Transcript Wind Energy Stephen R. Lawrence Leeds School of Business University of Colorado

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
Wind Energy History

1 A.D.


~ 400 A.D.



Thomas Edison commissions first commercial electric generating stations in
NYC and London
1900


Multiblade turbines for water pumping made and marketed in U.S.
1882


Golden era of windmills in western Europe – 50,000
9,000 in Holland; 10,000 in England; 18,000 in Germany
1850’s


Wind driven Buddhist prayer wheels
1200 to 1850


Hero of Alexandria uses a wind machine to power an organ
Competition from alternative energy sources reduces windmill population
to fewer than 10,000
1850 – 1930

Heyday of the small multiblade turbines in the US midwast


1936+

As many as 6,000,000 units installed
US Rural Electrification Administration extends the grid to most formerly
isolated rural sites

Grid electricity rapidly displaces multiblade turbine uses
7
Increasingly Significant Power Source
coal
coal
petroleum
petroleum
natural gas
natural gas
nuclear
nuclear
hydro
hydro
other renewables
other renewables
wind
wind
Wind currently produces less than
1% of the nation’s power.
Wind could
generate
6% of
nation’s
electricity
by 2020.
Source: Energy Information Agency
8
9
Manufacturing Market Share
Source: American Wind Energy Association
10
US Wind
Energy
Capacity
U.S.
Wind Energy
Capacity
10000
8000
6000
MW
4000
2000
0
2000
2001
2002
2003
2004
2005
11
Installed Wind Turbines
12
Colorado Wind Energy Projects
Wind Energy Development
Project or Area
Owner
Date
Online
MW
Power
Purchaser/User
Turbines /
Units
1. Ponnequin (EIU)
(Phase I)
K/S Ponnequin
WindSource
& Energy Resources
Jan 1999
5.1
Xcel
NEG Micon
(7)
1. Ponnequin
(Xcel)
Project Info
Xcel
Feb-June
1999
16.5
Xcel
NEG Micon
(22)
1. Ponnequin
(Phase III)
New Century
(Xcel)
2001
9.9
New Century
(Xcel)
Vestas (15)
Peetz Table Wind Farm
New Century
(Xcel)
29.7
New Century
(Xcel)
NEG Micon (33)
Colorado Green, Lamar
(Prowers County)
Xcel Energy / GE Wind
Wind Corp.
Dec 2003
Prowers County (Lamar)
Arkansas River Power
Authority
2004
1.5
Arkansas River Power
Authority
GE Wind 1500 (1)
Prowers County (Lamar)
Lamar Utilities Board
2004
4.5
Lamar Utilities Board
GE Wind 1500 (3)
162.0 Xcel
GE Wind 1500
(108)
13
New Projects in Colorado
New Wind Projects in Colorado
Project
Utility/Developer
Location
Status
Spring Canyon
Xcel Energy / Invenergy
Near Peetz
Construction to
begin in June
Wray School District
Wray School District RD2
Wray
NA
Xcel Energy / Prairie
Wind Energy
Near Lamar
PPA Signed
MW
Capacity
On Line By/
Turbines
60
2005 / GE Wind
1500kW (87)
1.5
2005 / 1500kW
(1)
69
2005 / 1500kW
(46)
14
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
Pollution from Electric Power
Sulfur Dioxide
70%
Carbon Dioxide
34%
Nitrous Oxides
33%
Particulate Matter
28%
Toxic Heavy Metals
23%
0%
20%
40%
60%
80%
Percentage of U.S. Emissions
Source: Northwest Foundation, 12/97
Electric power is a primary source of industrial air pollution
19
Economic Development Benefits
Expanding Wind Power development
brings jobs to rural communities
 Increased tax revenue
 Purchase of goods & services

20
Economic Development Example
Case Study: Lake Benton, MN
$2,000 per 750-kW turbine in revenue
to farmers
Up to 150 construction, 28 ongoing
O&M jobs
Added $700,000 to local tax base
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

Density = P/(RxT)
P - pressure (Pa)
R - specific gas constant (287 J/kgK)
T - air temperature (K)
kg/m3
Area =  r2
m2
Instantaneous Speed
(not mean speed)
m/s
25
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
How Big is a 2.0 MW Wind Turbine?
This picture shows a
Vestas V-80 2.0-MW wind
turbine superimposed on a
Boeing 747 JUMBO JET
29
Wind Turbine Power Curve
2500
Vestas V80 2 MW Wind Turbine
2000
KW
1500
1000
500
0
10
20
30
40
50
30
MPH
Recent Capacity Enhancements
2006
5 MW
600’
2000
850 kW
265’
2003
1.8 MW
350’
31
Nacelle Components
10
5
16
17
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
Hub controller
Pitch cylinder
Main shaft
Oil cooler
Gearbox
Top Controller
Parking Break
Service crane
Transformer
Blade Hub
12
12
11. Blade bearing
12. Blade
13. Rotor lock system
14. Hydraulic unit
15. Machine foundation
16. Yaw gears
17. Generator
18. Ultra-sonic sensors
19. Meteorological gauges
32
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%

