in the air may be the most common corrosive agent in the area, but there may be
others if the candidate site is downwind of an industrial area, power plant, or city.
Earthquake
The nature and frequency of earthquakes at the candidate site should be assessed. This affects
both the structural design of the WTG and the foundation.
Soil and Foundation
The nature of the soil at the candidate site affects the foundation design and affects the project
cost. The nature of the soil is also a factor in the Earthing for lightning protection.
Major Wind Storms
The frequency and the magnitude of major wind storms at the candidate site needs to be
assessed. Though the WTG will not be operating during a major storm the structure is
expected to survive the storm.
Icing
If icing can occur at the candidate site then icing should be addressed in the technical
specification for the WTG and its foundation.

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Figure 7: Sample Wind Power Developers Steps Involved in Wind Resource Measurement and Tasks Required Prior to Financing

Greenfield Activities and Preproject Planning


Identification of proposed potential site
Survey Regarding terrain and topography
Survey of approach road/infrastructure
Policy and Regulatory Study

Greenfield Activities
and Pre-project
Planning

Procurement of Manufacturer and


EPC Contractor

Wind Resource Assessment


Mast Installation
Measurement and Collection of wind data
Wind data analysis
Selection of appropriate WTG Mode
Micrositing
Wind Flow Modelling
Annual Energy Estimation
Contingency Analysis
Applications for permissions

Procurement
of Manufacturer
and EPC
Contractor

Wind Resource
Assessment

Technical Due Diligence


Commercial Due Diligence
Third party vetting of generation
Legal Due Diligence
Negotiations
Raising Purchasing Order

Project
Monitoring

Synchronization

Sale of
Electricity

Project Monitoring

Synchronization

Sale of Electricity

Monitoring delivery schedule

Prestabilization test checks

Validation of technical compliance

WTG Grid syncronization

Sell Electricity to utility/captive


consumption / EB

Monitoring WTG commissioning

WTG Stabilization

Quality Check
Safety

Supporting Wind Power Take-off in the SARI/Energy Region

Monitoring payment cycle


Monitoring reactive power consumption
and other losses
Payment realization

29

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Section 5
TECHNOLOGY/TURBINE
SELECTION
Electricity is generated when fuel is used to turn a turbine that drives a generator. Wind power
is no different, except the fuel is wind a free, clean and limitless fuel source.
The concept of harnessing wind energy is not a new one. Windmills employing a rotor driven
by wind power have been used for centuries for applications such as grinding grain or pumping
water. While this basic concept of harnessing wind power remains unchanged in todays multimegawatt and multi-million-dollar wind turbine, the modern wind turbine is in other ways a
vastly different and far more advanced machine. It must generate reliable, economical, highquality and network-frequency electricity with virtually no attendance and little maintenance,
continuously for a period in excess of 20 years.
In addition to becoming more efficient, reliable, and economical over time, wind turbines have
most visibly grown in size, from a rotor diameter of 15 meters in 1980 to around 128 meters
today for the largest turbines, corresponding to an increase in nominal power output of over
16,000%. Turbine efficiency has dramatically improved during this period from advances in
design and engineering. Figure 9 shows the scale of wind power development.
In 2007, MW-class turbines (capacity 1 MW) captured over 95% of the market share, leaving
less than 5% for smaller machines. Within the MW segment, turbines with capacities of 2.5
MW and upwards are becoming increasingly important, including for on-land use. The market
share of these largest turbines grew 20 fold between 2003 and 2007, from 0.3% to 6%. While
there continues to be demand for ever-larger turbine designs, especially in the off-shore
market, the focus for the on-shore market has shifted towards increased volume supply in the
1.5 to 3.0 MW range.

Supporting Wind Power Take-off in the SARI/Energy Region

31

Figure 9. The Scale of Wind Power Technology Advancement

Source: Bundesverband WindEnergie e.V.

The top-ten global manufacturers of wind turbines (using 2007 global market share) and the
design choices of their flagship models are presented Table 5; Table 6 shows comparable data
for South Asia.

Table 5. Flagship Designs of Leading 10 Global Turbine Manufacturers


Manufacturer

Market
Share

Model

Drive
Train

1
2

Vestas
GE Energy

22.8%
16.6%

V90
2.5XL

3
4
5
6
7

Gamesa
Enercon
Suzlon
Siemens
Acciona

15.4%
14.0%
10.5%
7.1%
4.4%

G90
E82
S88
3.6 SWT
AW119/3000
8
Goldwind
4.2%
REpower750
9
Nordex
3.4%
N100
10
Sinovel
3.4%
1500
(Windtec)
Source: Indian Wind Energy Association, 2009

Diameter
(m)

Geared
Geared

Power
Rating
(kW)
3,000
2,500

90
100

Tip
Speed
(m/s)
87
86

Geared
Direct
Geared
Geared
Geared

2,000
2,000
2,100
3,600
3,000

90
82
88
107
116

90
84
71
73
74.7

Asynchronous
PMG
converter
DFIG
Synchronous
Asynchronous
Asynchronous
DFIG

Geared
Geared
Geared

750
2,500
1,500

48
99.8
70

58
78
NA

Induction
DFIG
NA

Supporting Wind Power Take-off in the SARI/Energy Region

Power
Conversion

32

Table 6. Flagship Designs of Leading South Asian Turbine Manufacturers


Manufacturers

Capacity
(kW)

Model

Rotor
Diameter
(m)

Hub Height
(m)

Cut-in
Wind
Speed

Vestas Wind
Technology
India Pvt Ltd.
Elecon
Engineering
Company Ltd.
Enercon (India)
Ltd.

1650

V-82

82

70 / 78 / 80

600

T600-48

48

800

E-48

GE Wind Energy
India,
Pioneer
Wincon Pvt Ltd.
Suzlon Energy
Ltd.

Shriram epc
Ltd.
RRB Energy Ltd.

Southern Wind
Farms Ltd
Regen
Powertech Pvt
Ltd.
Kenersys India
Pvt Ltd.
WinWind
Power Energy
Pvt Ltd.
Global Wind
Power Ltd

3.5
m/s

Cut
Out
Wind
Speed
20
m/s

Rated
Wind
Speed
(m/s0
14
m/s

Survival
Wind
Speed
(m/s)
52.5

50/55/60

3.5
m/s

22
m/s

11.5
m/s

55.3/55.8
m/s

48

75

53

73/75

70.5

64.7/85

750

GE 1.5sle
el
W755-48

48

50

1500

S82 V3-1500

82

78

2100

88

80

250

Suzlon S88
V3A-2100
SEPC 250 T

4.0
m/s
4.0
m/s
4 m/s

28.5

41.2

4 m/s

500

V39-500

47

50

600

47

50

225

Pawan
Shakthi- 600
GWL 225

29.8

45

1500

V 77

76.84

80

4.0
m/s
4.0
m/s
4.0
m/s
3 m/s

25
m/s
25
m/s
25
m/s
25
m/s
20
m/s
25
m/s
23
m/s
25
m/s
25
m/s
25
m/s
22
m/s

14
m/s
12
m/s
12
m/s
14
m/s
14
m/s
14
m/s
14
m/s
14
m/s
16
m/s
15
m/s
11.8
m/s

---

E-53

2.0
m/s
3.0
m/s
4 m/s

2000

K82

82

80

3.5
m/s
4 m/s

25
m/s
20
m/s

---

---

11.5
m/s

---

3-4
m/s

25
m/s

---

60 m/s

1500

1000

WinWinD 1
MW

60

70

750

NORWIN 750

47

65

Supporting Wind Power Take-off in the SARI/Energy Region

57 m/s
----52.5 m/s
59.5 m/s
58 m/s
56 m/s
70 m/s
60 m/s
52.5 m/s

33

Table 6. Flagship Designs of Leading South Asian Turbine Manufacturers


Leitner Shriram
1350
LTW77-1.35
Mfg Ltd.
Siva
250
SIVA 250/50
Windturbine
India Private
Ltd.
Source: Indian Wind Energy Association, 2010

77

65

3 m/s

30

50

4 m/s

25
m/s
25
m/s

---

10.6
m/s
14
m/s

----

Today in India, wind turbines typically range from 250 kW to 2100 kW; they are installed in
locations compatible with the required wind speed of the turbine. In terms of turbine
technology, the Indian market has many variants with different capacities, including:
 Gearless technology, where the wind turbine is coupled with a synchronous generator
and the power generated is fed through an electronic inverter system
 Conventional gearbox technology with two winding induction generators; at low wind
speed the first winding kicks in and at high speed the second winding induction
generator produces power
 A single winding generator for the entire range of wind speeds
 Turbines tailored for a low wind regime, which is otherwise classified as: class I > wind
speed ranging over 10 m/s; class II > wind speed ranging between 8.5-10m/s, and class
III > between 7.5-8.5 m/s and class IV > is less than 6 m/s.
The process of selecting the technology is called the techno commercial evaluation. The
developer should clearly know the purpose of his investment is it purely for generating green
energy, which will be used for captive consumption; is it purely for investment purposes; or is it
for investment and captive usage purposes? The technology selection can then be made to fit
the developers requirements.
For example, if the developer is making a purely financial investment, then the technology must
be evaluated on the basis of the equitys internal rate of return (IRR), which is relatively low
compared to other forms of renewable energy such as biomass or hydro. If the developers
appetite is large, then he or she may opt for more efficient, higher-cost technology to be
relatively assured of good turbine performance. It is only after this decision is made that one
can think of selection parameters, which is an important and time-consuming exercise. Here,
more attention must be paid to the technologys performance in terms of the plant load factor
(PLF) and grid conditions and availability. Some of the important issues to be considered in this
regard include the site characteristics in the location offered, whether the grid is available for at
least 92-95% of the time, and the past performance of the grid.
Supporting Wind Power Take-off in the SARI/Energy Region

34

The investor should also consider the credibility of the equipment supplier in terms of his
assurance for any technology failure, location disturbance, and operations and maintenance
requirements. The investor perhaps can look for some kind of insurance policy to safeguard
against force majeure situations. By and large, the main issue becomes the land on which the
project is to be situated. On making the first advance payment, the equipment supplier
qualifies to register the land title in the investors name. This activity results in the investor
having clear title and ownership of the land.

5.1 Wind Turbine Technology


The evolution of modern wind turbines is a story of engineering and scientific skill. In the last
20 years, turbines have increased in size from 250 kW to 5000 kW and beyond, the cost of
wind-generated energy has been reduced, and the industry has moved from an idealistic fringe
activity to an acknowledged component of the power generation industry. At the same time,
the engineering base and computational tools have developed to match machine size and
volume. This is a remarkable story, but it is far from finished: many technical challenges remain
and more spectacular achievements are set to follow.
Wind turbine components come under significant strain from operating in a wide range of wind
speeds. Highly variable loading from turbulent wind conditions means that the major structural
components of wind turbines experience a far greater number of fatigue cycles than other
rotating machines. This fatigue must be tolerated over an average 13 years of operation in a
design life of 20 years. By comparison, a car that travels 200,000 km over its life would only
have needed to tolerate fatigue for about 5 months of its operation. These uniquely high
demands on wind components have resulted in wind technology having its own technical
identity and research and development demands.

5.2 Wind Turbine Selection


The selection of a wind turbine largely depends upon its economic viability. While technical
superiority in terms of its successful functioning is a requirement, cost is an equally important
factor. In any case, the turbine vendor must provide or obtain comprehensive EPC services,
which include a thorough wind resource assessment of the proposed site in order to establish
that its wind speeds correspond to the turbines rating, enabling maximum generation from the
turbine.
In the South Asian context, it is generally the turbine supplier (and occasionally the developer)
who provides the configuration of the turbines in accordance with the wind resource
assessment (WRA). The WRA matches the turbine design for the location and a specific range

Supporting Wind Power Take-off in the SARI/Energy Region

35

of wind speeds (rather than a location being chosen to match the design features of the wind
turbine). If the location is not suitable, the WRA could recommend a different location.

5.3 Site Selection


Wind energy developers are interested in the energy that can be extracted from the wind, and
how this varies with location. Wind is ubiquitous and in order to make the choice of potential
project sites an affordable and manageable process, some indication of the relative size of the
wind resource across an area is very useful. This is best accomplished through an independent
WRA that draws together all known information on the site such as wind data, wind direction,
wind regime, and wind velocity. With this, the micro-siting is done at the site based on the
diameter of the turbine blade.

5.4 Computer Modeling


On a broad scale, wind speeds can be modeled using sophisticated computer programs, which
describe the effects on such wind parameters as elevation, topography and ground surface
cover. These models must be primed with values from a known location. Usually, this role is
fulfilled by local meteorological station measurements or other weather-related recorded data,
or can be extracted from numerical weather prediction models, such as those used by national
weather services.

5.5 Constraints
Most wind energy resource studies start with a top-level theoretical resource, which is
progressively reduced through the consideration of so-called constraints. These are
considerations that tend to reduce the area that will actually be available to the wind energy
developer. For instance, these can be geographically-delineated conservation areas, areas
where the wind speed is not economically viable, or areas of unsuitable terrain. The areas
potentially suitable for development are sequentially removed from the available area.

5.6 Commissioning, Operation and Maintenance


Once construction is completed, plant commissioning begins. Depending upon the capacity of
the turbine, infrastructure available at the site, and location, it can take as little as six hours to
two days to commission an individual turbine. Commissioning tests will usually involve
standard electrical tests for the electrical infrastructure as well as the turbine, and inspection of

Supporting Wind Power Take-off in the SARI/Energy Region

36

routine civil engineering quality records. Careful testing at this stage is vital, if a good-quality
wind farm is to be delivered and maintained.
The availability of a wind turbine generator (WTG) is usually in excess of 95%. This means that
for 95% of the time, the turbine will be available to work if there is adequate wind. This value is
superior to values quoted for conventional power stations. It will usually take a period of some
six months for the wind farm to reach full, mature, commercial operation and hence, during
that period, the availability will increase from a level of about 80-90% after commissioning to
the long-term level of 95% or more.
Operation and maintenance costs include regular maintenance, repairs, spare parts and
administration. The O&M cost, which used to be just over 1 US cent per unit, have been
reduced to just over US cent or even less. Manufacturers over the years have aimed to
shrink this cost significantly through the development of new turbine designs requiring fewer
regular services, thereby reducing downtime. The trend towards manufacturing larger wind
turbines also reduces O&M costs per kWh produced.
By and large, the post-commissioning warranty and guarantee are essential to the smooth
running of the project. Most of the parts are covered under the manufacturers warranty,
which precisely means that at any point in time within the defined period when the
manufacturing defect surfaces, it will be repaired or replaced. The guarantee generally covers
the life of the technology. Warranty against design defects is another matter.

5.7 Scope of Routine Operation


During the contract period, the wind farm is generally completely operated and staffed by the
equipment supplier. The equipment supplier provides daily generation data for each WTG
through a SCADA system (Supervisory Control and Data Acquisition) and also informs the
customer about his username and password for accessing the suppliers website, which
includes records on the plant. Depending upon the contract requirements and the equipment
supplier, there could be an option to sign the O&M contract for a period of 10 years as well,
and in such a case, the developer will have to spell out the contract terms and conditions.
At the site, the equipment supplier performs routine maintenance on the WTG as per standard
practices by and on behalf of the owner. The standard contract stipulates that these services
be provided at the site for ten years from the date the wind turbine is commissioned. The
essence of the contract is to improve and maintain the reliability of the WTG and to strive to
achieve or exceed an annual machine availability of 95%.
During the tenure of this contract no agency other than the equipment suppliers personnel is
permitted to repair or adjust the WTG covered under the contract. Any breach of this condition
will be sufficient grounds to terminate the agreement and the equipment supplier is not under
Supporting Wind Power Take-off in the SARI/Energy Region

37

any obligation to refund any part of the amount already paid. He will also be at liberty to
pursue any other remedies available to him. However, this could be also be negotiated.

5.8 Preventive and Predictive Maintenance


Wind power projects differ greatly from conventional power projects, and wear and tear is a
constant concern. The operational components of wind turbines are exposed to the various
elements of nature, and they are often unmanned in remote locations. The nacelle, which
houses the turbine's mechanical parts, sits 200 feet or more in the air and is difficult to access.
Bearing and gear wear, if not caught in time, will often progress to more serious collateral
damage affecting the other parts of the drive-train and the generator. Through various studies
it has been established that the mechanical stress on wind turbines is unmatched as compared
to other types of power generation. Hence, both preventive and predictive measures are
required to maintain a wind turbine properly.
To prevent downtime, the equipment supplier should maintain the wind turbine as per the
checklist in the turbines maintenance manual, deploying service personnel to the site as
needed to carry out maintenance as needed. The supplier should draw up the preventive
maintenance schedules and attend to breakdowns, bearing in mind that annual wind turbine
availability should always be more than 95%. In order to meet maintenance requirements, the
supplier should maintain a stock of consumables and spare parts as recommended by the
manufacturer.
Operations procedures such as preparing the turbine to start, running it, conducting routine
operations, taking safety precautions, and monitoring should be conducted according to the
manufacturers instructions so the entire system operates trouble-free. Some basic preventive
measures include regular visits at six-month intervals to check fluid levels, greasing and bolt
torque. It is proven that a well-organized, predictive maintenance schedule utilizing alarm
sensors and tests will minimize turbine outages and maximize energy output.

