Wind Energy

Stephen R. Lawrence
Leeds School of Business University of Colorado Boulder, CO

1

Acknowledgement

Adapted from a presentation by

Keith Stockton
Environmental Studies University of Colorado Boulder, CO 2

Ancient Resource Meets 21st Century

3

Wind Turbines

Power for a House or City

4

Wind Energy Outline History and Context  Advantages  Design  Siting  Disadvantages  Economics  Project Development  Policy  Future  5 .

History and Context 6 .

000 in England.D.000 Heyday of the small multiblade turbines in the US midwast  1200 to 1850 1850’s    1882   1900   1850 – 1930   1936+   As many as 6.     ~ 400 A.D.000 units installed US Rural Electrification Administration extends the grid to most formerly isolated rural sites Grid electricity rapidly displaces multiblade turbine uses 7 .000 in Holland. Thomas Edison commissions first commercial electric generating stations in NYC and London Competition from alternative energy sources reduces windmill population to fewer than 10. Hero of Alexandria uses a wind machine to power an organ Wind driven Buddhist prayer wheels Golden era of windmills in western Europe – 50.000 9.000 in Germany Multiblade turbines for water pumping made and marketed in U.S. 10.000. 18.Wind Energy History    1 A.

8 Wind currently produces less than 1% of the nation’s power.Increasingly Significant Power Source Wind could generate 6% of nation’s electricity by 2020. Source: Energy Information Agency .

9 .

Manufacturing Market Share Source: American Wind Energy Association 10 .

US Wind Energy Capacity 11 .

Installed Wind Turbines 12 .

5 Xcel New Century (Xcel) New Century (Xcel) Xcel Energy / GE Wind Wind Corp.5 Arkansas River Power Authority Lamar Utilities Board 13 . Lamar (Prowers County) Prowers County (Lamar) Prowers County (Lamar) Owner K/S Ponnequin WindSource & Energy Resources Xcel Date Online Jan 1999 MW 5.9 29. Arkansas River Power Authority Lamar Utilities Board 9.1 Power Purchaser/User Xcel Turbines / Units NEG Micon (7) NEG Micon (22) Vestas (15) NEG Micon (33) GE Wind 1500 (108) GE Wind 1500 (1) GE Wind 1500 (3) Feb-June 1999 2001 16.Colorado Wind Energy Projects Wind Energy Development Project or Area 1. Ponnequin (Phase III) Peetz Table Wind Farm Colorado Green. Ponnequin (EIU) (Phase I) 1.7 New Century (Xcel) New Century (Xcel) Dec 2003 2004 2004 162.0 Xcel 1. Ponnequin (Xcel) Project Info 1.5 4.

5 On Line By/ Turbines 2005 / GE Wind 1500kW (87) 2005 / 1500kW (1) 2005 / 1500kW (46) PPA Signed 69 14 .New Projects in Colorado New Wind Projects in Colorado Project Spring Canyon Wray School District NA Utility/Developer Xcel Energy / Invenergy Wray School District RD2 Xcel Energy / Prairie Wind Energy Location Near Peetz Wray Near Lamar Status Construction to begin in June MW Capacity 60 1.

Ponnequin – 30 MW •Operate with wind speeds between 7-55 mph •Originally part of voluntary wind signup program •Total of 44 turbines •In 2001. 15 turbines added •1 MW serves ~300 customers •~1 million dollars each •750 KW of electricity each turbine •Construction began Dec ‘98 •Date online – total June 1999 •Hub height – 181 ft •Blade diameter – 159 ft •Land used for buffalo grazing 15 .

Wind Power Advantages 16 .

Advantages of Wind Power Environmental  Economic Development  Fuel Diversity & Conservation  Cost Stability  17 .

Environmental Benefits No air pollution  No greenhouse gasses  Does not pollute water with mercury  No water needed for operations  18 .

Emissions Source: Northwest Foundation.Pollution from Electric Power Sulfur Dioxide Carbon Dioxide Nitrous Oxides Particulate Matter Toxic Heavy Metals 0% 20% 34% 33% 28% 23% 40% 60% 80% 70% Percentage of U. 12/97 Electric power is a primary source of industrial air pollution 19 .S.