% Available
100
80
60
40
20
0
1981
'83
'85
'90
'98 Year
34
Wind Project Siting
35
Wind Power Classes
10 m (33 ft)
Wind
Power
Class
1
2
3
4
5
6
7
ft)
50 m (164
Speed
m/s
(mph)
Speed
m/s
(mph)
0
0
4.4 (9.8)
5.6 (12.5)
5.1 (11.5)
6.4 (14.3)
5.6 (12.5)
7.0 (15.7)
6.0 (13.4)
7.5 (16.8)
6.4 (14.3)
8.0 (17.9)
7.0 (15.7)
8.8 (19.7)
9.4 (21.1)
11.9 (26.6)
Wind speed is for standard sea-level conditions. To maintain the same power density, speed
increases 3%/1000 m (5%/5000 ft) elevation.
36
37
38
Siting a Wind Farm

Winds


Transmission


Distance, voltage excess capacity
Permit approval




Minimum class 4 desired for utility-scale wind farm (>7
m/s at hub height)
Land-use compatibility
Public acceptance
Visual, noise, and bird impacts are biggest concern
Land area


Economies of scale in construction
Number of landowners
39
Wind Disadvantages
40
Market Barriers

Siting



Avian
Noise
Aesthetics
Intermittent source of power
 Transmission constraints
 Operational characteristics different from
conventional fuel sources
 Financing

41
Wind Energy and the Grid

Pros




Small project size
Short/flexible development time
Dispatchability
Cons



Generally remote location
Grid connectivity -- lack of transmission capability
Intermittent output



Only When the wind blows (night? Day?)
Low capacity factor
Predicting the wind -- we’re getting better
42
Birds - A Serious Obstacle


Birds of Prey (hawks, owls, golden eagles) in jeopardy
Altamont Pass – News Update – from Sept 22



shut down all the turbines for at least two months each winter
eliminate the 100 most lethal turbines
Replace all before permits expire in 13 years
43
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
Gas/Hydro
3500
Base Load – Coal
3000
45
Energy Delivery
Lake Benton II
Lake Benton & Storm Lake Power
February 24, 2002
Storm Lake
Combined
200000
180000
160000
140000
(kW)
120000
100000
80000
60000
40000
20000
(HH:MM)
23:00
22:00
21:00
20:00
19:00
18:00
17:00
16:00
15:00
14:00
13:00
12:00
11:00
10:00
9:00
8:00
7:00
6:00
5:00
4:00
3:00
2:00
1:00
0:00
0
46
Energy Delivery
Lake Benton II
Lake Benton & Storm Lake Power
July 7, 2003
Storm Lake
Combined
180000
160000
140000
120000
(kW)
100000
80000
60000
40000
20000
(HH:MM)
23:00
22:00
21:00
20:00
19:00
18:00
17:00
16:00
15:00
14:00
13:00
12:00
11:00
10:00
9:00
8:00
7:00
6:00
5:00
4:00
3:00
2:00
1:00
0:00
0
47
Wind Economics
48
Wind Farm Design Economics

Key Design Parameters


Mean wind speed at hub height
Capacity factor





Start with 100%
Subtract time when wind speed less than optimum
Subtract time due to scheduled maintenance
Subtract time due to unscheduled maintenance
Subtract production losses
 Dirty blades, shut down due to high winds

Typically 33% at a Class 4 wind site
49
Wind Farm Financing
 Financing

Interest rate
 LIBOR

Terms
+ 150 basis points
Loan term
 Up
to 15 years
50
Cost of Energy Components

Cost (¢/kWh) =
(Capital Recovery Cost + O&M) / kWh/year



Capital Recovery = Debt and Equity Cost
O&M Cost = Turbine design, operating
environment
kWh/year = Wind Resource
51
Costs Nosedive  Wind’s Success
38 cents/kWh
$0.40
$0.30
$0.20
3.5-5.0 cents/kWh
$0.10
$0.00
1980
1984
1988
1991
1995
2000
2005
Levelized cost at good wind sites in nominal dollars,
not including tax credit
52
Construction Cost Elements
Financing & Legal
Fees
3%
Development
Activity
4%
Interconnect/
Subsation
4%
Design &
Engineering
2%
Land
Transportation
2%
Turbines, FOB
USA
49%
Interest During
Construction
4%
Towers
(tubular steel)
10%
Construction
22%
53
Wind
Farm Component
Costs
Wind Farm
Cost
Components
100%
80%
Balance of System
Transportation
60%
Foundations
Tower
40%
Control System
Drive Train Nacelle
Blades and Rotor
20%
0%
750 kW 1500 kW 3000 kW
54
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, shut down due to high winds
Typically 33% at a Class 4 wind site
55
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, Texas


37% CF in first 9 months
Springview, Nebraska

36% CF in first 9 months
56
Wind Farm Economics

Key parameter

Distance from grid interconnect

≈ $350,000/mile for overhead transmission lines
57
Wind Farm Economics

Example

200 MW wind farm


Class 4 wind site




33% capacity factor
10 miles to grid
6%/15 year financing


Fixed costs - $1.23M/MW
100% financed
20 year project life
Determine Cost of Energy - COE
58
Wind Farm Economics