5.9 Project Equipment Ranking Methodology


Wind turbine equipment vendors offer a wide range of performance and cost options for
developers. Hence it is important to rank options using a standard methodology. Such a
ranking exercise requires a comprehensive study of both the commercial and technical
performance of machines. This includes examining different technologies and their past
performance in specific locations. Generation data from similar locations will give developers
an idea of how the turbines will perform. The ranking and WRA will give an estimate of actual
performance. The generation figures can be used for assessing and ranking different
technologies and the price at which they are offered. Table 7 provides a sample ranking
methodology as utilized by developers.
Supporting Wind Power Take-off in the SARI/Energy Region

38

Table 7. Illustration of a Ranking Methodology


Equip
ment
supplie
r

Capacit
y of
wind
turbine
(kW)

Annual
Generation
per turbine
(in 100,000
kWh)

Generation
In mln
kWh per
MW

Cost of
turbine
(in mln
Rs)`

PLF
%

Cost per
MW
(in mln
Rs.)

Cost
INR
per
kWh
`

Ranking
methods

D=C/B

F=D*1000/8760

G=E*1000

H=G/D

Cost

20.33
21.25
24.00
26.40
26.64
27.33
28.04

1
2
3
4
5
6
7

PLF

/B

A
600
B
800
C
225
D
250
E
1000
F
250
G
1650
PLF: Plant load factor

1.50
2.00
0.50
0.50
2.46
0.45
4.20

2.50
2.50
2.22
2.00
2.46
1.80
2.54

30.50
42.50
12.00
13.20
65.60
12.30
117.50

28.54
28.54
25.37
22.83
28.11
20.55
29.06

50.83
53.13
53.33
52.80
65.60
49.20
71.21

3
3
4
5
2
6
1

As Table 7 shows, WTG supplier A has the cheapest cost, while supplier G has the highest plant
load factor (PLF). The choice of technology will depend on the risk appetite of the
developer/investor, the business model they favor, and the returns they envisage.

5.10 The Economics of Wind Power


Owing to ongoing improvements in turbine efficiency and higher fuel prices, wind power is
becoming economically competitive with conventional power generation. At sites with high
wind speeds on land, wind power is considered to be fully commercially viable.
The cash flow spreadsheet basically highlights issues that must be resolved without ambiguity:
the debt service coverage ratio (DSCR)7 and project internal rate of return (IRR) for the lender,
and the equity IRR for the equity investor. The lender might expect a loan term of ten years
and could expect a debt service coverage ratio (DSCR) average of 1.30 with a minimum of over
1 in any of the ten years.
Table 8 shows an example of debt funding on project cash flow that gives insights into the
working of a wind farm project that employs the independent power producer model.
7

The DSCR is a ratio used to analyze the amount of debt that can be supported by the cash flow generated from
the project. Ideally, this ratio should be more than the amount borrowed on an average during the tenure of the
debt.
Supporting Wind Power Take-off in the SARI/Energy Region

39

5
Methodology

Table 8. Sample Project Economics Calculation for a 18.75 MW Wind Farm


A
1
2
3

Project Cost
Project cost per MW
Turnkey project cost for an 18.75 MW project
Interest during construction @ 1% of project cost
Preliminary and pre-operative expenses, processing fees, etc. @
1% of project cost
Total Cost of Project
Total Cost per Turbine 1250 kW

Cost (Million INR)


50.00
937.50
9.375
9.375

Means of Finance
Equity margin at 30%
Term loan from banks at 70%
Total

Cost (Million INR)


286.907
669.343
956.250

C
1
2
3
4
5
6
7
8
9
10
11

Project Details
Project capacity
Turbine capacity
Number of wind turbines
Generation per MW
Net generation per generator (after Inter-farm line loss @ 2.5%)
Total generation for the project
Plant load factor
Power price (Tamil Nadu)
GBI @ 6.2 M per MW translates into
CDM / CER credit (up to FY 2020-21)
Tariff escalation

Parameter (`)
18.75 MW
1.250 MW
15
2.24 MU
2.80 MU
42.00 MU
25.57 %
3.39
0.50 paise per Unit
0.50
0.00

D
1
2
3
4
5
6
7
8

Financial Highlights of the Project


Cost per MW
Cost per kWh
Avg. DSCR
Debt : equity ratio
O&M (of the project cost)
Escalation in O&M
Insurance
Residual value

B
1
2
3

956.25
62.50

Interest rate: 11.60%

Supporting Wind Power Take-off in the SARI/Energy Region

Parameter (`)
51.00
22.77
1.49
2.33 : 1
1.50%
5.00%
0.25%
20% after 15 yrs

40

9 Project IRR
12.96 %
10 Equity IRR
18.13 %
GBI = generation-based incentive, MU = million units, MW = Megawatt, PU = per unit
INR = Indian Rupee

The selection of the equipment for the project depends on several factors, the most important
of which are:





Whether the equipment supplier has established a presence in the market and if so,
for how long?
What is the total capacity the supplier has installed in the market?
What is the performance history of the proposed equipment?
Has the equipment performed as promised by the manufacturer? Have any deviations
been recorded for performance, O&M, etc.?

Once the equipment selection is complete, the developer will move into the procurement stage
and begin project implementation. While individual project construction companies follow
their own implementation steps, it is important for the owner to recognize the individual steps
involved in the civil, mechanical and electrical work streams. Figure 10 shows a sample project
implementation flow chart.

Supporting Wind Power Take-off in the SARI/Energy Region

41

Figure 10. Project Implementation Flow Chart


Land Procurement
Registration of NOC
EB Officials Inspection at Site
Civil Work

Mechanical Work

Electrical Work

Excavation

Tower Materials at Site

Unit Substation

Metering Point

OHT line

R.C.C.

Tower Assembly

D.P. Erection

CTs, PTs Testing

Line Survey

Ready for Erection

Nacelle & Blade at Site

Earthing

D.P. Erection

Erection on Poles

Control Room

WEG Erection

Transformer Erection

Earthing

Conductor Stringing

Cabling Works

Cabling & Termination

Control Panel Erection


Termination
Pre-commissioning
Commissioning

Supporting Wind Power Take-off in the SARI/Energy Region

42

Section 6
GRID INTERCONNECTION
To ensure a reliable and secure supply of power to electricity consumers, the grid must be
planned, erected and operated efficiently. Grid connectivity standards, transmission planning
criteria, and the grid code define the guidelines for achieving optimal operation of the system.
Wind power is an intermittent power source that must be used when available. Electricity
generated from wind power can be highly variable from hour to hour, daily, and seasonally. By
its nature, a wind generator is a variable power device; the individual unit size of a wind
generator is very small, and in some cases older generators may also act as an inductive load
(that is, having a lagging power factor and requiring reactive compensation).
As a part of the power system, wind power plants must fulfill the requirements defined in the
grid code documents. Wind power integration must satisfy the technical needs of grid
reliability, security and quality. This section briefly describes the special requirements for wind
farm integration with the grid.

Construction phase of a wind project substation (Credit: PPM Energy / Tetra Tech)

Supporting Wind Power Take-off in the SARI/Energy Region

43

6.1 Transmission
Transmission System
The electricity generated by wind generators, (see Figures 11 and 12) is transmitted to load
centers through transmission lines. To minimize transmission losses, a high-voltage (HV) or
extra-high voltage (EHV) transmission system is employed. Various levels of voltage
transmission are put in place with the help of transformers. Parallel operation of the lines of
the transmission system increases system reliability and minimizes transmission losses.
Substations, which are basically switching stations or switching yards, allow for effective
operation and maintenance. Most substations are equipped with a voltage step-up facility.
System energy accounting and protection are taken care of by current transformers, potential
transformers, relays, meters, etc. Circuit breakers, isolators, earth switches, lightning arrestors,
earthing systems, etc. are all substation equipment. These technologies enable the operation,
maintenance and protection of both transmission and distribution entities.
The transmission system is planned, and erected or strengthened, well in advance so that the
electrical energy generated is transmitted without constraint. In this case, it is desirable to
avoid wind power backing down for want of an evacuation system. The reasons behind this are
that in developing countries the transmission evacuation system may not be commensurate
with wind power growth, and wind power has to compete with conventional power for
evacuation preference.
For transmission lines that connect the wind farm pooling substation to the main grid system,
transmission planning criteria can be relaxed to minimize evacuation costs. Norms for surge
impedance loading (SIL) may also be relaxed, taking into account the distance between the
wind farm pooling substation and the main grid system. In addition, the need for adopting N-1
grid security can be addressed on a case-by-case basis.
The SIL of a transmission line is the MW loading at which a natural reactive power balance
occurs. Transmission lines produce reactive power (Mvar) due to their natural capacitance.
The amount of Mvar produced is dependent on the transmission lines capacitive reactance (XC)
and the voltage (kV) at which the line is energized. A transmission lines SIL is simply the MW
loading (at a unity power factor) at which the lines Mvar usage is equal to the lines Mvar
production. The line length is not a factor in the SIL or surge impedance calculations.
Therefore, the SIL is not a measure of a transmission lines power transfer capability, as it does
not take into account the lines length, nor does it consider the strength of the local power
system. The value of the SIL to a system operator is realizing that when a line is loaded above
its SIL, it acts like a shunt reactor absorbing Mvar from the system and when a line is loaded
below its SIL, it acts like a shunt capacitor, supplying Mvar to the system.

Supporting Wind Power Take-off in the SARI/Energy Region

44

Figure 11. Schematic Diagram of a WEG


WEG, from Generation to the Consumer

Figure 12. Single-Line Diagram of a WEG

SIL specifies limits on loading the transmission lines. However, short lines (less than 100 km)
can be loaded more than 2.5 times the SIL. Wind power evacuation lines may be generally less
than 100 km. Therefore, lines can be designed for higher SIL
SILs, which helps minimize project
costs.
Supporting Wind Power Take-off
off in the SARI/Energy Region

45

The N-1 criterion (as per the Union for the Coordination of Transmission of Electricity Grid
Code) is a rule stating that elements remaining in operation after the failure of a single network
element (such as a transmission line, transformer or generating unit, or in certain instances a
bus bar) must be capable of accommodating the change of flows in the network caused by that
single failure.
To ensure grid security, using the criteria above, there may a need for the duplication of the
wind power evacuation system. Considering the poor capacity utilization factor (CUF) in the
case of wind power, the N-1 criterion may be relaxed to minimize project costs.
Applying the N-1 criteria also has maintenance implications. That is, single network elements
(as listed above) are also taken out of service for maintenance. The developer needs to decide
whether or not, or to what extent, the wind farm is to continue operation during maintenance
of the electrical system.
The N-1 criteria can be applied separately to the major parts of the electric power system: local
grid for collecting electricity, the step-up substation, and the transmission evacuation routes.
For example, it may not be justified to have a second transmission exit, but it may be justified
to have substation that can be maintained while the wind farm operates.

Transmission Tariff
A transmission system is needed to transmit electrical energy from the generator to the load
element. The transmission service provider needs sufficient financial resources for the
installation and proper upkeep of the transmission system. The required revenue is to be
collected via transmission charges that are collected from the transmission systems users such
as generators and distribution companies. Government-designated agencies may compute the
transmission tariff based on financial norms including capital cost employed, debt-equity ratio,
rate of return, interest on working capital, O&M charges, and depreciation cost.

6.2 System Impact Study


Although the cumulative installed capacity of wind plants is small compared to conventional
generators, connecting wind plants to the grid may pose problems to the grids operation.
When the penetration levels of wind plants are higher, operational constraints (e.g., voltage
fluctuation due to reactive power mismatch, frequency excursion attributable to changes in
wind velocity, harmonics associated with control and conversion devices, self-excitation at the
time of line tripping) may result. The permissible penetration level depends on such factors as
the type of generation mix, regulatory reserve profile, load curve, load profile, and nature of
ancillary service. Defining a specific limit can be attempted at a later stage. Figure 13 shows
the level of penetration of wind power plants in European countries.
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To ensure reliable, secured quality power, a system impact study is needed to evaluate the
required reactive power compensation (this is to meet the grid codes requirements). Also, in a
market-based system operating environment, the regulator has to be satisfied with the level of
reactive power compensation claimed by the transmission service provider.
The installation of a low-voltage ride through (LVRT) for wind power plants is generally
recommended by the service provider. However, the service provider should demonstrate the
necessity of the LVRT. The need for a LVRT facility, the requirement of reactive power
compensation, power quality problems and the self-excitation issues attributable to wind
plants may warrant a system impact study.
Figure 13. Wind Power Penetration Levels in Europe at the End of 2007

6.3 Frequency Control


Forecast and Scheduling
The scheduling and dispatch of wind energy sources to the grid should be considered only after
system reliability and impact studies have been undertaken considering the temporal nature of
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wind power. However, if there is a deviation in the actual from the scheduled figure, WTGs will
be asked to pay penalty charges for deviating from the schedule. In India, WTGs are required
to pay unscheduled interchange charges as of 1 January 2011.

Ancillary Services8
For large-scale integration of WTG electricity to the grid and for improved grid operation, the
variable nature of wind generation must be supplemented by ancillary services. While the
power output from WTGs is variable depending on wind input, a grid operator needs a steady
output for smooth grid operation. Ancillary services can supply backup generation at the time
of need and absorb surplus power from the grid when wind power is in excess of demand.
Pumped storage hydro is one such example. In this case, the load dispatch center (LDC) must
enter into an agreement with ancillary service providers.

Load Dispatch Center


The system operator should make all efforts to evacuate the available wind power and treat it
as a must-run station. However, the system operator may instruct the wind generator to back
down generation for reasons of grid security and if the safety of any equipment or personnel is
endangered. A data acquisition system should be provided to transfer information to the
concerned LDC.

6.4 Reactive Power Management


Power Factor Design
Conventional synchronous generators inherently provide controllable reactive power, whereas
most of the old induction-type generators currently used by wind plants can only provide
reactive power through the addition of external devices. Wind plants are required to operate
within a specified power factor range to help balance the reactive power needs of the
transmission system. Large wind plants maintain a power factor within the range of 0.95,
leading to 0.95 lagging to be measured at the high-voltage side of the wind plant substation
transformer. Wind plants should have the capability to provide sufficient dynamic voltage
support to interconnect to the transmission system, if the system impact study shows that
dynamic capability is necessary for system reliability. Dynamic reactive capability can be
achieved by systems with a combination of true dynamic capability plus switched shunt
capacitors and reactors.

These are the services needed to support the power systems (that is, grids) operation, including maintaining
power quality, reliability and security (e.g., active power support for load following, reactive power support, black
start, regulating frequency during high wind power availability).
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Voltage Control
The LDC may direct a wind farm to curtail its reactive power draw-down or injection in case the
security of the grid or safety of any equipment or personnel is endangered. During wind
generator start up, the wind generator must ensure that the reactive power draw-down (inrush
currents in the case of induction generators) will not affect the grids performance.

Reactive Power Pricing


In a market-based environment, reactive power absorption by the WEG beyond a defined limit
must be priced. Likewise, when reactive power of more than a nominal value is generated to
support the grids operation at a time of need, it must be compensated. Regulators have to
address this issue after taking necessary input from the LDC and transmission service provider.

6.5 Harmonics and Voltage Flicker


Harmonics control and measurements should be taken in accordance with the IEC 61400-21 or
IEEE STD 519-1992 methodologies. As regards voltage flicker, the IEC61000-4-15 (IEC, 1997)
and IEC 61000- 4-15 (IEC, 2003) standards should be followed.

6.6 Protection Scheme


Wind farms connected at the transmission system must remain connected to the grid during
system faults for specified periods of time. Reactive power compensation equipment must also
remain connected during system faults.
Wind farms connected at the transmission level should be provided with LVRT capability.
However, this may be decided by the appropriate government agency taking into account the
penetration level. The cost would have to be addressed appropriately in the generation tariff.
All the grid-connected WTGs must have a protection system to protect the wind farm
equipment as well as the grid, so that no part of the system is unprotected during faults. The
protection schemes should be coordinated with the respective grid protection committee. A
WTG should be protected against short circuiting and earth faults generally.

6.7 Metering and Communication Requirements


To ensure appropriate real-time communications and data exchanges between the wind power
producer and the grid operator, a supervisory control and data acquisition (SCADA) system
should be in place. For this purpose, wind farm owners must provide the necessary metering
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arrangements at the interface with the transmission or distribution system, as specified by


government agencies. These metering arrangements are required for operation control,
protection arrangements, and the settlement of both reactive and active energy exchanges. In
the case of open-access transactions, the generator or receiving utility would pay the
transmission or wheeling charges as decided by regulatory agencies.
There will be times when the wind farm takes energy from the transmission or distribution
company, for example, during construction, when there is no wind or too much wind, or during
major works at the site. The metering needs to be able to measure this reverse flow of
energy, which is often many times smaller than the normal power flow from wind farm the
transmission or distribution system. Also, the wind farm needs to have a customer contract (a
supply contract) in place with an energy provider so as to buy this reverse flow energy.

6.8 Supervisory Control and Data Acquisition


Transmission providers generally do not require wind generators to have remote SCADA
capability because of their small size and minimal effects on the transmission system.
However, with the increasing number of large wind plants connecting to transmission systems,
SCADA capability is needed to acquire wind farm operating data and ensure the safety and
reliability of the transmission system during normal, system emergency, and system
contingency conditions.

6.9 Balancing and Settlement Code


The distribution company or bulk power users (industry) enter into a power purchase
agreement with the wind farm owners, as specified by regulatory agencies. Also, users must
enter into a bulk power transmission agreement (BPTA) with the transmission service provider
to use its transmission line. A copy of the agreement must be given to the system operator or
LDC.
Every control area needs a balancing and settlement mechanism.9 This mechanism tracks the
energy transferred by the wind farms and the energy received by the utility based on the power
purchase agreement. Transmission loss sharing and transmission or wheeling charges would be
accounted for based on the BPTA. The balancing authority must prepare weekly or monthly
statements towards settlement and the copies given to the transmission system users (TSUs,
the persons who have been allotted transmission capacity rights to access an intra-state
transmission system pursuant to a BPTA, except as provided in the transmission open access
9

A control area is an electrical system bounded by interconnections (tie lines), metering and telemetry, to control
its generation and/or load to maintain its interchange schedule with other control areas whenever required to do
so and contributes to frequency regulation of the synchronously operating system.