Economic Development Benefits Expanding Wind Power development brings jobs to rural communities  Increased tax revenue  Purchase of goods & services  20 .

000 per 750-kW turbine in revenue to farmers Up to 150 construction.Economic Development Example Case Study: Lake Benton. 28 ongoing O&M jobs Added $700. MN $2.000 to local tax base 21 .

Fuel Diversity Benefits Domestic energy source  Inexhaustible supply  Small. dispersed design   reduces supply risk 22 .

Cost Stability Benefits  Flat-rate pricing  hedge against fuel price volatility risk  Wind electricity is inflation-proof 23 .

Wind Power Design 24 .

Power in the Wind (W/m2) = 1/2 x air density x swept rotor area x (wind speed)3 A V3 ρ Density = P/(RxT) P .air temperature (K) Area = π r2 m2 Instantaneous Speed (not mean speed) m/s kg/m3 25 .pressure (Pa) R .specific gas constant (287 J/kgK) T .

Wind Energy Natural Characteristics  Wind Speed    Wind energy increases with the cube of the wind speed 10% increase in wind speed translates into 30% more electricity 2X the wind speed translates into 8X the electricity  Height   Wind energy increases with height to the 1/7 power 2X the height translates into 10.4% more electricity 26 .

Wind Energy Natural Characteristics  Air density     Wind energy increases proportionally with air density Humid climates have greater air density than dry climates Lower elevations have greater air density than higher elevations Wind energy in Denver about 6% less than at sea level  Blade swept area  Wind energy increases proportionally with swept area of the blades  Blades are shaped like airplane wings   10% increase in swept diameter translates into 21% greater swept area Longest blades up to 413 feet in diameter  Resulting in 600 foot total height 27 .

Betz Limit Theoretical maximum energy extraction from wind = 16/27 = 59.3%  Undisturbed wind velocity reduced by 1/3  Albert Betz (1928)  28 .

0-MW wind turbine superimposed on a Boeing 747 JUMBO JET 29 .0 MW Wind Turbine? 80 59.6 This picture shows a Vestas V-80 2.How Big is a 2.

Wind Turbine Power Curve 2500 Vestas V80 2 MW Wind Turbine 2000 KW 1500 1000 500 0 10 20 30 MPH 40 30 50 .

8 MW 350’ 31 .Recent Capacity Enhancements 2006 5 MW 600’ 2000 850 kW 265’ 2003 1.

Main shaft 4. Blade 13. Top Controller 7. Gearbox 6. Yaw gears 17. Ultra-sonic sensors 19. Hydraulic unit 15. Blade bearing 12. Oil cooler 5.Nacelle Components 5 10 17 1. Service crane 9. Pitch cylinder 3. Meteorological 32 gauges . Hub controller 2. Transformer 10. Rotor lock system 14. Blade Hub 16 12 12 11. Generator 18. Machine foundation 16. Parking Break 8.

Turbines Constantly Improving      Larger turbines Specialized blade design Power electronics Computer modeling  produces more efficient design Manufacturing improvements 33 .

Improving Reliability Drastic improvements since mid-80’s  Manufacturers report availability data of over 95%  100 % Available 80 60 40 20 0 1981 '83 '85 '90 '98 Year 34 .

Wind Project Siting 35 .

5) 6.0 (15.0 (13.7) 9.4 (9.1) ft) 50 m (164 Speed m/s (mph) 0 5.7) 7.5) 5.4 (14.Wind Power Classes 10 m (33 ft) Wind Power Class 1 2 3 4 5 6 7 Speed m/s (mph) 0 4.3) 7.8) 5.7) 11.6 (12.5) 6.8) 8. speed increases 3%/1000 m (5%/5000 ft) elevation.6 (12.5 (16.0 (15. To maintain the same power density.9 (26.1 (11.8 (19. 36 .4 (21.6) Wind speed is for standard sea-level conditions.4) 6.9) 8.4 (14.3) 7.0 (17.