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regulations). Based on the statement, the utility will make payments to the wind farm owners
within the time frame specified by regulatory agencies.

6.10 Regulatory Requirements


Regulatory agencies specify the interconnection requirements for wind power facilities larger
than a specified size (e.g., 5, 10 or 20 MW), based on grid capacity. While formulating the
requirements, these agencies take into consideration such things as technical differences in the
design and operating characteristics of wind generating technology, development of wind
generating resources, and the need to ensure reliability.
The technical differences arise due to different WTG designs. These may be grouped into four
main categories:
 Conventional induction generator (constant-speed drive)
 Double-fed asynchronous generator (variable-speed drive)
 Gearless synchronous generator with a back-to-back frequency converter
 Advanced gearless design with permanent magnet generator.
While dispatching, wind generators must meet the following conditions, if the transmission
service provider demonstrates they are needed. 1) If needed, a large wind generating facility
must remain operational during voltage disturbances on the grid for a specified period of time.
2) Large wind plants must, if needed, meet the same technical criteria for providing reactive
power to the grid as those required of conventional large generating facilities. 3) Supervisory
control and data acquisition (SCADA), if needed, should be implemented to ensure appropriate
real-time communications and data exchanges between the wind power producer and the grid
operator. The requirements can be worked out by the service provider based on the system
impact study and then finalized by the regulator after technical scrutiny and discussion.
Connectivity by Generators to Transmission System
Transmission service providers must prepare the connectivity framework in concurrence with
the regulatory agencies.
The application for the WEGs connectivity with the transmission system must cover the
information shown below.
A
1
2
3
4
5

General
Name of the generating company
Name of power station, number of units, unit size, location
Generating company officer-in-charge for coordination of work
name and designation
Point of connection to intra-state transmission system, single-line
diagram of the proposed connection to be furnished
Name of transmission licensee with whom the systems connection

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is required or any existing connection to be modified


Evacuation system indicating number of feeders and voltage levels

B
1
2
3
4
5
6

Construction Schedule of Pooling Sub-Station


Name of pooling station
Group of units and size
Commencement
Completion
Date of pooling sub-station commissioning
Date of commercial operation

C
1
2

Inter-Connection
Generation voltage, step-up voltage for connection
Details of feeder protection on outgoing feeders to be connected to
transmission licensee system for evacuation of power
Start-up power requirement and black-start sequence and process
Requirement of power for construction and voltage

3
4
D
1

6
7

Generator
Metering system provided on lines indicating ownership and
responsibility for joint meter reading, sealing and calibration, etc. as
per metering code
Details of feeder protection on outgoing feeders
Copy of power purchase agreement /memorandum of
understanding for power purchase and transmission service
agreement for a evacuation by transmission licensee
Confirmation to the effect that all conditions outlined in the
connection agreements site responsibility schedule shall be
complied with by the user applying for a new connection or
modification of an existing connection
Detailed planning data (generation and substation) in compliance
with grid code for a new connection. For example, generator
impedances and inertias, transformer impedances, ground
resistance and fault capability.
Details of relay schemes provided for generator protection,
generator transformer protection and unit auxiliary transformer
protection.
Details of data acquisition and control system for unit being
interconnected.
Confirmation to the effect that standard planning data (generation)
are in compliance with the grid code for a new connection

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Bulk Power Transmission Agreement


The transmission service providers (TSPs) may prepare a model bulk power transmission
agreement in concurrence with regulatory agencies. The BPTA between the WEG and TSP
should address the following points:
1. Bank guarantee towards security deposit
2. Establishment of letter of credit
3. Fee and charges of load dispatch center
4. Billing and delay in payments, scheduling and data on actual draw
5. Balancing power pricing
6. Assessment of available transmission capacity
7. Dedicated transmission system
8. Non-utilization of open-access capacity
9. Assignment of transmission capacity
10. Surrender of transmission capacity
11. Metering
12. Energy losses
13. Transmission constraints
14. Compliance with grid code
15. Transmission performance standards
16. Responsibilities for taxes and VAT.

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Section 7
GRID CODE AND CONNECTIVITY
STANDARDS
A financial model must be run for a wind energy project for the purposes of investment analysis
and decision making, cash flow projections, raising debt funding, and performance monitoring.
Like any other financial model, basic cash flows are projected and various scenarios are built
up. Important financial ratios are computed, and profit and loss accounts and balance sheets
are projected. Thus, a financial model will be constructed before the investment is committed
and will be used during the life of a project to monitor its performance against the forecast.

7.1 Cost Structure


The major components in determining wind farm economics include:
 Investment costs for capital equipment and auxiliary costs such as foundations and
grid connection
 Operation and maintenance costs
 Average annual electricity production, which is related to wind speed
 Turbine lifetime
 Discount rate
 Taxes and VAT
 Incentives.
The majority of the investment costs can be attributed to the cost of the wind turbine itself (exworks). Figure 14 shows the cost structure of a typical 2 MW wind turbine installed in Europe
in 2006.
The breakdown of costs can vary considerably depending on the turbine size and country of
installation. Thus, the percentages shown in Figure 14 will not be representative of all wind
power projects.

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Figure 14.
Wind Turbine Investment Cost Structure
1.2% 0.9%
1.2%
0.3%
3.9%

8.9%

1.5%

Turbine
Foundations
Electric installation

6.5%

Grid connection
Control systems
Consultancy
Land
Financial costs
75.6%

Road

7.2 General Parameters of a Wind Financial Model


Typically, because wind turbines have a design life of 20 years, cash flows forecasts are made
for 20 years. Depending on requirements, a shorter or longer forecast could be modeled.
While building up the model, it is important to decide on the discrete time periods the model
will depict or consider. The financial model could be built on a monthly, quarterly or annual
basis. Thus, the cash flows would be forecast for every month, quarter or year for the life of
the project. An annual model may provide a quick assessment of the projects viability,
whereas a quarterly model will be more accurate and aid in detailed analysis. On the other
hand, monthly models are rarely used since they become complex and do not add too much
value to the analysis.
The financial model will begin with laying down important data points and assumptions about
the project; these can be added separately in the model as inputs. This helps when there is a
need to revisit the analyses after a critical assumption changes. The data points and
assumptions to be considered range from technical concepts such as the projects business
model (fixed tariff PPA, merchant sale, captive consumption, etc.) to technical modalities such
as generation estimates, along with all the other essential financial parameters such as debtequity ratio or interest rates.

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Therefore, it may be worthwhile to take an in-depth look at the essential parameters that help
build financial models. The following sections throw light on the various parameters involved.

7.2.1 Business Model


A wind energy project can be operated under one of several possible business models. The
business model defines the sales arrangement for electricity generated, the payment
mechanism, credit period, and impacts on the revenue generated by the project. The most
common business models are discussed here.

Power Purchase Agreement


A wind energy generator can choose to enter into a contract for the sale of electricity with an
offtaker, who is usually either a utility or consumer. Such a contract is called a power purchase
agreement (PPA) or energy purchase agreement. The offtaker buys the electricity generated
and pays the generator as per the pricing determined under the contract. Usually, state-owned
utilities purchase the wind energy from the generators on a long-term basis and at a
predetermined rate.

Merchant Sale
Under this arrangement, a bilateral agreement is signed between the project sponsor and any
other third party (typically not the Electricity Board). The project sponsor is paid at a rate
mutually decided upon by the two parties. The rate may vary depending on such factors as
time of day or demand, or the rate may be fixed.

Captive Consumption
Here, the investor generates electricity for in-house consumption. This model is well suited for
investors whose electricity consumption is projected to be large enough to absorb the energy
from a wind plant (mostly in manufacturing and industrial settings). In some cases, the project
may sell excess power to the grid, in which case the sponsor may receive an offset on his
monthly energy bills equivalent to the electricity supplied to the grid. If sales are to an
Electricity Board, any surplus generation will be paid for at the current tariff rate (in whichever
State or country the project operates). In India, the captive route for wind energy is the
second-most popular option, after merchant sale to the Electricity Board or distribution
companies.

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7.2.2 Capital Expenditures


Capital expenditures for any wind farm project include expenses towards plant and machinery,
civil works, erection and commissioning, evacuation infrastructure, and the cost of land and
associated infrastructure such as access roads. Indias Central Electricity Regulatory
Commission (CERC), in its latest order on calculating the Renewable Energy Tariff, assumed a
capital cost of approximately one million US$ per MW, inclusive of all the above-mentioned
factors.
For the purposes of financial modeling, future capital expenditures (e.g., for the refurbishment
of turbines after several years of operation) need to be considered wherever applicable. If the
project sponsor did not enter into a comprehensive O&M contract, he may need to budget for
future capital expenditures that could result when any major component breaks down.
However, forecasting such capital requirements is difficult and will be invariably based on the
history of the wind turbines being used.

7.2.3 Electricity Generation


Estimating the electricity generated from a wind energy project is the most critical part of the
financial model. The generation estimates are based on wind data observed at the site and
should be computed for various probabilities such as P50, P75, P90 and P95. The P50
generation would be an estimate of the electricity generation that has a 50% probability of
being achieved. Different probability estimates help to forecast differing cash flow scenarios.
Various factors significantly impact the generation potential of any WTG. These factors are
discussed below.

Generation Estimation at P50/P90


Annual electricity production (AEP) has a direct impact on overall project viability. Since wind
speed is variable in nature and sensitive to seasonal variations, significant amounts of
variations are involved in AEP prognosis. Hence, it is necessary to plot different scenarios for
cash flow forecasting. The simplest financial models will use only P50 as the single generation
estimate and forecast cash flow on this basis. More sophisticated models will use other
generation estimates as well.

Expected Yearly Project Output


Wind resource assessment (WRA) is used to compute average annual energy production. As
described earlier WRA is based on: a) onsite measurement data, b) appropriate adjustment of
data in (a) based on terrain and local roughness, c) appropriate adjustment of data in (a) based

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on long-term reference data, and d) power production data of turbine provided by the
manufacturer is used to compute average annual energy production.
Also, expected yearly energy output depends largely on the PLF or CUF of the wind conditions
and the installed turbine. As an example, in India, per-MW CUF estimates can be made
available from the recently released CERC tariff guidelines. These guidelines have adopted the
approach of a zone-wise tariff, which assumes different CUF levels for different zones. These
are (on a per MW basis):
Annual Wind Power Density (W/m2)
200-250
250-300
300-400

CUF

>400

30%

20%
23%
27%

It should be noted that the annual expected output from wind power projects can be derived
from the above-mentioned CUFs. Note that the annual mean wind power density specified
above was measured at a height of a 50 m hub.

De-rating of Generation
Extreme operational conditions beyond the wind turbines design limits often result in the
underperformance of turbine components. Over the years, turbine output may fall below
expected generation. To reflect this fall in output and therefore revenues, a suitable de-rating
factor can be used in the financial model. Usually, de-rating is applied after 10-12 years of
operation. The gross generation of the turbine (P50) may be reduced by 1-2 % in absolute
terms due to de-rating. However, the actual de-rating will depend on actual operating
conditions and maintenance of the turbine.

Seasonality of Generation
A wind turbine will not produce a constant amount of energy throughout the year. For
example, in southern India, about 60% of annual energy generation may be achieved during the
six months of peak wind, whereas only 5% of annual energy output may be achieved during the
lowest two months.
If the financial model is prepared on a quarterly or monthly basis, this seasonal variation in
generation needs to be taken into account. If it is prepared on an annual basis, these variations
may be ignored.

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7.2.4 Revenue Modeling


The revenues from a wind project may have more than one component emanating from the
sale of electricity, carbon credits, other regulatory incentives, etc. The amount as well as the
timing of actual cash inflows will depend on relevant contracts and incentive structures. In the
case of captive consumption, the total cost savings in the energy bill is substituted for revenue;
the timing will be same as the timing of payout when the projects owner consumes energy
from the grid.
The most critical factors in forecasting revenues are generation estimates (P50, P75, P90, etc.),
seasonality of generation, billing cycle and credit period. Typically, electricity bills are
calculated monthly and actual revenues are credited within 15 days to 3 months, depending
upon the power purchase agreement. Therefore, the revenue cash inflows are to be modeled
accordingly.
As an illustrative example of revenue components, the sources of revenue in a typical Indian
project are discussed below:

Generation-Based Incentives
During December 2009, Indias Ministry of New and Renewable Energy (MNRE) announced the
new generation-based incentives (GBI) scheme, which was designed to encourage and aid the
entry of independent power producers in the Indian renewable energy market, which were not
seen as being as forthcoming as the other generation options. The key features of this scheme
are:


GBI will be available to all investors who do not chose accelerated depreciation
benefits for their projects

The per-unit incentive is set at INR 0.50 per kWh

The incentive will be applicable for projects that plan to sell power to an electric utility
or captive consumption business. For captive consumption, the GBI will only be
available for that portion that is designated for sale to the Electricity Board or licensed
utilities

The applicable cap is Indian Rupees (INR) 6.2 million per MW (approximately US$
141,000 per MW);

These GBIs will co-exist with the accelerated depreciation benefit until the
announcement of a revised tax code, known as the Direct Tax Code, or the end of the
current five-year plan (Eleventh Five Year Plan, 2007-2012), or whichever is earlier.

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Thus, revenue from GBI can be modeled as INR 0.50 per kWh generated from a wind project.
The payments will be made every six months and cash flow timings should be modeled
accordingly.

Renewable Energy Certificates


Tradable Renewable Energy Certificates (RECs) were recently introduced in the Indian markets.
The RECs have been inducted into the system in order to aid in building Renewable Portfolio
Obligations fulfillment by Indian states that do not have good wind resources.
Under the framework set for these RECs, the owner of the RECs would be entitled to trade
them in the open market using the power trading exchange as the potential platform. The
open market transaction would lead to effective price realization of the certificate. However, in
order to safeguard against any risks for this budding market, CERC has set in place a floor and a
forbearance price for these certificates. For example, the floor price for RECs has been set at
INR 1.50/ unit and the forbearance price is INR 3.9 / unit (where 1 REC = 1 MWh).
The REC revenues thus need to be modeled between these two prices. Depending on the
scenario adopted for the model optimistic, most likely, or pessimistic the price can be
assumed to be between these limits. However, since REC pricing will vary over the life of the
project, it will not be possible to correctly forecast prices, so a conservative approach in
assuming the prices is recommended.

Carbon Credits
Wind projects are eligible for carbon credits under the Clean Development Mechanism (CDM)
of the Kyoto Protocol. If a project chooses to apply for CDM registration, it can forecast CDM
revenues depending on the number of certified emission reductions (CERs) the project is likely
to generate. However, as with RECs, the prices of CERs vary and it is difficult to forecast a
correct price. Moreover, the CDM registration process involves several steps and is time
consuming. CDM revenues are likely to materialize later in the life of the project.
Further, depending on the regulatory structure and PPA, part of the CDM revenues may need
to be shared with the electricity off-taker. If applicable, the project financial model should
make a provision for this. As per CERC, 100% of the gross proceeds from CDM benefits are to
be retained by the investor in the first year after the data on the projects commercial
operation are submitted. However, beginning in the second year, the investor is to give a 10%
share to the beneficiary, and 20% in the third year, until the share reaches 50%, after which
time the proceeds are shared in equal proportion between the parties.

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7.2.5 Project Expenses (Other than Capital Cost)


Apart from capital expenses, wind energy projects, like any other power project, will have an
array of financial outlays. These are discussed below.

Operation and Maintenance Charges


A project sponsor may opt to outsource the operation and maintenance of a wind farm or may
choose to do it himself. When O&M is outsourced, the expenses are known for the period of
the O&M contract. O&M charges differ across various wind turbine manufacturers; some
charge it as a percentage of the sale price, while others link it to the turbines performance (i.e.,
generation). However, the most common convention is to charge for O&M services at a flat
rate (fixed amount). As per the recent CERC guidelines on determining tariffs for wind energy
(CERC Terms and Conditions for Tariff determination from Renewable Energy Sources
Regulations, 2009), O&M expenses for wind projects have been assumed at INR 0.66 million per
MW with an annual escalation clause of 5.72% for the tariff period.

Repair and Refurbishment Costs


If the O&M contract is comprehensive and covers all repairs and replacements of major
components, additional expenses need not be budgeted. However, if the contract is not
comprehensive, additional maintenance and repair expenses may need to be budgeted.

Regulatory Charges Payable


In some jurisdictions, project sponsors may have to pay additional regulatory charges for wind
energy projects. Typically, these charges relate to safety inspection, meter reading charges,
etc. All applicable charges along with frequency of payment need to be entered as a cash
outflow in the financial model.

Depreciation
In order to ensure the successful replacement of an asset at a future date, depreciation
allowances are accommodated in project costs. As per CERC, for computing depreciation, the
salvage value is assumed to be 10% and the depreciation is allowed for 90% of the total capital
cost. The depreciation rate for the first 10 years is assumed at 7% per annum and the
remaining depreciation is to be spread over the remaining useful life of the project.
Depreciation is chargeable from the first year of operation.