37 .

38 .

Siting a Wind Farm  Winds  Minimum class 4 desired for utility-scale wind farm (>7 m/s at hub height) Distance. noise. and bird impacts are biggest concern Economies of scale in construction Number of landowners 39   Transmission  Permit approval     Land area   . voltage excess capacity Land-use compatibility Public acceptance Visual.

Wind Disadvantages 40 .

Market Barriers  Siting    Avian Noise Aesthetics Intermittent source of power  Transmission constraints  Operational characteristics different from conventional fuel sources  Financing  41 .

lack of transmission capability Intermittent output   Cons    Only When the wind blows (night? Day?)   Low capacity factor Predicting the wind -.we’re getting better 42 .Wind Energy and the Grid  Pros    Small project size Short/flexible development time Dispatchability Generally remote location Grid connectivity -.

Birds . owls. golden eagles) in jeopardy Altamont Pass – News Update – from Sept 22    shut down all the turbines for at least two months each winter eliminate the 100 most lethal turbines Replace all before permits expire in 13 years 43 .A Serious Obstacle   Birds of Prey (hawks.

Wind – Characteristics & Consequences  Remote location and low capacity factor  Higher transmission investment per unit output  Small project size and quick development time  Planning mismatch with transmission investment  Intermittent output  Higher system operating costs if systems and protocols not designed properly 44 .

Balancing Supply & Demand 4500 Gas 4000 3500 Gas/Hydro Base Load – Coal 3000 45 .

Energy Delivery 200000 Lake Benton & Storm Lake Power February 24. 2002 Lake Benton II Combined Storm Lake 180000 160000 140000 120000 (kW) 100000 80000 60000 40000 20000 0 10:00 11:00 12:00 13:00 14:00 15:00 16:00 17:00 18:00 19:00 20:00 21:00 22:00 (HH:MM) 46 23:00 3:00 4:00 5:00 0:00 1:00 2:00 6:00 7:00 8:00 9:00 .

2003 Lake Benton II Combined Storm Lake 160000 140000 120000 100000 (kW) 80000 60000 40000 20000 0 12:00 13:00 14:00 15:00 16:00 17:00 19:00 21:00 22:00 23:00 10:00 11:00 18:00 20:00 1:00 2:00 3:00 4:00 5:00 6:00 7:00 8:00 9:00 0:00 (HH:MM) 47 .Energy Delivery 180000 Lake Benton & Storm Lake Power July 7.

Wind Economics 48 .

shut down due to high winds  Typically 33% at a Class 4 wind site 49 .Wind Farm Design Economics  Key Design Parameters   Mean wind speed at hub height Capacity factor Start with 100%  Subtract time when wind speed less than optimum  Subtract time due to scheduled maintenance  Subtract time due to unscheduled maintenance  Subtract production losses   Dirty blades.

Wind Farm Financing  Financing   LIBOR Terms Interest rate + 150 basis points  Loan term  Up to 15 years 50 .

operating environment kWh/year = Wind Resource 51 .Cost of Energy Components  Cost (¢/kWh) = (Capital Recovery Cost + O&M) / kWh/year    Capital Recovery = Debt and Equity Cost O&M Cost = Turbine design.

5-5.00 1980 1984 1988 1991 1995 2000 38 cents/kWh 3. not including tax credit 52 .10 $0.Costs Nosedive  Wind’s Success $0.40 $0.0 cents/kWh 2005 Levelized cost at good wind sites in nominal dollars.20 $0.30 $0.

FOB USA 49% 53 .Construction Cost Elements Financing & Legal Fees 3% Development Activity 4% Interconnect/ Subsation 4% Interest During Construction 4% Towers (tubular steel) 10% Construction 22% Design & Engineering 2% Land Transportation 2% Turbines.