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7.2.6 Project Financing


A project sponsor may choose to adopt a debt-equity mix based on project economics as well
as the sponsors own financial strength and resources. Wind energy projects can be funded on
the basis of the sponsors balance sheet or off-balance sheet funding. The finance charges
(interest), tenure of debt, repayment structure, etc. will depend on the type of financing
structure adopted. The key parameters to consider in financing projects are discussed below.

Debt/Equity Mix
In balance sheet funding, a strong project sponsor can obtain up to 70% of the project cost in
debt. The sponsor may opt for a lower level of debt depending on its balance sheet strength
and other funding requirements. In the case of off-balance sheet funding, the actual debt level
will depend on project cash flows. Typically, lenders will specify debt service coverage ratio
(DSCR) requirements for the P50, P75 or P90 generation levels, and will provide debt funding
accordingly. Therefore, in project financing, the debt level needs to be determined based on
forecast cash flows.

Sources of Finance
As mentioned above, the most common type of funding is a balance sheet funding, which is by
and large extended by financial institutions. The vast majority of projects in India have been on
balance sheet funding, with the bank setting the terms of finance.

Loan Tenure
A loan tenure of 710 years can be taken to be a reasonable approximation of the actual deal
structure for any wind farm project. CERC, for tariff determination, has assumed a loan tenure
of 10 years.

Moratorium
Generally left to the discretion of the financing body, the moratorium for a typical wind project
would be one or two years. The moratorium could include or exclude the payment of interest
during this period. Usually, a moratorium is provided only for capital repayments and interest
is payable during the moratorium period.

Interest
The interest payable will depend on market conditions as well as the projects financing
structure. Balance sheet funding will usually result in a lower interest rate, whereas off-balance
sheet funding will lead to higher costs. Further, the interest could be payable monthly,
quarterly, semi-annually or annually.
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For determining tariffs, the Indian CERC assumes the average long-term prime lending rate of
the State Bank of India prevalent during the year plus 150 basis points.
For example, apart from interest, the project sponsor may have to pay financing costs such as
processing fees for raising debt. Typically, these costs may be 1-2% of debt raised and will be
incurred at the time of debt drawdown and should be modeled accordingly.

Debt Payment Schedule and DSCR Computation


After the debt moratorium period is over, debt repayments will begin. Usually, banks and other
lending agencies require quarterly repayments of interest and capital. The debt service
coverage ratio is an important ratio to be computed since in the case of off-balance sheet
financing, lenders will depend heavily on it to finance the project. Thus, different scenarios for
the DSCR under various levels of generation need to be computed. Further, the DSCR should be
computed for each year of debt tenure as well as an overall average DSCR. The formula for
computation is:
DSCR = Cash available for debt service coverage/(Capital repayment + Interest
for the period)
Where cash available for debt service = net profit + depreciation + interest (on a
long-term loan).

7.2.7 Taxation
Applicable Tax on Profits
Taxes should be computed according to applicable tax provisions and should take into account
any tax holiday or other benefits available to the project. Further, tax computation may also
depend on the project sponsors tax structure and other tax obligations. For a simple analysis
without considering tax benefits which are useful for making comparisons between different
investment alternatives a fixed effective cash tax rate may be assumed to compute net profit
after taxes. For a detailed analysis, tax computations need to be carried out.

Applicable Tax Incentives and Credits


In most tax jurisdictions, certain tax incentives are available to wind energy projects. In India,
wind energy projects are eligible for accelerated depreciation (80% of project cost) and a 10year tax holiday. In some jurisdictions, production tax credits are available. The financial
model should incorporate applicable tax incentives depending on the projects structure and
jurisdiction.

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7.2.8 Profitability and Key Ratios


After forecasting the cash flows, profits and balance sheet items can be computed and forecast
for the period of the financial model. Several important ratios may also be computed for
investment analysis, funding and other purposes. Some of the most important ratios are
discussed below.

Project Internal Rate of Return, and Net Present Value


The project IRR is the most commonly used investment analysis tool. Most firms have a target
project IRR below which investments are not made. Therefore, computing the project IRR
provides a quick go/no-go decision for the project. For a detailed analysis, however, net
present value (NPV) may be computed from the free cash flow to the equity. The NPV
computation will depend on the firms discount rate. However, it will be better to apply a
discount rate that reflects the project risk and not the risk to the project sponsors business (as
reflected in the firms discount rate).

Simple Payback Period


The project simple payback period can be computed from the following formula:
Simple Payback period = Project cost / Net annual cash inflow
However, for wind energy projects, the net annual cash inflow will vary from year to year in
case debt repayments are on declining balances. In such a case, the financial model will have to
sum up net annual cash flows until they match the project cost. The period where the two
amounts are equal will be the payback period. A more sophisticated method will apply a
discount factor based on time value of money to the annual cash flow before comparing to
project cost.

Equity IRR, and Return on Equity


Equity IRR can be computed based on free cash flow to equity, similar to project IRR.
Return on equity (ROE) can be computed as:
ROE = Net Income / Shareholders equity

Profitability Index
The profitability index = Present value of cash inflows / Initial cash outlay.
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Levelized Cost of Generation


The levelized cost of generation can be used to determine whether a fixed tariff is profitable for
the project or not. It is also used by regulatory authorities to set the feed-in tariffs.
Levelized cost can be computed by calculating the total cost per kWh for every year and then
discounting it to obtain the NPV. This NPV is then spread over the life of the project at a
constant discount rate to obtain the levelized cost of generation per kWh. Excels PMT function
can be used to compute the levelized cost as:
Levelized cost = -PMT (discount rate, period, NPV) *
* The - sign is needed since the PMT function in Excel computes payments required to pay a
loan at a constant interest rate.
Table 9 shows Indian states tariffs for sales of wind energy to utilities.

Table 9. Indian State Wind Energy Tariffs


Tariff Fixed by the
Commission (U.S. cents
(INR)/ kWh)
7.25 (3.39)

No.
1

State
Tamil Nadu

2
3
4
5

Maharashtra
Karnataka
Andhra Pradesh
Gujarat

10.85 (5.07)
7.92 (3.70)
7.49 (3.50)
7.62 (3.56)

Rajasthan

8.20 (3.83)
8.62 (4.03)

Madhya
7
Pradesh
9.31 (4.35)
8
Kerala
6.72 (3.14)
9
West Bengal
8.56 (4.00)
Source: Indian Wind Energy Association, 2010.
Exchange rate about 46.7 INR per 1 USD

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Remarks
Fixed
In line with CERC guidelines
for the lowest wind zone
Applicable for 10 years

For Jaisalmer, Balmer,


Jodhpur
For other districts

Fixed, to be used as a cap

66

Section 8
FINANCIAL MODEL FOR WIND
POWER PROJECTS
The most important benefit of developing projects through a bidding process is a greater level
of transparency leading to overall reduction in risk involved for investors and developers. In
most cases, bidding processes facilitates investment, overall reduction in procurement cost,
and contracting with the best vendors with defined timelines. Hence, it is imperative to
understand the bidding requirements for developing wind power projects.
Bidding processes depend greatly on the energy contract and implementation model that is
prevalent in each country. In Europe, for example, the project developer or investor is
responsible for the identification and development of the site, land acquisition, micro-siting,
selection of the turbine manufacturer, the erection and commissioning of turbines, and the
development of allied infrastructure (e.g., roads, power evacuation facility). In India, the wind
turbine manufacturer also acts as the project developer and provides end-to-end solutions,
from the selection of the site until post-sales services such as O&M. This chapter reviews the
main analyses that a developer must undertake and prepare in order to submit a successful bid.

8.1 Feasibility Report


Irrespective of the implementation model, the feasibility report is a good starting point for
exploring whether to invest in wind power. This report would cover the prevailing
implementation practice for wind power projects in the country. On the technology front, it
examines the types and local availability of different turbines. It would also address such basic
factors as possible sites, the availability of authentic wind resource data, possible energy
generation, and availability of infrastructure. Further, the feasibility report would also detail
the prevailing policy environment, structure of the power industry, and facilities available to
wind projects (e.g., incentives, tariff and grid connectivity standards).
Together, these features of the feasibility report allow a decision on whether to pursue a
project.

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8.2 Detailed Project Report


Because a wind power project requires a large up-front investment, it is very cost-sensitive.
Parameters such as the capacity factor, tariff, capital cost (CAPEX), O&M cost (OPEX), and tax
and incentive structure can have major impacts on project viability. In the majority of cases,
wind power projects are partly financed by banking institutions, private equity firms, and
venture capital, so before a project receives financing, investors will require a complete
understanding of its techno-commercial aspects. Also, the developer must understand the
projects overall viability before entering into the long-term contracts required for wind power
projects, as the projects economics are solely dependent on its financial viability. A detailed
project report (DPR) provides the basic documentation required for any financing institution to
make a decision on whether to invest in a project.
Typically, the sections of the DPR encompass information on several techno-commercial
aspects of a proposed project:
1.

Brief information on the project: This section typically outlines the basics of the project:
site location, developer, financing institution(s), type of turbine proposed, total MW
capacity planned, etc.

2.

Detailed site information: This section usually deals with the exact location of the site
and its identification on a map, approach to the site (nearest transmission line, rail, road
and airport, etc.), types of flora and fauna in the vicinity, etc.

3.

Environmental impact assessment: The probable impacts of a proposed wind power


project are described in this section.

4.

Details regarding selected manufacturer: Here, the capabilities of the manufacturer


selected, justification for the selection of a particular manufacturer, etc., are addressed.

5.

Type of turbine model used: In this section detailed information is provided on the type
of wind turbine model considered for the project, the power curve, detailed technical
information on the product, and a technical validation analysis.

6.

Wind resource study: This section details the wind flow pattern, wind flow modeling,
suitability of the selected turbine type for the available wind resources, annual energy
production estimate, etc.

7.

Land details: Here, information is provided on the type of land proposed for the wind
power project, land availability (i.e., whether land is available from the developer or if it
is under procurement or in the approval phase (for government land), whether it is
purchased or leased, etc.).

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8.

Micro-siting details: Details are provided on the exact location of the proposed wind
turbines (e.g., UTM coordinates, zone, elevation).

9.

Power evacuation details: This section consists of a single-line diagram, proposed


substation capacity and layout, location of the substation relative to the proposed wind
farm, details on the evacuation line, metering arrangements, and ownership details
(owned by the developer or government).

10.

Policy and regulatory study: Details on the policy and regulatory environment are
provided in this section. It broadly highlights the tariff structure, tariff consistency,
policy stability, other incentives, tax benefits, structure for the sale of electricity, CDM
participation, etc. This section also lays out the permissions and approvals required to
set up a wind power project at a proposed location, and provides insights on the
timeframe during which the utility will make payments for the projects energy.

11.

Commissioning schedule: This section provides a realistic schedule for turbine


commissioning. It is usually in the form of Gantt or PERT chart.

12.

Financial outlook: The techno-commercial aspects of the project are detailed here to
determine its viability. These include the CAPEX, OPEX, working capital, debt/equity
ratio, interest rate, capacity factor, tariff, tax structure, and other incentives. The results
of this analysis are usually indicated in terms of the IRR, NPV, and/or DSCR.

13.

SWOT analysis: This section normally presents the detailed results of an investigation of
the strengths, weaknesses, opportunities and major threats (SWOT) to the project.

14.

Contingency analysis: This section assesses project risks under varying parameters
considered during the financial outlook analysis. Various possible combinations of
parameters are worked out to optimize the projects viability and to reach a realistic
conclusion on its economic outlook.

15.

Conclusion and salient features: This section concludes the DPR, highlighting the
advantages and disadvantages of the project and proposing a way forward for it.

The availability of a DPR mitigates technical and commercial risks for a wind power project and
helps the developer, investor and financial institutions in making an appropriate decision.

8.3 Preparing the Bid Document


The bid documents and type of contracts for a wind power project can vary depending on the
implementation model employed. If the land has been procured and the contracting is in
process for the project, then the components of the bid document are:
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1.

Micro-siting and projection of annual generation. This involves a detailed study of the
site, and the type of land use and land cover, which will affect wind generation. If wind
measurements have been taken at the site, this component will also involve the
analysis of wind data, which will be used to estimate the annual energy generation
from the proposed project.

2.

Equipment supply. The technical parameters of the wind turbines are to be supplied
along with the project bid. This includes the power curve for the wind turbine and
specifications of other components such as the step-up transformer, generator, etc.

3.

Infrastructure development. A wind project will involve the development of road


infrastructure for the erection of the wind turbines, as well as the design and
development of a power evacuation network from the wind turbines to the nearest grid
point. For high-capacity projects, a dedicated control center for monitoring the wind
turbines must also be developed. These activities will require obtaining permits and
approvals for such things as connectivity with the grid and the construction of access
roads; they should be included with the bid document.

4.

Erection and commissioning of wind turbines. The wind turbines must be erected
according to the micro-siting study recommendations, and the foundation for the
turbines must be built to meet the sites soil conditions. Further, the commissioning of
the project is to be undertaken as per practices prevailing in the country and those of
the local utility.

5.

Operation and maintenance of the wind project. If the turbine supplier provide free
operations and maintenance services for a limited period, the bid could provide for
these services after the free O&M period. This could also be designed for a fixed period
with an agreed-upon annual increase in cost.

In cases where bids are requested by prospective investors for wind projects that do not have a
fixed location or site, bidders are usually required to submit turnkey bids that detail projects at
a number of different sites. In South Asia, where turbine manufacturers are involved in project
development, this type of bidding is prevalent. In such cases, the turbine manufacturers take
on the full scope and provide a single bid price. This involves the identification of a site,
acquisition of land and necessary permissions, development of infrastructure, and the supply
and erection of turbines.

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8.4 Evaluating Bids


Wind project bids are normally evaluated in two stages: technical and financial. During the
technical evaluation, bids must pass a number of qualifying criteria and then are ranked. The
top three or four bids that qualify in the technical evaluation are then evaluated on a financial
basis.

Technical Evaluation
In order to evaluate and rate the bids, evaluation criteria are prepared. These criteria can be
selected from the various parameters requested in the bid document. They can be broadly
divided into the following categories (arranged in descending order of importance):

Energy Generation
The important parameter here is the net annual energy generation from the proposed project.
The benchmark employed is usually the annual net generation per MW.

Turbine Parameters
These parameters are of two types: 1) those related to the turbines experience in the country
and its certification, and 2) those related to its salient features (electrical, mechanical, safety,
etc.).
The experience parameters of the turbine model offered could include the number of machines
installed in the country of interest and the number of years of experience with the turbine.
The features that may be included in the evaluation criteria are:
Status of Certification
The turbines offered must have a necessary type test certificate from the
appropriate authority in the country. If a country does not have such a certification
process, an international certificate can be considered.
Machine Size
Higher-capacity wind turbines offer optimum land use and lower O&M costs, and
hence are preferred.
Generator Type
Synchronous generators have definite advantages in terms of efficiency and thus are
preferred.

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Geared/Gearless
The gearless machines have the highest energy capture rate and thus are preferred.
Startup
Machines with a soft start mechanism present fewer problems for the grid to which
the turbines are connected and hence are preferred.
Reactive Power Control
Turbines with dynamically varying control systems are preferred, as these systems
have better reactive power control than mechanically switched control systems.
Class of Machine
The class of machines is an indicator of whether the wind turbine is designed to
operate in a particular wind regime. The definition of the wind turbine classes is
given in IEC safety standard IEC 61400. The class defined by the annual average wind
speed at hub height is:
WTG class
I
Annual avg. wind speed (m/s) 10

II
8.5

II
7.5

IV
6

Depending upon the wind resource at the site, the wind turbine class is to be
evaluated and verified during the bid evaluation process.
Power Regulation
The active pitch control technique has better control on the output power from the
wind turbine and thus is preferred.

Bidder Experience
Bidders experience in installing wind farms in the country as well as their O&M capability can
be included as evaluation criteria.

Financial Evaluation
After the technical evaluation, the financial evaluation is undertaken. It involves examining the
bids that were selected in the technical evaluation. The best criterion for the financial
evaluation is a comparison of the per-unit costs of generation from the wind power projects.

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Section 9
CDM FOR WIND PROJECTS
The United Nations Framework Convention on Climate Change (UNFCCC) was held in 1992 to
address the issues surrounding climate change and their implications. Developed countries,
referred to as Annex I countries in the Convention, were given emission reduction targets. The
Clean Development Mechanism (CDM), developed in 1997 at the Conference of Parties under
the UNFCCC, is a market mechanism to encourage the sustainable development of developing
countries, referred to as Non-Annex I countries, in a way that reduces greenhouse gas (GHG)
emissions.
The CDM, as defined in Article 12 of the Kyoto Protocol, allows a country with an emissionreduction or emission limitation commitment under the Kyoto Protocol (Annex I of UNFCCC) to
implement emission-reduction projects in developing countries. The CDM is the first global,
environmental investment and credit scheme of its kind, providing a standardized emission
offset instrument called a Certified Emission Reduction (CER).
In order to participate in the CDM, there are certain eligibility criteria that countries must meet.
All parties must meet three basic requirements: voluntary participation in the CDM, the
establishment of a national CDM authority, and ratification of the Kyoto Protocol.
The CDM is supervised by the CDM Executive Board (CDM EB) and is under the guidance of the
Conference of the Parties of the UNFCCC. The Executive Board supervises the operation of
CDM and has the final say on whether a project is approved or not. It also lays out procedures
and guidelines for CDM. The figure below outlines the procedures involved for a successful
CDM project.

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Figure 15. The CDM Project Cycle

Host Country Approval CDM Project Cycle


Design

Project Proponent

Applicant Entity

Designated Operational
Entities

Executive Board
& COP/MOP

Validation/
Verification

Designated National
Authority
Executive Board

Monitoring

Project Proponent

Verification/
Certification

Designated Operational
Entities
Executive Board

Insurance
Certified Emissions
Reductions

9.1 The CDM Project Cycle


The CDM project cycle starts with the development of Project Concept Note (PCN), which is
submitted to the national CDM authority. Based on the PCN, the authority approves or denies
the project (this is an essential step for registering the project with the CDM EB). A typical wind
CDM PCN contains basic information about the project, such as capacity planned and location
details.
The most important step in developing CDM projects is the preparation of the Project Design
Document (PDD), which provides all the information about the project. It also contains a
description of the baseline methodology and how the project satisfies the additionality criteria.
(Additionality means that the project is additional to what would have happened in the
normal course of policy implementation and technological development; it is intended to prove
that the project would not have been implemented without CDM benefits.)

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9.2 Baseline
The baseline is the emissions that would occur in the absence of the proposed CDM project,
and it must be developed for the project. A number of baseline methodologies have already
been approved by the CDM EB; they can be used if the project is similar to the project for which
the baseline has been approved. There is also an approved simplified methodology (ACM 002)
that most small-scale (less than 15 MW) wind projects can use. While the ACM 002 provides a
number of baseline options, the proposed project must provide baseline data related to
emissions from other generating sources, primarily thermal power generation, in addition to
generation data.
The development of CDM projects and their construction can occur in parallel. The best time to
initiate CDM project development is at the time of project conceptualization and certainly
before the investment decision. Table 10 provides the approximate timing for the steps
involved in CDM project development, up to the issuance of CERs.

Table 8: Approximate Time Line for CDM Cycle


No.
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.

CDM Project Cycle


Preparation of project idea note and project concept note
Preparation of project design document
Host country approval
Public web-hosting
Site visit for validation
Addressing draft validation report
Request for registration
Web hosting at UNFCCC
Registration
Monitoring
Preparation of monitoring report
Site visit for verification
Web-hosting of verification report
Request for issuance of CER
Issuance of CER
Total Time required for receiving CDM revenue

Time Schedule
2 weeks
8 weeks
6 weeks
4 weeks
1 week
20 weeks
4 8 weeks
4 weeks
2 weeks
52 weeks
1 week
1 week
2 weeks
2 weeks
2 weeks
110 weeks

9.3 Wind Energy and CDM


In the renewable energy sector, one of the major beneficiaries of CDM is wind energy,
especially in countries like India and China. By mid-2010, energy projects totaling some 31,000
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MW of installed capacity have applied for CDM registration. Of these, 1,665 energy projects
have been registered. In the SARI/Energy region, India leads wind power project registration
with some 104 wind projects now registered.
Wind power projects, like any other renewable energy project, have high initial investment
requirements with longer payback periods, which increase project risk. Various governments
have provided incentives to overcome this risk. Registering a wind power project as a CDM
project also provides additional revenue through the sale of CERs generated from the project.
A number of financial analyses have found that CDM revenue is capable of raising the return on
a wind project by 3-4%.10 Thus, CDM would help projects that fall just below the viability
benchmark in terms of IRR, to become viable.

9.4 Current Issues


Of late, wind power projects have scrutinized by the CDM Executive Board. The primary reason
for this has been the continuous changes in the modalities and procedures of the Board in an
attempt to make the entire system more stable. The huge inflow of non-additional wind
projects under the CDM was also a spur. As a result, many changes were made to the existing
rules and regulations for CDM projects.
Figure 16 shows a decreasing number of wind power projects in the CDM pipeline. When it
comes to India, about 755 MW of wind power projects have not achieved registration. These
projects have either been rejected by the Executive Board, been withdrawn by the developers,
or given a negative validation report by their respective Departments of Energy, or the
developers have terminated the project themselves. Out of these, projects comprising almost
600 MW had started the validation process during 2006-2008. Clearly, the frequent and drastic
changes brought about during this time have adversely affected the projects in the pipeline.

10

http://cd4cdm.org/Publications/WindCDM.pdf

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Figure 16. Number of Wind Power Projects Registered under CDM Annually11
90
80
70
60
50
40
30
20
10

Q
104
Q
304
Q
105
Q
305
Q
106
Q
306
Q
107
Q
307
Q
108
Q
308
Q
109
Q
309

Serious Consideration of CDM Revenue


Recently, the CDM Executive Board released a guideline to establish that project promoters
consider CDM as one of the critical sources of revenue before seeking investment in the
project. This guideline, which also leaves much open to interpretation, greatly affected
projects that either started the CDM process recently or have not been able to complete their
validation. The worst affected are projects that were already in the pipeline or in advanced
stages of validation. As a result of the release of this guidance, the validation for existing
projects was started all over again. There have been a number of cases when even after the
submission of number of official documents; the project promoters have not been able to
convince their Department of Energy of the worth of their project. The result has again been
either a rejection of the project or a delay in project execution.

Common Practice Analysis


The common practice analysis is an additional test that large-scale projects (above 15 MW)
need to complete following the financial additionality principle. The test basically establishes
the fact that wind power projects without CDM are not a common practice within a particular
area or a jurisdiction, e.g., a State or province. For CDM wind power projects, this becomes a
problem, especially in the Indian states of Tamil Nadu, Karnataka and Maharashtra, which have
the largest number of wind project installations. However, this would not be a major problem
in other South Asian countries, which currently have few wind installations. Although many
developers appear to be familiar with CDM rules and claim to have applied for CDM
registration, there is little quantitative data on the number of submissions and their status.
With the CDM Board increasing their standards for compliance, the need for additional data
development will be critical.
11

UNFCC, CDM Projects Search, http://cdm.unfccc.int/Projects/projsearch.html, CDM project pipeline, 2010.

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Increased Transaction Costs and Other Procedural Issues


The transaction costs for getting a project registered have seen a multifold rise. This can be
attributed to the increased number of rules and regulations in CDM, and the simultaneous rise
in the number of CDM projects. This is especially true in the case of the validation or
verification fee, which has increased by at least 50% over the past four years. This issue is
further magnified because of the fact that CER prices have been falling. If this trend continues,
small-scale project promoters might not feel encouraged to apply for CDM revenue at all.

Table 11. Typical Costs for a CDM Project


S. No

Description

Cost

1
2
3

Project development charges


Validation charges
Monitoring and verification
charges
UNFCCC registration charges

US$ 10,000- 15,000 + Success Fee 0.5-5%


US$ 13,000 20,000 (one-time fee)
US $ 8,500 10,000 (Every Year)

5
6

Adaptation fund fee to UNFCCC


Carbon exchange fee (If CER
transacted through an exchange)

0.1 US$/CER up to 15,000 CERs, 0.2 US$/CER after


15,000 CERs
No charges if annual average is less than 15,000
CERs
2% CERs per annum
2 5 % of CER transacted

9.5 Voluntary Emission Reductions: A Feasible Alternative


Due to the procedural and technical issues associated with the CDM, many project developers,
especially those of older installations, are steadily moving towards other voluntary standards.
Many of these standards hold promise as good alternatives to the stringent CDM rules and
regulations, and allow wind projects to begin realizing revenues in less time than they would
under CDM. Initially, the voluntary market was looked at for pre-registration credits or projects
rejected by CDM. Now, an increasing number of people are making a conscious decision to
move ahead with the voluntary carbon market for their projects.
Currently, two standards are dominant in the voluntary market: The Voluntary Carbon
Standard and the Chicago Climate Exchange. These standards do have a disadvantage,
however: because they are not as stringent as those in the CDM, the price that the voluntary
emission reductions fetch is quite low as compared to CERs. At present, a Voluntary Carbon
Unit (from the Voluntary Carbon Standard) and a Carbon Financial Instrument (from the
Chicago Climate Exchange) are being traded at approximately 4 and $2 per instrument,
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respectively, as compared to a CER, which is being traded at around 14 (the spot market price
on 5 September 2010).
On the other hand, the future of projects that were recently, or are currently being,
commissioned is beginning to look brighter under the CDM. Post-2012, such projects are likely
to be registered with minimum difficulty. In addition, the CDMs new Gold Standard is a
qualifying project standard with a focus on sustainable development. A Gold Standard project
is likely to earn a premium of at least 3-4/ CER above the usual CER prices.
While the opportunity for increased CDM support for wind projects is substantial clearly a
large proportion of the more than 5,500 MW of the development pipeline could benefit from
CDM the opportunity has not been fully explored by the regions governments and policy
makers. CDM remains a powerful tool to further augment private sector investment in wind
power and Power Ministries should fully support project registration.

9.6 CDM Best Practice


Besides proving a project to be additional, certain practices can facilitate the registration of a
CDM project. For example, informing the CDM Executive Board and the National CDM
Authority early about the possibility of developing a project (even if it is only at a conceptual
stage) will provide evidence that the project was conceived with CDM at the earliest stages.
Further, good documentation is key to speedy registration, as the facts and figures mentioned
in the CDM PDD often require third-party documented proof. Last, the timely appointment of
consultants and a validation agency will increase the probability that the project will be
registered successfully.

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APPENDIX A
WIND PROJECT DEVELOPMENT
CHECKLISTS
This appendix was adapted from Soren Krohns paper Wind Power Projects in Developing
Countries: Key Barriers and Solutions for Wind IPP/BOO Projects, September 2010.

A.1 Policy and Regulation


The economic feasibility of developing large-scale wind energy depends primarily on having
high wind speeds on sites accessible to electricity transmission equipment and roads, and on
the economic cost of alternative forms of power generation. The practical feasibility of large
wind projects, including their financing, is highly dependent on having an adequate legal and
regulatory framework. The tables below list typical barriers cited by developers and possible
ways to address them. Some solutions apply only to projects tendered on the basis of a
tendered independent power project/build-own-operate project (IPP/BOO project), whereas
others apply to fixed-price feed-in tariffs (FIT); this is noted in the text below.
Institution and Capacity Building,
First Pilot / Demonstration Project
Barrier
Possible Solutions
1 Many government agencies
In order to succeed in building projects, wind power needs to be
are involved in the regulation high on the political agenda. Many governments have had success
of wind, but there is little
in setting up an effective inter-agency task force to fill in the
effective coordination.
missing pieces of the legal and regulatory framework. The task
force should consult with the wind industry to clarify technical
issues.

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Institution and Capacity Building,


First Pilot / Demonstration Project
Barrier
Possible Solutions
2 It is difficult to create
This difficulty maybe overcome to a certain extent by tendering an
comprehensive legal and
IPP/BOO project internationally, and in areas where regulation is
regulatory environment for
missing, do regulation by contract. If properly prepared, e.g., grid
wind sector development.
interconnection requirements can be recycled as a general grid
code for wind turbines and wind farms.
3 Government or utility preThe government or utility should ensure that a grid study and a
development of tendered
complete preliminary environmental and social impact assessment
IPP/BOO projects is necessary have been completed before bids are due. Otherwise, the winning
if projects are tendered on
bidder may be blocked by, e.g., missing environmental permits.
predetermined sites.
Final site measurements are most efficiently done by pre-qualified
developers.
4 It is critical that meteorology
Wind power needs far more precise wind speed measurements
masts be correctly installed in than those needed for weather forecasting: An error of 1% on the
accordance with the IEC
mean wind speed may translate into a loss of 3% of power
standard and equipped with
generation. The first meteorology masts in the country should be
MEASNET or equivalent
installed by certified international wind measurement consultants,
calibrated quality
and local staff should be trained to erect and maintain masts (guy
instruments.
wire tensioning, visual inspection, safe data collection). Local
cellular phone mast erection contractors often have staff that can
be trained for this purpose.
5 Technicians for turbine O&M
First-rate turbine suppliers will train local staff to do routine O&M
are not available.
work. Experienced operators of diesel gensets or engineers
managing ship engines are excellent candidates for this type of
work.
6 Procurement expertise in
Training programs are required. Because thermal projects are
relation to wind IPP/BOO
technically and economically different from wind projects (wind
projects is missing.
projects resemble small run-of-river hydro projects to a certain
extent), some specific wind expertise is required in writing requests
for proposals and assessing bids.

Economic Barriers for Wind at Power Generation Planning Stage


Barrier
Possible Solutions
1 Market failure to include
Government should have utilities include externalities when
externalities in the financial
analyzing economics in power generation planning in order to
analysis of wind projects
obtain the true social cost of power generation.
2 Competition from subsidized
The utilitys economic analysis and excess cost compensation
fuel for conventional thermal mechanism should include the true opportunity cost of fuel savings
power
(fuel can be exported or imports reduced, and there may be savings
on fuel subsidies)

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Economic Barriers for Wind at Power Generation Planning Stage


Barrier
Possible Solutions
3 Improper or no accounting for Power system planning models such as WASP (not to be confused
fuel price risks in power
with the wind resource analysis model, WAsP) systematically
systems planning makes
choose minimum-cost solutions with high risk, even if alternative
countries choose short-term, lower-risk solutions are available with a minimal cost increase.
low-cost solutions without
Sensitivity analyses based on varying the rate of discount do not
reveal this very real risk.
regard for long-term risk.

4 Dominance of conventional
thermal power allows fuel
price risks to be passed onto
clients - or de facto absorbed
by public budgets
5 Electricity markets not geared
to wind

Barrier
1 20-year take-or-pay PPAs
unavailable or not allowed
2 Feed-in tariff may be
modified politically at any
time

3 No sustainability of tariff
scheme

Models exist for calculating the historical tradeoff between costs


and risks for power generation portfolios and portfolio
optimization. (The World Banks ESMAP model for assessing fuel
price risk in power systems planning is in the public domain. More
recent versions are available, but such modeling requires additional
training.)
One key advantage of wind, hydro and geothermal projects is that
the fuel is free, and that the electricity offtaker can do 20-year fixed
price contract for electricity supplies.

Gate closure times in electricity markets (i.e., the planning


horizon for power generation in number of hours between the time
power plants offer their electricity for sale and the time when it has
to be delivered) may be too long to benefit from short-term wind
energy forecasting. Gate closure times should be shortened to
what is technically necessary for actual dispatch.

Energy Tariff & PPA Issues


Possible Solutions
Wind energy is extremely capital-intensive, so long-term (basically)
fixed-price PPAs are a necessity to obtain a reasonable price per
kWh, regardless of whether the tariff is determined by a tender or
by a feed-in scheme. Since the technical lifetime of a wind farm
built according to IEC standards is 20 years, the lowest prices can be
obtained if the owner can get a PPA corresponding to the technical
lifetime of the plant.
Changes to tariffs in feed-in based tariff systems should only apply
to new projects, where investments have not started.
The costs of wind energy can met by spreading them on the
electricity tariff base, placing a levy on transmission, a renewable
energy fund, or initiating compensation for the true opportunity
cost of fuel saved from power generation.

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Barrier
4 Creditworthiness of the
electricity offtaker is
inadequate
5 The fixed feed-in tariff or RE
bonus per kWh is inadequate
to ensure the profitability of
projects

6 Wind energy cannot compete


financially due to subsidies to
fuels for power generation
7 Economic incentives are
inadequate, (taxation, etc.)

Barrier
1 Unexpected permitting and
licensing requirements may
wreck an otherwise fully
developed wind project

Energy Tariff & PPA Issues


Possible Solutions
Projects may need to be backstopped by partial risk guarantees
(political risk and general payment risk) from MIGA or export credit
insurance organizations.
It is difficult to determine the appropriate level of a feed-in tariff in
a new market, i.e., a tariff that is adequate, yet does not give
excessive profits on the best sites. Some mitigation can be
obtained through tariffs, which are differentiated by wind resource
or profitability (the Danish, German or French models). The best
way to determine a commercially viable tariff is to start with an
IPP/BOO demonstration scheme and tender a few wind farms on
the basis of the kWh price under such a scheme.
If fuel subsidies cannot be reduced, compensation mechanisms can
be implemented for the electricity offtaker (for, e.g., domestically
produced fuel freed for export or saved) rather than being given as
subsidized fuel for power generation.
Basically this is a question of determining an appropriate tariff - by
tendering or a fixed-price feed-in tariff (FIT). Special incentive
schemes may serve to make the pricing and tariff issue less
transparent.

Permitting and Licensing Issues


Possible Solutions
Permitting and licensing requirements should be built into
requirements for BOO projects, so that the winning bidder will have
demonstrated compliance with the requirements for obtaining
permits and licenses.
For price-based tariff schemes (FIT) a single window approach (a
single government agency that coordinates all permitting
requirements) is extremely useful. This has been done for offshore
wind with success in Denmark and elsewhere, often through
national energy agencies or national investment authorities.

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Barrier
1 Exclusivity arrangements with
developers (often land
speculators) lock up valuable
high-wind resource land,
which remains undeveloped.

Public Land Use Policy


Possible Solutions
In fixed-price FIT systems, it is best to have competition for land use
(auction based on rent per MWh), with annual land rent to be paid
in any case, until the project is commissioned. It is definitely
necessary to have a time limit for a land lease expiry before
commissioning occurs. Possible model inspiration may be obtained
in Ireland's offshore wind territory lease system.
For tendered BOO/IPP projects on sites to be found by developers,
non-exclusive letters of intent of governments for land leases can
avoid the lock-up problem during the bidding phase. (A good
example is the Government of Qubec.)
For tendered BOO/IPP projects on predetermined sites, the issue
does not arise (only one bidder will win the right to use the site).