Wind Farm Cost Components 54 .

shut down due to high winds  Typically 33% at a Class 4 wind site 55 .Wind Farm Economics  Capacity factor      Start with 100% Subtract time when wind speed < optimum Subtract time due to scheduled maintenance Subtract time due to unscheduled maintenance Subtract production losses  Dirty blades.

Nebraska  . Texas  37% CF in first 9 months 36% CF in first 9 months 56  Springview.Improved Capacity Factor  Performance Improvements due to:     Better siting Larger turbines/energy capture Technology Advances Higher reliability Capacity factors > 35% at good sites  Examples (Year 2000)   Big Spring.

Wind Farm Economics  Key parameter  Distance from grid interconnect  ≈ $350.000/mile for overhead transmission lines 57 .

23M/MW 33% capacity factor  Class 4 wind site    10 miles to grid 6%/15 year financing  100% financed  20 year project life  Determine Cost of Energy .COE 58 .$1.Wind Farm Economics  Example  200 MW wind farm  Fixed costs .

200.3¢/kWh 1.0¢/kWh  Total Annual Energy Production  Total Energy Production  Capital Costs/kWh  Operating Costs/kWh  Cost of Energy – New Facilities    @ $12/MMBtu 59 .000 x 20 = 11.160.6¢/kWh Wind – 4.7¢/kWh Natural gas – 7.Wind Farm Economics       Total Capital Costs  $246M + (10 x $350K) = $249.000 kWh 3.33 = 578.5M 200 MW x 1000 x 365 x 24 x 0.000 kWh 578.9¢/kWh Coal – 3.160.563.

Wind Farm Development 60 .

Wind Farm Development  Key parameters       Wind resource Zoning/Public Approval/Land Lease Power purchase agreements Connectivity to the grid Financing Tax incentives 61 .

Wind Farm Development  Wind resource    Absolutely vital to determine finances  Wind is the fuel Daily and hourly detail Requires historical wind data  Install metrological towers Preferably at projected turbine hub height  Multiple towers across proposed site   Multiyear data reduces financial risk  Correlate long term offsite data to support short term onsite data  Local NWS metrological station 62 .

. Inc.Wind Energy Variability 63 Source: Garrad Hassan America.

Wind Farm Development  Zoning/Public Approval/Land Lease  Obtain local and state governmental approvals  Often includes Environmental Impact Studies  Impact to wetlands.  Annual payments per turbine or production based 64 . etc. birds (especially raptors)  NIMBY component  View sheds  Negotiate lease arrangements with ranchers. Native American tribes. farmers.

Wind Farm Development  Power Purchase Agreements (PPA)    Must have upfront financial commitment from utility 15 to 20 year time frames Utility agrees to purchase wind energy at a set rate  e.3¢/kWh  Financial stability/credit rating of utility important aspect of obtaining wind farm financing   PPA only as good as the creditworthiness of the uitility Utility goes bankrupt – you’re in trouble 65 .g. 4.

Wind Farm Development  Connectivity to the grid  Obtain approvals to tie to the grid  Obtain from grid operators – WAPA. BPA. California ISO Especially since the grid is operating near max capacity  Power fluctuations stress the grid  66 .

Wind Farm Development  Financing  Once all components are settled… Wind resource  Zoning/Public Approval/Land Lease  Power Purchase Agreements (PPA)  Connectivity to the grid  Turbine procurement  Construction costs   …Take the deal to get financed 67 .

LLP .Financing Revenue Components 68 Source: Hogan & Hartson.

Shell Wind Energy.g. Florida Power & Light.Closing the Deal  Small developers utilize a “partnership flip”   Put the deal together Sell it to a large wind owner e. PPM – Scottish Power  Shell and PPM jointly own Lamar wind farm   Large wind owner assumes ownership and builds the wind farm 69 . AEP.

Wind Policy 70 .

6% subsidy  5 year depreciation schedule   Depreciation bonus  71 .8% subsidy 2.9 ¢/kWh production tax credit  33.5% subsidy 29.Wind Farm Economics  Federal government subsidizes wind farm development in three ways  1.