2 Land rent

Land speculators may not be helpful to the process of building a


viable pipeline of projects. In that case, access to public lands
should be limited to pre-qualified, bona fide developers, with
sufficient technical and economic qualifications. (This is usually
done in all tendered IPP/BOO projects.)
If any land rent must be collected, it is best (because it presents the
least risk for the developer and thus the lower acceptable tariff) if
the annual rent is based on actual energy production, i.e., on an
amount per MWh.
In quantity-based systems (tendered IPP/BOO projects) land rent
will be reflected in the bid price, hence zero rent for public land
may be optimal in price-tendered projects. It is usually necessary to
specify a minimum number of MW for the particular land area to
ensure the efficient use of valuable high-wind resources. (The
number of MW varies with the terrains surface roughness,
topography and wind climate, and requires expert advice.)

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A.2 Wind Project Development


The tables below list typical barriers cited by developers and possible solutions. Some solutions
apply only to projects tendered on the basis of a tendered IPP/BOO project (on the basis of the
kWh price), whereas others apply to fixed tariff systems (FIT); this is noted in the text below.

Wind Resource & On-Site Measurements


Barrier
Possible Solutions
1 Lack of knowledge of national Develop a meso-scale wind atlas based on satellite data, weather
wind resources and probable
model reanalysis data, and existing meteorology models.
generation costs
Preferably also develop a national ground-based meteorology mast
measurement program to verify the existing models. This can be
used as a basis for further exploration and measurements on
potential sites. World Bank (ESMAP) guidelines for terms of
reference are available for meso-scale wind atlas mapping.

2 Lack of reliable long-term


wind data makes wind energy
resource estimates uncertain.

Developers or land speculators who have measured before others


(and frequently taken out options for land leasing) often consider
wind resource mapping a low priority, since they prefer to remain in
a situation where they have an effective knowledge monopoly and
can lock up the best land with good wind resources.
A government-run long-term wind measurement program for each
relevant region may be needed. Good examples are the DANIDA
and GtZ-financed program in Egypt, which has been operating for
>15 years, and a GtZ-financed program in 12 regions of Syria, which
has been operating for > 5 years. (Poorly planned and poorly
managed wind measurement programs abound in many countries
on several continents.)

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Wind Resource & On-Site Measurements


Barrier
Possible Solutions
3 The government does little or Pre-development work on promising sites with good wind
no pre-development work for resources, grid access and good accessibility makes sense only if the
potential sites, and little or no sites are tendered competitively (by bidding for a MWh price). If
regulatory work related to
the site is thus pre-selected, it is important that the government
wind energy.
take on all the project risks under its control in order to minimize
the risk for bidders and their MWh price. Prior environmental
impact assessment, screening is also necessary. The regulatory
framework needs not be complete for the first projects; the
problems may be solvable by regulation by contract. (See Section
A.1.)

4 Moral hazard problem if the


electricity offtaker
(government or utility) has
measured wind on a
predetermined site to be
tendered as an IPP/BOO
project: There is an incentive
to exaggerate the wind
resource, and the quality of
measurements may be
insufficient, making it too
risky for financiers.
5 Low quality of wind
measurement and sketchy
resource modeling
requirements in tendered
IPP/BOO contracts increase
project risks.

If developers are to find sites on their own, then logically predevelopment work is the developer's responsibility, for example, in
a classic FIT system. In this case, however, it is necessary that the
legal and regulatory framework has been properly established,
dealing with all the issues listed in these tables (and more).
Bidding developers, not the electricity offtaker, should measure
wind on sites tendered for IPP/BOO projects, since the developer
takes the wind resource risk. An operational model for a voluntary
joint site measurement program for pre-qualified bidders has been
developed in Egypt for its 2,500 MW IPP/BOO wind program. This
model is now also being copied in Syria.

The quality requirements of the developers and their financiers are


the determining factor in whether a project succeeds. Hence, it is
preferable if minimum quality standards correspond to the bankers
requirements. This is the basis for the mandatory measurement
requirements in the Egyptian IPP/BOO tender model mentioned
above. Likewise, resource modeling using WAsP or other
internationally bankable software should be required. Otherwise
project financing may be impossible to obtain.

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Wind Resource & On-Site Measurements


Barrier
Possible Solutions
6 Poor or no digital
The Egyptian tender model includes advanced aerial laser scanning
topographical high-resolution of sites. There are economies of scale in site mapping, however,
maps are available for sites
and governments could digitally map multiple sites as part of their
being tendered as IPP/BOO
pre-development work for tendered IPP/BOO projects. There is
projects. This increases risks
more trust in the offtaker doing this type of measurement work
in resource modeling and
than in their wind measurements, since topographical
consequently bid prices.
measurement quality can be verified ex post, whereas wind
resource assessments can only be verified after the wind farm has
been built.
7 No geotechnical sampling
The Egyptian tender model mentioned above includes geotechnical
prior to tendering sites
sampling.
increases risks for bidders
(foundation costs).

Environmental and Social Impacts


Barrier
Possible Solutions
Wind development competes A nation program of pre-screening relevant regions for
with other land uses in the
environmental and social issues (e.g., birds, telecommunications,
province or region
archeological sites, waterways), as well as preliminary
environmental impact and social assessment studies, is
recommended. Map layers can be combined with the wind atlas
and generic grid reinforcement cost map to find suitable
development areas.
Project risk regarding whether For IPP/BOO projects at predetermined sites, the government
environmental and social
should do preliminary environmental impact and social assessment
impact assessments will be
studies, ensuring a near-certain approval of project.
positive or not
Private land use: Poorly
A land registration program may be needed to determine property
defined property rights or
rights in the area of the site. Special problems can arise when
indigenous people's rights
handling collectively owned land. There is extensive literature on
the subject available from the World Bank (and its upcoming
publication on best practice for handling environmental and social
issues in relation to wind farms) and other sources.
Private land use: Landowner
It is important that all landowners within wind farm perimeter
resistance to the project
receive some sort of compensation per turbine on their land plus
compensation for access roads. In some jurisdictions transmission
mast compensation rules can be used as a model. Even landowners
without turbines or road use should receive some (lower)
compensation to avoid political blockage of project from noncompensated landowners. Good elaborated model guidelines were
issued in Ontario, Canada.

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Environmental and Social Impacts


Barrier
Possible Solutions
Laws or resistance against
Land need not be purchased for wind farms, but can be leased for
land being taken out of
the duration of the PPA, and legislation and regulations should
farming
allow this. Close to 98% of the land area will remain arable after a
wind farm has been installed.
Local resistance to the project Community income sharing schemes have been implemented in
due to lack of information or
other power generation projects. Best practices for local
participation
information and hearing practices can be obtained from, e.g., ADB,
IFC or World Bank safeguard guidelines.
Concerns about safety for
All wind turbines installed in the country must be required to be
neighbors and workers on site type certified for a technical lifetime at least equal to the duration
of the PPA by an accredited entity in accordance with the most
recent version of the IEC 61400 standards as fit for purpose in the
site environment.
Ornithological concerns about Ornithological studies (1 year) may be required as part of
bird or bat populations
environmental impact assessment (EIA) in critical areas. Mitigation
measures may be needed (e.g., temporary stoppage during highdensity migration, if the wind farm is placed in an important bird
migration path). The determination of whether an area needs
additional studies is best done in the environmental screening
phase (point 1 above), where zones may be labeled as red
(prohibition), yellow (bird studies required), or green (no bird
studies required).

Barrier
1 Poor site area planning leads
to interference (wind shading)
between wind farms which
increases risks by decreasing
power output requiring
higher tariff for cost recovery
(this is a common problem in
very high-wind zones with
densely packed wind farms)

Public Spatial Planning (Zoning)


Possible Solutions
Wind farms generate turbulence downstream, and turbulent
energy cannot be used for power production. It is essential that
wind farms be carved out so that they do not shade one another.
An upstream wind farm will reduce energy production downstream
by 10-20% depending on turbulence intensity and terrain surface
roughness. Poor site planning also means that use of the wind
resource will not be optimized, possibly wasting 15-20% of the
energy and with correspondingly higher required tariffs. Adjacent
wind farms should be long slices in the prevailing wind direction,
with the borderline following the prevailing wind. Buffer zones for
wind to recover are required between wind farms, notably
downstream. A single large wind farm optimized by a single owner
will usually exploit the land area best.

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Barrier
2 Poor site planning in relation
to noise and shadow flicker
may cause problems with
neighbors and cause sites to
require re-planning.

3 Military or civil aviation


authorities may object to the
siting.

4 Telecommunications
authorities may object to the
siting.

5 Road authorities may object


to the siting.
6 Decommissioning
requirements for wind farm
are undefined; risk of ghost
wind farms.

Public Spatial Planning (Zoning)


Possible Solutions
There is excellent software on the market (e.g., WindPro, Wind
Farmer) that can be used to define appropriate distances between
turbines and residences to meet a regulatory requirement that the
theoretical noise level will not exceed, say, typically 40 dB(A) (this
maximum limit needs to be defined in regulations). Likewise,
shadow flicker is only a real problem in a narrow strip that is
northeast and northwest of each turbine (in the Northern
hemisphere above the tropic of cancer), and east and west of each
turbine between equator and tropic of cancer. Exclusion zones can
be mapped using this standard software. (Again, the acceptable
maximum number of shadow flicker hours needs to be defined in
regulations).
Rules for aerial markings on tall wind turbines need to be
established. Good standard models for this are available (red/white
stripes on blades, and for very tall turbines, night lighting). But
decisions may need to be taken in relation to topography
(mountain ridges) and proximity to air corridors (e.g., end of
runways in airports are off limits, but no major problems elsewhere
around airports).
Turbines should not be placed directly in microwave transmission
corridors. Standard rules are available for this. Otherwise, there
are generally no major radio or TV interference problems. Wind
turbines often have double use as towers for cell phone
communications.
The setback from roads is usually regulated to be about 100 m.
Decommissioning requirements should be defined in the PPA or
regulated generally. The best practice is to require that
foundations are removed to 1 m below grade and that land is
restored to its original state after the PPA ends. Any turbine that
has been out of service for a year must be removed from the site
and the terrain restored when decommissioning. A security or
guarantee arrangement for this (bond) is useful to include in the
RPF documents or the PPA.

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Barrier
1 Disagreement about which
party bears which risks in
IPP/BOO contracts

2 BOO or BOOT contracts

3 Price indexation of PPA


contracts (applies to FIT
contracts as well)

Experience/Capacity for IPP/BOO Projects


Possible Solutions
Best practice for all tendered IPP/BOO contracts is that the party
who effectively can control each risk or who most cheaply can cover
it, bears that risk. For risks that are outside the control of either
party such as exchange rate risks, and prices that affect project
economics, they are usually most cheaply carried by the electricity
offtaker. It is in the interest of the electricity offtaker to reduce
project risks as much as possible in order to achieve a low electricity
price. The offtaker will have an interest in doing as much predevelopment as possible in the special case of IPP/BOO tendering
on predetermined sites in order to reduce risk.
According to IEC standards, wind farms have a standard certified
technical lifetime of 20 years. PPAs should generally have a term of
15-25 years and a decommissioning requirement, and terminate
thereafter. It is unwise to insert any option for the bidder to
continue projects after this point, since economic conditions may
change substantially in the meantime (giving windfall capital gains
to project owner).
The primary economic advantage of wind energy is that the
electricity offtaker can do fixed-price electricity contracts for a 20year period. Wind farm projects should thus normally be done as
primarily fixed-tariff (energy only) take-or-pay contracts for the
duration of the PPA. Wind farm owners are safe with this solution,
since they will take out nominal, not real (price-indexed) loans from
their financiers. A small component limited to labor and parts
content in O&M (maximized to about 15-20% initially) could be
indexed.
Exchange rate indexation is another issue treated under the finance
section. Price indexation of bids between the time of bidding and
financial close or commissioning is a separate issue.

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Critical Mass Issues, Local Participation, Local Content


Barrier
Possible Solutions
High local content
The most important prerequisite for local manufacturing is to have
requirement beyond balance- a stable wind program with a time horizon of at least 5-10 years,
of-plant (i.e. roads,
and a credible continuity of national policy despite changes in
foundations and electrical
government. Otherwise, it is too expensive to make investments
works) is not economic for
and train local staff. Local manufacturing, particularly of small
small projects
volumes, may imply significant cost and reliability penalties. Simple
one-off programs in a single year will only generate local work on
installation (balance-of-plant), but this may be quite significant: 2035% of project investment.
Tower manufacturing is most Transportation costs often mean that towers can be manufactured
amenable to localization for
locally economically for larger projects. Towers account for a
larger projects
relatively large share of the value of a wind turbine, about 15-20%.
Local manufacturing requires ISO 9000-series certification of the
supply chain.
Nacelle assembly is
Nacelle assembly accounts for around 2% or less of the price of a
(mistakenly) seen as a
wind turbine. Hence, there is no economic gain, little employment
valuable means of
and high quality risk associated with local manufacturing. The
employment and technology
manufacturing process for wind turbines in not substantially
transfer
different from other forms of large machinery manufacturing.
Rotor blade manufacturing
Rotor blade molds are expensive assets, which - like blades - are
requires high, continuous
difficult to transport. Hence, they need to be run with high capacity
order volume
utilization, i.e., the local market has to be relatively large and
continuous. Raw materials normally need to be 100% imported.
Blades typically account for 12-15% of the value of a wind turbine.
Local manufacturing requires ISO 9000-series certification of the
supply chain.
High local content is more
Annual volume is politically uncontrollable in a FIT system and in
difficult to achieve in pricepractical terms also uncontrollable in a green certificate system.
based (FIT) system than in
Volume and suppliers can be controlled accurately in a pipeline of
quantity-based tariff systems IPP/BOO tenders (or EPC tenders by the national utility or
government).
Small project size fails to
Large, experienced international wind developers with good access
attract experienced
to finance focus on projects in the 100-250 MW range, or on
international bidders and
pipelines or bundles of projects from this size and up. Small
turbine manufacturers in
projects below 50 MW may have difficulty getting turbines, if they
tenders
are the first in a region without an established service network.
A possible way of obtaining a critical mass of MW is to bundle
several non-contiguous project sites into a single tender, as is being
done in the Philippines.

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A.3 Wind Power Transmission Grid Integration


The tables in this section treat the typical technical and administrative barriers to transmission
grid integration of wind power in developing countries.

Typical Transmission Grid Issues in Developing Countries


Barrier
Possible solutions
Little or no knowledge of
Capacity building for TSO staff is required, including basic wind
wind power characteristics,
power technology, power quality and grid support properties of
(e.g,. assumption that wind
modern wind turbines, meteorology, and use of short-term wind
power is intermittent 100%- forecasting in dispatch. The simulation of power generation should
0% in seconds rather than
be based on historical local meteorology data and historical hourly
several hours)
load curves.
No existing standard grid
A grid code for wind turbines and wind farms should be established
code adapted for wind
based on mainstream large international markets, but adapted to
turbines or wind farms
local grid conditions. If the first project is an IPP/BOO project,
define and subsequently recycle interconnection requirements as a
general grid code.
Grid studies, including
For larger wind farms it is necessary to include such studies in the
dynamic grid stability
transmission project related to the wind farm.
studies, are not available for
the project.
Weak grids and long radials
It is extremely useful to prepare a generic grid reinforcement cost
study for each (wind-relevant) section of the transmission grid (to
to reach (often remote)
windy areas require grid
be updated, say, after 3-5 years).
reinforcement or grid
This study will complement a national meso-scale wind resource
extension. Wind developer
demands for grid connection map in order to search for economically suitable sites and begin
in remote areas may be
local wind measurements.
costly to meet.
A separate transmission queue is needed for an IPP project
pipeline, with clearly defined responsibilities for the transmission
No clear responsibility for
system operator.
transmission systems
operator to provide
interconnection for IPP wind
farms
Transmission master
planning not adapted to
IPPs: Long transmission
project queue, often
requiring waits of 3 years or
more. Master plan revision
is slow.

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10

11

Typical Transmission Grid Issues in Developing Countries


Barrier
Possible solutions
Wind projects are often
The transmission grid should be considered a public good, to be
required to bear the cost of
financed through a postage stamp transmission tariff.
grid reinforcement or grid
extension, even if a stronger Central planning can be useful to make wind energy development
local grid or a grid extension take off: Governments and development banks can help finance
to remote areas also
grid extension to windy areas, where pre-assigned sites can be
benefits local consumers
tendered as a pipeline of IPP projects.
and the electrical utility.
Example: Egyptian Red Sea Coast, where 3,500 MW of IPP and
First projects in a remote,
government-owned projects will be built 300 km away from the
high-wind area cannot bear
main transmission grid. The Egyptian Government, World Bank,
the cost of grid extension,
African Development Bank, EIB and KfW are financing the grid and
but additional projects
EIA for the whole area.
could. This chicken and
egg problem prevents wind
development from taking off
in potentially promising
high-wind zones.
Auto-generation wind
Replicable models have been developed in India and Morocco, for
projects face problems of
example.
negotiating interconnection
fees, wheeling and banking
rights, and agreements on
the cost of balancing power.
Grid maintenance planning
IPP contracts need to be take-or-pay contracts, with damages to IPP
not adapted to wind IPPs:
equal to the actual lost production in case of any grid interruption,
TSO may demand right to
since the maintenance event is controlled by the TSO and can be
interrupt grid, say 1% of the planned for the low-wind season. Otherwise, the developer may
hours of the year.
require some (1% / capacity factor) in the risk premium!
Connection requirements for No technical need to apply transmission codes at the distribution
small wind farms (connected voltage (medium voltage, MV) level.
at the distribution voltage
level) are sometimes as
demanding as for large wind
farms connected to the
transmission grid.

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Typical Transmission Grid Issues in Developing Countries


Barrier
Possible solutions
12 Long gate closure times in Gate closure times can be shorter, limited only by technical
electricity market and in
requirements for dispatch.
least-cost dispatch planning
makes it difficult for wind
The dispatch center needs to run a short-term wind generation
supplies to be scheduled
forecast model, if there is a high level of wind penetration in the
efficiently.
grid control area. Larger IPP wind farms should be required to
supply real-time wind data from on-site meteorology masts and
generation and availability data from SCADA systems for the wind
forecasting model.
13 Large concentrations of wind Grid codes should provide for remote control of wind farms or
farms in remote areas put
clusters of wind farms by the dispatch center, e.g., for variable
additional demand on grid
reactive power compensation, and in emergency situations where
management functions to
the possibility of energy curtailment ranges from 0-100%.
ensure grid stability.
14 Capacity credit - if part of
Wind does have a capacity value in the grid, which can be
the tariff system - may
determined by simulation models including historical data for wind
discriminate against wind by and electricity demand, and observing a given loss-of-load
assigning it zero capacity
probability. These analyses indicate that for moderate amounts of
value
wind in the grid, say, up to 20% by energy, the capacity value is
about equal to the average capacity factor for wind power.

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A.4 Financing and Costs


This chapter addresses financing and cost issues related to large-scale wind projects. There is a
considerable overlap with the previous chapters, in particular policy & regulation and project
development. The table attached below lists typical barriers to financing projects. Each subject is
treated in more depth in the other chapters.

Examples of Major Risks for Wind Farm Financing


Barrier
Possible Solutions
Risk allocation between
Risk should be carried by the party able to control the risk or to
contracting parties
most cheaply mitigate the risk (e.g., the developer takes the wind
risk, the government guarantees against regulatory changes with
major economic impact). Risks beyond the control of either party
(e.g., exchange rate risk, price index risk) are generally most cheaply
carried by the electricity purchaser.
Developer qualifications:
Form consortia with experienced companies
Insufficient experience,
inadequate capital base
Electricity offtaker with little A contractual framework needs to be established in accordance
IPP experience and a poor
with best international practice. Lack of regulatory framework can
credit rating
partially be remedied by "regulation through contract.

Wind resource uncertainty,


lack of long-term reference
data, poor site
measurements

A PPA may need to be backstopped by government guarantee and


partial risk guarantee from credit insurance company or MIGA
(political risk, payment risk).
Governments and development agencies can finance modern
meso-scale wind atlas work based on satellite data, meteorological
modeling and meteorological reanalysis data.
Due to poor long-term meteorology data in many developing
countries, a ground-based long-term provincial measurement
program is often needed to obtain reference data, which is used to
calibrate measurements in order to find long-term mean wind
speeds. There are good examples of such programs in Egypt and
Syria.

Construction risk

Bankable site measurements need to be done by certified


consultants. At least 12 months of measurement if good, long-term
reference data are available from nearby locations; otherwise, a
longer time period for measurements is preferable.
Form consortia with experienced companies with local knowledge
and experience.

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Examples of Major Risks for Wind Farm Financing


Barrier
Possible Solutions
Land risk, property rights
Property rights programs for land registration may be needed, and
poorly defined, lack of
a government land use policy is needed.
government land use policy
Environmental and social
Prior screening of land use by the government is extremely useful
risks
(good examples can be found in Denmark and Germany). Such
screening may involve bird studies, mapping microwave corridors
for telecommunications, aerial marking requirements close to
airports, potential archeological finds, etc.
Environmental and social impact assessments are needed, and
mitigation measures may need to be implemented.

Grid risk: Inadequate grid


studies, including dynamic
stability studies. Missing
grid code or requirements
that do not correspond to
actual grid strength and
stability
9 Revenue risk: Poor
creditworthiness of the
offtaker, firm PPAs of 20 (or
15) years duration not
available, tariff subject to
political uncertainty
10 Tariff inadequate for rate of
return or debt service
coverage
11 Power curtailment risk

Information and participation schemes for local communities,


landowner compensation schemes.
Grid codes for wind turbines and wind farms (preferably modeled
on grid codes from major markets) are needed. Grid studies for site
area are required to ensure technical feasibility.

Firm PPAs of 20 (or at least 15) years with fixed prices are necessary
to obtain an acceptable electricity price.

Wind projects are very capital-intensive and require a (mostly fixed)


tariff to service debt. Only O&M costs (max 15-20%) need
indexation.
Contracts must be take-and-pay and compensate for actual loss due
to grid outages or grid maintenance. (Actual loss should be
calculated from meteorology mast measurements on site and an
empirical power curve for the wind farm.)

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Examples of Major Risks for Wind Farm Financing


Barrier
Possible Solutions
12 Availability and operations
Power purchaser should require quality turbines from experienced
risk
manufacturers that are IEC certified by an accredited entity as fit
for purpose in the site environment. Turbine models that have
proven high availability in previous large wind farm projects in
similar climatic conditions are preferable.
Sufficient manufacturer warranties and service contracts with
training of local staff and manufacturer service team in region.
Spare parts and consumable stocks are needed near the site.

13 Health and safety risks

14 Inadequate legal and


regulatory framework

15 CDM/JI and other carbon


finance is difficult to handle
for developers
16 Depth of local long-term
capital market insufficient

An experienced wind farm operator with an appropriate training


program for local staff is required.
Adequate health and safety program is required from the
developer. Occupational safety requirements should be state-ofthe-art from developed markets (e.g., fall protection, lifts in large
turbines).
In countries new to wind power, in particular developing countries,
there is often a legal and regulatory vacuum. This makes it
impossible to design projects so that they can be shown to be
compliant with existing regulations, which may in turn make it
impossible to finance projects. Developers are attracted to markets
where the framework conditions are known, or where at least the
government is aware of the regulatory gaps and capable of plugging
them through contracts.
CDM/JI and other carbon finance is difficult to handle for
developers, and hence attributed little or no value, when
calculating their required tariff. Consequently, it is best for the
government to handle carbon finance.
If it is not possible to obtain long-term finance in local capital
markets, then contracts will have to be in hard currency - or
indexed against hard currency.

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APPENDIX B
THE SARI/ENERGY PROGRAM
B.1 Background
USAIDs South Asia Regional Initiative for Energy (SARI/Energy) program was launched in 2000
to promote energy security through increased trade, investment and access to clean sources of
power and fuel. Since then, SARI/Energy has reached out to more than 4,000 participants in
the region on clean energy trade, energy efficiency, rural energy supply, energy regulation,
energy statistics, and private sector involvement.
Activities under the SARI/Energy program include building institutional capacity, promoting
private sector and civil society participation in energy policy, and creating and strengthening
regional forums, networks and associations.
The long-term results that SARI/Energy seeks to achieve in the region are:






Improved policies and international agreements enabling cross-border trade in clean


energy
Increased availability of energy to meet regional development needs
Improved cross-border infrastructure for electricity transmission and natural gas
transport
Improved regional market mechanisms related to energy
Improved utilization efficiency of energy resources to ensure sustainable economic
growth and development.

Together, these conditions will encourage trade in energy that will benefit both buyers and
sellers, contribute to economic growth throughout the region, and help mitigate the growth of
greenhouse gas emissions from the region.
More information on the SARI/Energy program can be found at www.sari-energy.org.

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B.2 SARI/Energy Activities Promoting Regional Energy


Recent SARI/Energy activities promoting renewable energy development in South Asia include:

Regional Centre for Excellence in Micro-Hydropower


In 2010, SARI/Energy established the Regional Centre for Excellence in Micro-Hydropower
(RCEMH) in partnership with Nepals Alternative Energy Promotion Centre. The Centre
promotes and shares best practices for micro hydro development in the South Asia region. The
key role of the Centre is to act as a platform for exhibiting case studies and emerging efficient
micro hydro power technologies, managing best practices, maintaining quality and
performance standards, social and user committee mobilization, and all-round capacity building
needs for the sector.
The RCEMH launch was accompanied by an exhibition of micro hydro technologies that was
well attended by local private sector participants in micro hydro, and Nepals Ministers of
Finance and Environment.

Regional Centre for Excellence in Energy Efficient Lighting


SARI/Energy partnered with the Sri Lanka Sustainable Energy Authority to launch the Regional
Centre for Lighting (RCL) in 2009. SARI/Energy contributed $800,000 to the Centre, which brings
public and private enterprises together to promote energy-efficient lighting throughout the
SARI/Energy region. SARI/Energys implementing team member the Lighting Research Center
of Rensselaer Polytechnic Institute, an internationally recognized organization devoted to stateof-the-art lighting technologies and programs, provides RCL with technical knowledge, training
and guidance on its activities.
The Centres launch was accompanied by a two-day Energy-Efficient Lighting Workshop in
Colombo, which brought together lighting technology experts from Afghanistan, Bangladesh,
Bhutan, Canada, Maldives, Nepal, Pakistan, Sri Lanka, and the United States. The workshop
promoted new energy-efficient lighting technologies, presented innovative ways to apply them,
and discussed ways to encourage new investment in R&D.

Nepal Hydro Equity Fund


SARI/Energy provided technical assistance for the framework establishment and launch of a Rs
275 million hydropower equity fund, the Nepal Small Hydro Fund, in partnership with the
Clean Energy Development Bank of Nepal.

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Social Merchant Bank Model


SARI/Energy funded a reconnaissance study by the Small-Scale Sustainable Infrastructure
Development Fund (S3IDF) to assess the transferability of S3IDFs Social Merchant Bank (SMB)
model to Nepal. The SMB model facilitates extensive use of clean energy, especially by the
poor who lack access to mainstream modern energy services, in a very cost-effective way with
poverty alleviation and environmental benefits. SARI/Energy continues to promote this model,
which won a World Clean Energy Award in 2007.

Regional Wind Power Workshop: Supporting Wind Power Take-off in the SARI/Energy Region
SARI/ENERGY hosted a three-day workshop on wind power in Colombo, Sri Lanka from 22-24
September 2010. The workshop built the technical capacity of the attending wind power
stakeholders on the practical aspects and steps involved in the development of a wind power
project from start to finish. Partners for this workshop included the Sri Lanka Sustainable
Energy Authority, Asian Development Bank, Indian Wind Energy Association, Tetra Tech, and
the National Renewable Energy Laboratory.
The workshop was attended by senior representatives of power ministries, utilities, and wind
power developers from the eight SARI/Energy countries (Afghanistan, Pakistan, India, Nepal,
Bhutan, Bangladesh, Sri Lanka and the Maldives). Interactive presentation sessions were
delivered by developers, equipment manufacturers, equipment procurement and construction
providers, wind power experts, banks that have experience in financing wind power projects,
and international financial institutions with programs promoting wind power.
The workshop included guided site visits to the two pioneering wind independent power
producer projects in Sri Lanka, and closed with an interactive exercise that brought together
diverse wind power stakeholders from each SARI/Energy country to develop a practical
roadmap for expanding the utilization of on-grid wind power in their country.

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APPENDIX C
CASE STUDIES
SARI/Energy countries are earnest in their desire to harness their wind resources for power
generation. Many have completed the first phase in the development process (wind resource
mapping), and have put in place the institutional framework and enacted policy for promoting
wind power generation.
This appendix presents two case studies from India and Sri Lanka that provide insights into the
various methodologies being adopted in the South Asian region for appraising and developing
wind power projects.

C.1 India: Wind Farm for Captive Use


Name of the Owner:
Off Taker:
Size, Location:

Oil and Natural Gas Corporation Ltd.


Oil and Natural Gas Corporation Ltd.
51 MW, Jakhau Site, District Kutch, Gujarat

Project Description
ONGC Ltd. floated a tender for the development of a wind power project in Gujarat on a
turnkey basis. After the technical and financial due diligence were completed, the project was
awarded to Suzlon Energy Ltd. This 51 MW
project has 34 wind turbines with a capacity of
1.5 MW each. The project development activities
included site identification, turbine supply, site
development, wind turbine erection,
development of electrical lines and substation for
the evacuation of power, obtaining necessary
permissions and approvals, and commissioning of
the project. The project was commissioned in

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September 2008 and has been in operation since then.

Equipment Package
The equipment package included nacelle assembly, tower, hub, blade set, power panel, DP VCB
yard, electrical lines, and 34 WTGs of 1.5 MW each.

Project Time Line


The project was completed over an eight-month period from the receipt of the order from
ONGC Ltd.

Wind Regime
The annual average wind power density at the Jakhau site where the project is located is 311
W/m2 measured at the height of 50 m from ground level.

Power Generation Estimation


Based on the wind regime at the site, turbine characteristics and the micro-siting of the
turbines at the site, the annual power generation is estimated to be 2,928,000 kWh/turbine,
with a capacity utilization factor of 27%.

Grid Interconnection
The 51 MW wind farm is connected to the 220/33 kV substation situated at the project site.
This substation was developed as part of the wind project. The 220 kV Nani Sindhodi
substation is further connected, through a 220 kV line, to the substation of Gujarat Electricity
Transmission Company located at Nani Khakad, which is about 30 km from the wind project
location.

Costs
The total project cost for the 51 MW wind project was about INR 3070 million. The power
generated from the wind project is wheeled at different locations, 98 plants and offices of
ONGC, and used as captive power. Four percent of the power generated from the project is
deduced from the final unit adjustment, and put towards open-access charges (charges for
using the grid infrastructure). The 4% deduction also includes wheeling and transmission
losses. By using wind power at different locations, ONGC reduced its power purchases from the
distribution utility at the industrial rate for power, which is about Rs 6.00/kWh.

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Incentives
The incentive mechanisms used by the projects are:
1. Concessional open access charges of 4%, whereas the normal charges are higher for
transactions involving conventional power (e.g., the transmission charge alone is about
INR 2,000/MW/day and 18% transmission losses).
2. There are special provisions for the banking of energy. In the case of wind power plants,
energy generation cannot be scheduled, often resulting in excess generation in real time
rather than demand in the case of captive use. However, the consumer gets credit for
all energy produced and sold on a monthly basis (i.e., the excess generation during the
month is banked in the grid).

C.2 Sri Lanka: Grid-Connected Wind Farm (Senok Group)


Names of Owners

Off-taker
Size, Location

M/s Segavantivu Wind Power (Pvt) Ltd &


M/s Vidatamunai Wind Power (Pvt) Ltd
Mr Manjula Perera, Chief Executive Officer
Ceylon Electricity Board
20 MW, Puttalam

Project Design and Basic Schematic


Gamesa conducted micro-siting for AE59800 kW machines considering the wind
pattern and land availability at the identified
site. The wind farm was installed on flat
terrain between 2 and 10 m above sea level.
Both electrical and civil works were
undertaken by Gamesa.

Equipment Package
The equipment package included the
nacelle, blade, tower, anchor, rotor hub, and
electro-mechanical accessories for the tower and nacelle, as required by the customer.

Project Timeline
In order to complete the scope of work which included supplying the equipment, erecting the
project, commissioning, and supervising the civil foundation the projects timeline was
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originally envisioned to be six months. However, due to a few unforeseen events related to
logistics, it was completed in about eight months.

Wind Regime
The wind regime that prevails at the Puttalam site is class IIIA as per the IEC classification. It is
suitable for AE59-800 kW machines that were installed for this project.

Power Generation Estimates


The estimated gross annual power generation is 2.8 million kWh per WTG and the gross plant
load factor is about 40%. The estimated net power generation from the wind farm is about 65
million kWh per year.

Grid Interconnection
A 33 kV grid is connected to the wind farm to evacuate the power generated and a 14.7 km
transmission line has been constructed to the nearby substation in Kallady.

Tariff and Costs


The project developer has signed a PPA with Ceylon Electricity Board (CEB) for a period of 20
years, with a 3-tier tariff, starting at Lankan Rupees (LKR) 22.53 for the initial 8 years, followed
by LKR 8.19 for years 9 through 15. From year 16, LKR 1.62 will be paid as the tariff, with an
additional LKR 2.46 for O&M. At present, CEB is the sole purchaser of power, with no
alternative sales options available.

Incentive Mechanism
As a government policy initiative, the Ministry
of Power and Energy has set a target of 10% of
renewable power by 2015. Apart from the
tariff, which is attractive at present, there is no
other incentive mechanism available in Sri
Lanka to promote wind energy at this time.
Also, the Sri Lanka Sustainable Energy Authority
is responsible for issuing permits for setting up
renewable energy projects, including wind
energy, and for determining the tariff.

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APPENDIX D
OFFSHORE INSTALLATIONS
It is expected that in the near future the majority of the wind farms in the region will be on
shore. However, with time and with experience the new wind farms may be offshore
installations. Wind farms in Europe have developed in this way, first on land, and then in the
sea. Therefore, this Report is developed primarily around on shore installations. This Appendix
provides insights into the opportunities and the challenges of offshore wind farm installations.
The other sections of this Report still apply to offshore installations, the subsections below
provide additional insight.
The issues raised below for offshore installations are not hard barriers to offshore wind farms.
Offshore wind farms are used in Europe. Also, the oil and gas industry has decades of
experience with the erection, operations and maintenance of offshore energy systems.
Appendix E, Selected References, has several entries dealing specifically with offshore wind
farm installations.

D.1 Site Selection


Large expanses of sea, and the sea bed, offer the possibility of large, orderly, uniform wind
farms. Rights to use the sea and the sea bed may be administered by the government rather
than many private land owners, thus accelerating the licensing processes.
The near absence of inhabited facilities (homes, farms, offices, villages, etc.) nearby reduces the
issues of audible noise, light flicker, and radio and TV reception.