6M tax credit/year  Small developers don’t have sufficient access to credit to finance a $200M+ project 72 .Tax Incentives Issues  Small developers can’t fully use federal tax credits or accelerated depreciation   They don’t have a sufficient tax liability Example  A 200 MW wind farm can generate a $12.

00/MMBtu  Current prices: $10 – $15/MMBtu 73 .9¢/kWh Production Tax Credit     First 10 years for producing wind generated electricity Wind farm must be producing by 12/31/07 PTC has been on again/off again since 1992 Results in inconsistent wind farm development   PTC in place – aggressive development PTC lapses – little or no development  The PTC puts wind energy on par with coal and significantly less than natural gas  When natural gas > $8.Production Tax Credit  1.

2010  5% of generation from 2011 .2014  10% of generation by 2015 and beyond     4% of renewable generation from solar PV 96% of renewable generation from wind. small hydro and biomass Small utilities can opt out of program 74 .Wind Power Policy  Renewable Portfolio Standard   21 States have them Colorado’s Amendment 37 Passed by voters November 2004  3% of generation from 2007 .

and Atlas) will also be powered by wind energy 75 . Wardenburg and the Recreation Center    Community Energy uses these funds to subsidize wind energy at wind farms in Lamar and in the upper Midwest Although CU isn’t getting the electrons from these wind farms.Renewable Energy Credits  You subsidize wind energy when produced by another utility  CU pays $0. it is in effect buying wind energy The three new buildings (Business.006/kWh to Community Energy  To power the UMC. Law.

Inconsistent Policy Markets  Unstable 76 Source: American Wind Energy Association .

Future Trends 77 .

Expectations for Future Growth 20.000 total turbines installed by 2010  6% of electricity supply by 2020  100.000 MW of wind power installed by 2020 78 .

Future Cost Reductions   Financing Strategies Manufacturing Economy of Scale Better Sites and “Tuning” Turbines for Site Conditions Technology Improvements   79 .

Future Tech Developments  Application Specific Turbines      Offshore Limited land/resource areas Transportation or construction limitations Low wind resource Cold climates 80 .

pole.T&D losses (underground cables lead to shore) and visual eye sore 81 .6 MW per turbine •60-120 m hub height •5 km from shore. or tripod formation •Shaft can act as artificial reef •Drawbacks.5 .The Future of Wind Offshore •1. 30 m deep ideal •Gravity foundation.

Wind Energy Storage

Pumped hydroelectric
      

Compressed Air Energy Storage
 

Georgetown facility – Completed 1967 Two reservoirs separated by 1000 vertical feet Pump water uphill at night or when wind energy production exceeds demand Flow water downhill through hydroelectric turbines during the day or when wind energy production is less than demand About 70 - 80% round trip efficiency Raises cost of wind energy by 25% Difficult to find, obtain government approval and build new facilities Using wind power to compress air in underground storage caverns Costly, inefficient
Salt domes, empty natural gas reservoirs

Hydrogen storage
    

Use wind power to electrolyze water into hydrogen Store hydrogen for use later in fuel cells 50% losses in energy from wind to hydrogen and hydrogen to electricity 25% round trip efficiency Raises cost of wind energy by 4X

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U.S. Wind Energy Challenges

Best wind sites distant from
 

  

Wind variability
 

population centers major grid connections

Non-firm power

Can mitigate if forecasting improves Debate on how much backup generation is required Cape Wind project met with strong resistance by Cape Cod residents Sea floor drops off rapidly on east and west coasts

NIMBY component

Limited offshore sites

Intermittent federal tax incentives
83

North Sea essentially a large lake

Nantucket Project

130 turbines proposed for Nantucket Sound 84

Hawaiian Wind Farm “Shock Absorber”

   

Install on 2.4 MW wind farm on Big Island of Hawaii Utilizes superconducting materials to store DC power “Suddenly” increased and decreased wind power output Likely to loose efficiency due to AC-DC-AC conversions 85

"Utility Scale Wind on Islands," Refocus, Jul/Aug 2003, http://www.re-focus.net

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Oceanic Energy Next Week 87 .

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