D.2 Environmental
Environmental concerns, investigations, and permitting can be expected for offshore
installations just as they are for on-shore installations. The inter tidal zones, between the low
and high elevations may be the most sensitive; these zones tend to be rich in marine life.
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D.3 Technology
Turbines and Accessories
The materials used in the wind turbine construction needs to withstand the corrosive effects of
the water, particularly salty water since many offshore installations are in the sea as opposed to
fresh water lakes. The requirements here may not be that stricter than for on-shore
installations near the sea. The tender documents need to be clear on the location of the wind
farm, the expected environmental conditions, and the requirements on the supplier.

Electrical Switching Stations and Substations


The challenges of electrical switching stations and substations offshore are significant.

The stations may be assembled and tested on shore and then moved to the site
offshore.

Weight is a concern since the station most likely will be installed atop a tower. Heavier
the station, larger the foundation and larger the tower.

Since weight is a concern, the station may be compact to start with. Expansion or
changes later may be very difficult or expensive.

Access of the incoming outgoing cables to the switching station or substation becomes a
concern. They may need to be accessed later for repair or replacement.

If there is a liquid filled step-up transformer then the type of liquid is a concern. Since
the station atop the tower will be compact, there is a concern for the safety of
personnel working on the site with regards explosions and fires. If the liquid leaks there
is an environmental concern.

Circulating ground currents are harmful on land and utilities work hard to control the
ground currents and their associated electrochemical (Galvanic) reactions, At sea, in the
presence of salt water, the corrosive effect of such stray currents on metal parts will be
even more pronounced.

Electronics
Electronic equipment at the station needs to be designed and installed in such a way as to resist
humidity and corrosion. This concern applies to electrical connections (high voltage, and high
Supporting Wind Power Take-off in the SARI/Energy Region

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current), relaying, metering, instrumentation, control, indication, telemetry,


telecommunications, IT, and SCADA.
The electronic equipment at the offshore sites will most likely need auxiliary power, for
example, DC station batteries and diesel generator sets. The later brings with it the issues of
fuel handling, storage, contamination, and possible environmental pollution from leaks and
spills.
The electronic equipment may require humidity control and air conditioning, further increasing
the load on the auxiliary power supply.

D.4 Erection
Offshore installations offer both challenges and opportunities.
Access to the facilities, both for construction, operations, and maintenance will be not be
hampered by roads and bridges, their widths, turning radii, and weight limits. Barges and work
boats can come directly to the site.
Working at sea presents additional challenges, such as additional safety equipment, and
limitations on times when the site can be visited. Low tide or storms my preclude access at
times.
Installations near shore, the inter-tidal area, may be problematic. It will be hard to get a
construction barge to the site. Inter-tidal areas are often rich in marine life, and so there may
be environmental concerns.
Installations further out will have deeper water, and thus permit easier access for constructin
barges and maintenance boats.

D.5 Grid Connection


The design of the network that connects the offshore generators to the on shore transmission
grid needs to be carefully designed and developed. Because the difficulties of construction at
sea, the cabling and the stations (switching and substations) may be minimally designed and
costed. For example, the station (switching station or substation) may have only a single bus
and not a double bus, thus limiting switching operations, maintenance, and recover). Designs
may affect the reliability and availability criteria (for example, N-1) by being less robust than for
on shore wind farm installations. This, plus the difficult of accessing the sites during both
normal abnormal weather and sea state, may result in the facility not generating as much
energy as anticipated.
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Since the robustness of the medium and high voltage offshore networks can have a profound
impact on the revenue of the facility, the developer may wish to design and maintain the MV
and HV networks up to a point of connection to the existing utility transmission network on
land. That is, the developer may not want to have the transmission utility maintain the
undersea cable network at the at sea station.

D.6 Operations and Maintenance


As mentioned previously, working at sea presents additional challenges, such as additional
safety equipment, and limitations on times when the site can be visited. Low tide or storms my
preclude access at times. There is an additional concern that once personnel are on the site
(for construction, operations, or maintenance) they may be detained there for some time if the
weather or the sea-state (that is, wave height and wave period) turns bad. The offshore facility
may have to provide some form of accommodations for the personnel.

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APPENDIX E
SELECTED REFERENCES
American Wind Energy Association. Wind Energy Fact Sheet: 10 Steps in Building a Wind
Farm.
American Wind Energy Association (AWEA) website, www.awea.org.
Bazargan, M., Offshore Substation, IET Power Engineering, Volume 21, Issue 3, pages 26 and
27, June 2007.
Boehme, T., et. al, Offshore Transformer Platform Design, 8th International Workshop on
Large Scale Integration of Wind Power on Transmission Networks for Offshore Wind Farms,
October 2009.
Brish, Arie. Optimizing Wind Farms Maintenance Cost, Distributed Energy: The Journal of
Energy Efficiency & Reliability. May/June 2010 Issue.
Capacity Development for the Clean Development Mechanism. CDM Pipeline overview
http://cd4cdm.org/index.htm
Central Electricity Regulatory Commission. Indian Electricity Grid Code.
CIGRE Technical Report B3.26, The Challenges Facing AC Offshore Substations for Wind
Farms, Electra, Number 253, December 2010.
Det Norske Veritas, Offshore Substations for Wind Farms, Offshore Standard DNV-OS-J201,
Octrober 2009.
Global Wind Energy Council website, www.gwec.net.
Hoepfner, S.; Gierer, U.; Cooke, R.; Innovative Platform Solutions with Integrated Design for
Offshore AC Substations from 60 MW to 800 MW Experience form Realized Projects and

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Future Challenges, 8th International Workshop on Large Scale Integration of Wind Power on
Transmission Networks for Offshore Wind Farms, October 2009.
Indian Central Electricity Regulatory Commission, for tariff guidelines.
Indian Ministry of New and Renewable Energy, New Delhi website www.mnre.gov.in
Indian Ministry of Power, Indian Electricity Act 2003, and National Electricity and Tariff Policy.
Indian Wind Energy Association. InWIND Chronicle, 2008-2010.
Integration of Large Scale Wind Generation Using HVDC and Power Electronics, CIGRE
Technical Bulletin 370.
J. Finn, et. al, Designing Substations for Offshore connections, CIGRE Paris Session B3-201,
August 2008.
Maharashtra State Transmission Utility. Connection Application Procedure for Intra-State
Transmission System.
National Grid Electricity Transmission plc, UK. The Grid Code.
PJM Generation and Transmission Interconnection Studies, Main Manual.
Power Grid Corporation of India Ltd. Model Bulk Power Transmission Agreement for Long Term
Open Access.
Pramod, Jain. Wind Energy Engineering, McGraw-Hill Professional, 2010.
REN21 website, www.ren21.net.
Ris National Laboratory, Denmark. Wind power and the CDM,
http://cd4cdm.org/Publications/WindCDM.pdf, June 2005.
Smith, J. Charles, et al. Best Practices in Grid Integration of Variable Wind Power: Summary of
Recent US Case Study Results and Mitigation Measures, paper presented at EWEC 07, Milan,
Italy. May 2007.
Strack, M. and W. Winkler. Analysis of Uncertainties in Energy yield Calculation of Wind Farm
Project.
US Department of Energy Wind and Hydropower Interconnection Standards.
US Federal Regulatory Commission. Order No. 661A-Interconnection for Wind Energy.
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Wind Energy THE FACTS website, www.wind-energy-the-facts.org.


WISE. Wind Power in India, Towards A 5000 MW Annual Market by 2015. Co-sponsored by
Indian Wind Energy Association, 2009.
World Bank. REToolkit: A Resource for Renewable Energy Development, June 30, 2008.

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APPENDIX F
VENDOR CONTACT
INFORMATION

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115

Wind Turbine Generator Manufacturers with a Presence in South Asia


S.
No.
1

Manufacturer Name and Address

Contact Person (India)

Vestas Wind Technology India Pvt. Ltd.


298, Rajiv Gandhi Salai, Old Mahabalipuram
Road, Sholinaganallur
Chennai 600 119, India
Website www.vestas.com
Tel +91 44 2450 5100
Fax +91 44 2450 5101
Email: vestas-india@vestas.com
Elecon Engineering Company Ltd.,
P.O. Box No:6 Anand Sojibra Road Vallabh
Vidyanagar,
Gujarat - 388 120.
Tel : 91-02692-237016/236513/236516
Fax : 91-02692-236527

Shri Arvind Kaul


Managing Director

Supporting Wind Power Take-off in the SARI/Energy Region

Mr. V.D.Kalani, - HONY. SECY.


General Manager
(WED),IWTMA
Email:
vdkalani@mhe.elecon.com

Model
Rotor Diameter / Hub Height (in
meters)
V-82 1.65 MW
RD : 82 m
HH : 70 / 78 / 80 m
Tower Type : Tubular steel

1600-48
RD : 48 m
HH : 50/55/60 m
Tower type : Tubular

116

Capacity

1650 kW
Available
(06.02.2013)

600 kW

S.
No.
3

Manufacturer Name and Address

Contact Person (India)

Enercon (India) Ltd.,


Plot No. A-9, CTS No. 700
Plot Veera Industral.Estate., Veera Desai
Road,
Andheri West, Mumbai - 400 053.
Tel.: 91-022-66924848
Fax.: 91-022-66990940, 67040473

Mr. Yogesh Mehra,


Managing Director.
Email:
ymehra@enerconindia.net

Model
Rotor Diameter / Hub Height (in
meters)
E-48 RD : 48 m
HH : 50/56/57/65/75/76 m
Tower type : for HH
50/56/57/765/76 m Tubular steel
& 75 m pre cast concrete
________________
E-53 m HH : 73/75 m
Tower type : For HH
73 m steel & 75 m concrete
tower

GE Wind Energy INDIA,


A-1, Golden Enclave Corporate,
Towers, #3rd Floor, Airport Road,
Bangalore-560 017
Tel:91-080-25289979
Fax.:91-080-25203860
M/s Pioneer Wincon Private Ltd.
30/1A. Harrington Chambers,
2nd Floor, "B" Block Abdul Razak, 1st Street,
Saidapet,
Chennai-600 015
Ph : 044-24314790
Fax: 044-24314789

Supporting Wind Power Take-off in the SARI/Energy Region

Mr. Anand Bansal


Chief Executive
Email: anand.bansal@ps.ge.co
m

GE 1.5sle
RD : 77 m
HH : 80 m
Tower type : Tubular Steel

Mr. D.V. Giri,


President - CHAIRMAN-IWTMA
Email:
dvgiri@pioneerwincon.com

Pioneer P250/29
RD : 29.6 m
HH : 50 m
Tower type : Latice

117

Capacity

800 kW

________________
800 kW

1500 kW

250 kW

S.
No.
6

Manufacturer Name and Address

Contact Person (India)

Suzlon Energy Ltd.,


5th Floor
Godrej Millenium Building
9 Koregaon Park
Pune - 400001.
Tel : 020- 40122000
Fax : 020- 40122100

Mr. Tulsi Tanti


Chairman, Managing Director.
E-mail: cmd@suzlon.com

M/s Shriram EPC Ltd.,


Vangaram Road
Ayanambakkam
Chennai - 600 095
Ph : 044-26533313
Fax : 044-26532780

J.Jawahar
DGM-Marketing
Email: energy@shriramepc.com

M/s RRB Energy Ltd,


GA 1/B-1, Extension
Mohan Cooprerative Industrial Estate
Mathura Road, New Delhi 110 044
Tel: 011- 40552222
Fax: 011-40552200
Web: www.rrbenergy.com

Mr.Sarvesh Kumar
DY.Managing Director
E-mail:
pawanshakthi@rrbenergy.com

Model
Rotor Diameter / Hub Height (in
meters)
Suzlon S82V3-1500 kW
RD : 82 m
HH : 78 m
Tower type : Tubular steel
Suzlon S88 V3A-2100 kW
RD : 88 m
HH : 80 m
Tower type : Tubular steel
SEPC 250 T
RD : 28.5 m
HH : 41.2 m
Tower type : Lattice

V39-500 with 47m rotor diameter


RD: 47 m
HH : 50 m
Tower type : Tubular steel &
LatticekW

Pawan Shakthi-600 kW
RD : 47 m
HH : 50 m
Tower type : Latice

Supporting Wind Power Take-off in the SARI/Energy Region

118

Capacity

150 kW

2100 kW

250 kW

500 kW

600 kW

S.
No.
9

10

11

12

Model
Rotor Diameter / Hub Height (in
meters)
GWL 225
RD : 29.8 m
HH : 45 m
Tower type : Tubular

Manufacturer Name and Address

Contact Person (India)

M/s Southern Wind Farms Limited


No 15, Soundarapandian Salai,
Ashok Nagar,
Chennai-600 083
Tel.: 044-39182618
Fax.: 044-39182636
L M GLASFIBRE (INDIA) Pvt. LTD.
Plot 61/62 Kasaba Indl Area,
Hoskote - 562 114
Tel.: 91-080-7971532 / 1700 / 1701
Fax.: 91-080-7971320.
Regen Powertech Pvt Ltd
New No.28, College Road
Chennai -600006
Tamilnadu
30280200-206
Email: madhusudan@regenpowertech.com

Mr. M. N. Sudhindra Rao, Chief


Executive Officer

Mr Madhusudan Khemka
President & CEO

VENSYS 77
RD : 76.84 m
HH : 75 m/85 m
Tower Type : Tubular steel

Kenersys India Pvt. Ltd.


Muttha Towers, Don Bosco Road,
Yarwada, 411006, Pune, India.
Phone : +91 (0)20 410619-0
Fax : +91(0)20 410619-99

Mr. Bhushan Joshi

K82
RD : 82 m
HH : 80m
Tower type : Tubular

Supporting Wind Power Take-off in the SARI/Energy Region

Capacity

225 kW

Mr. Nirmal Kumar Gupta


CEO
Email : nkg@lm.co.in

Bhushan.joshi@kenersys.com

119

1500 kW

2000 kW

S.
No.
13

14

15

16

17

Manufacturer Name and Address

Contact Person (India)

WinWind Power Energy Pvt. Ltd.


Sterling Tower 327, Anna Salai,
Chennai-600006.

Mr. Dinesh Agarwal

M/s Chranjjeevi Wind Energy Limited,


26-A, Kamaraj Road, Mahalingapuram,
Pollachi-642002
M/s Essar Wind Power Pvt. Ltd.,
Essar House, 11 K.K. Marg,
Mahalaksmi,
Mumbai-400034
M/s. Gamesa Wind Turbines Private Limited,
No. 489, G.N.T. Road,
Thandal Kazhani Village,
Vadagarai (Post),
Red Hills, Chennai-600052.
M/s Global Wind Power Limited,
301, Satellite Silver, 3rd Floor,
Andheri Kurla Road,
Marol, Andheri (East),
Mumbai-400059

Supporting Wind Power Take-off in the SARI/Energy Region

Model
Rotor Diameter / Hub Height (in
meters)
WinWinD 1 MW

Capacity

1000 kW
Dinesh.agarwal@winwind.in

Phone : 04259-224438
Fax : 04259-224437
Phone : 022-66601557
Fax : 022-23544787
Phone : 044-30989898
Fax : Nil

Phone : 022-39918500
Fax : 022-39918521

RD : 60 m
HH : 70 m
Tower type : Tubular steel
CWEL 30/250kW
RD : 29.8 m
HH : Tower type : Lattice50 m
REpower MD77
RD : 76.5 m
HH : 85 m
Tower type Tubular Steel
G57-850 kW
RD : 58 m
HH : 444/55/65 m
Tower type : Tubular Steel
NOR WIL 750 kW
RD : 47 m
HH : 65 m
Tower type : Tubular Steel

120

250 kW

1500 kW

1500 kW

750 kW

S.
No.
18

19

Manufacturer Name and Address

Contact Person (India)

M/s Leitner Shriram Manufacturing Ltd.,


No. 5, T.V. Street, Off. Spurtank Road,
Chetpet, Chennai-600031.

Phone : 044-27926000

M/s. Siva Windturbine India Private Ltd.,


12A, Kandampalayam,
Perundurai,
Erode-(DIS)
Pin - 638052

Supporting Wind Power Take-off in the SARI/Energy Region

Fax : 044-27924944

Phone : 04294-220017
Fax : 04294-220137

Model
Rotor Diameter / Hub Height (in
meters)
Leitner LTW77-1.35 MW
RD : 76.6 m
HH : 65 m
Tower type : Tubular steel

Leitwind LTW77-1.5 MW
RD : 75.6 m
HH : 65 m
Tower type : Tubular steel
SIVA 250/50
RD : 30 m
HH : 50 m
Tower type : Lattice

121

Capacity

1350 kW

1500 kW

250 kW

The South Asia Regional Initiative for Energy (SARI/Energy /


www.sari-energy.org) is a US Government-funded program for the
promotion of energy security in South Asia through three focus areas:
(1) Cross border energy trade
(2) Energy market formation
(3) Regional clean energy development.
Clean energy development covers the advancement, capacity growth,
and use of renewable energy sources, such as wind and solar energy
technologies. Today, there are a number of technical and nontechnical barriers to clean energy development such as marketing,
institutional, and policy impediments, which are holding back the
acceptance of renewable energy technologies.
SARI/Energy conducts partnerships to spread successful
technologies, models and practices that increase access to clean
energy.
Through these activities SARI/Energy facilitates more efficient regional
energy resource utilization, works toward transparent and profitable
energy practices, mitigates the environmental impacts of energy
production, and increases regional access to energy. The
SARI/Energy countries are Afghanistan, Bangladesh, Bhutan, India,
Maldives, Nepal, Pakistan, and, Sri Lanka.

Tetra Tech
DLF Cyber City, Building No. 9B, 11th Floor
Gurgaon 122 002
Tel: +91 (0)124 473 7400
Fax: +91 (0)124 473 7444
www.tetratech.com
04072011 v01