Total Capital Costs


Total Annual Energy Production


3.3¢/kWh
Operating Costs/kWh


578,160,000 x 20 = 11,563,200,000 kWh
Capital Costs/kWh


200 MW x 1000 x 365 x 24 x 0.33 = 578,160,000 kWh
Total Energy Production


$246M + (10 x $350K) = $249.5M
1.6¢/kWh
Cost of Energy – New Facilities



Wind – 4.9¢/kWh
Coal – 3.7¢/kWh
Natural gas – 7.0¢/kWh

@ $12/MMBtu
59
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


Requires historical wind data


Daily and hourly detail
Install metrological towers



Wind is the fuel
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
Wind Energy Variability
63
Source: Garrad Hassan America, Inc.
Wind Farm Development

Zoning/Public Approval/Land Lease

Obtain local and state governmental approvals

Often includes Environmental Impact Studies
 Impact to wetlands, birds (especially raptors)

NIMBY component
 View sheds

Negotiate lease arrangements with ranchers,
farmers, Native American tribes, etc.

Annual payments per turbine or production based
64
Wind Farm Development

Power Purchase Agreements (PPA)



Must have upfront financial commitment from utility
15 to 20 year time frames
Utility agrees to purchase wind energy at a set rate


e.g. 4.3¢/kWh
Financial stability/credit rating of utility important aspect
of obtaining wind farm financing


PPA only as good as the creditworthiness of the uitility
Utility goes bankrupt – you’re in trouble
65
Wind Farm Development

Connectivity to the grid

Obtain approvals to tie to the grid


Obtain from grid operators – WAPA, BPA, California
ISO
Power fluctuations stress the grid

Especially since the grid is operating near max
capacity
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
Financing Revenue Components
68
Source: Hogan & Hartson, LLP
Closing the Deal

Small developers utilize a “partnership
flip”


Put the deal together
Sell it to a large wind owner



e.g. Florida Power & Light, AEP, Shell Wind Energy,
PPM – Scottish Power
Shell and PPM jointly own Lamar wind farm
Large wind owner assumes ownership and
builds the wind farm
69
Wind Policy
70
Wind Farm Economics

Federal government subsidizes wind farm
development in three ways

1.9 ¢/kWh production tax credit


5 year depreciation schedule


33.5% subsidy
29.8% subsidy
Depreciation bonus

2.6% subsidy
71
Tax Incentives Issues

Small developers can’t fully use federal
tax credits or accelerated depreciation


They don’t have a sufficient tax liability
Example


A 200 MW wind farm can generate a $12.6M tax
credit/year
Small developers don’t have sufficient
access to credit to finance a $200M+
project
72
Production Tax Credit

1.9¢/kWh Production Tax Credit




First 10 years for producing wind generated electricity
Wind farm must be producing by 12/31/07
PTC has been on again/off again since 1992
Results in inconsistent wind farm development



PTC in place – aggressive development
PTC lapses – little or no development
The PTC puts wind energy on par with coal and
significantly less than natural gas

When natural gas > $8.00/MMBtu

Current prices: $10 – $15/MMBtu
73
Wind Power Policy

Renewable Portfolio Standard


21 States have them
Colorado’s Amendment 37







Passed by voters November 2004
3% of generation from 2007 - 2010
5% of generation from 2011 - 2014
10% of generation by 2015 and beyond
4% of renewable generation from solar PV
96% of renewable generation from wind, small
hydro and biomass
Small utilities can opt out of program
74
Renewable Energy Credits

You subsidize wind energy when produced by
another utility

CU pays $0.006/kWh to Community Energy




To power the UMC, Wardenburg and the Recreation Center
Community Energy uses these funds to subsidize wind
energy at wind farms in Lamar and in the upper Midwest
Although CU isn’t getting the electrons from these wind
farms, it is in effect buying wind energy
The three new buildings (Business, Law, and Atlas) will
also be powered by wind energy
75
Inconsistent Policy  Unstable Markets
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
The Future of Wind - Offshore
•1.5 - 6 MW per turbine
•60-120 m hub height
•5 km from shore, 30 m
deep ideal
•Gravity foundation, pole, or
tripod formation
•Shaft can act as artificial
reef
•Drawbacks- T&D losses
(underground cables lead to
shore) and visual eye sore
81
Wind Energy Storage

Pumped hydroelectric








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
Compressed Air Energy Storage

Using wind power to compress air in underground storage caverns



Salt domes, empty natural gas reservoirs
Costly, inefficient
Hydrogen storage





Use wind power to electrolyze water into hydrogen
Store hydrogen for use later in fuel cells
50% losses in energy from wind to hydrogen and hydrogen to electricity
25% round trip efficiency
Raises cost of wind energy by 4X
82
U.S. Wind Energy Challenges

Best wind sites distant from



Wind variability


Debate on how much backup generation is required
NIMBY component


Can mitigate if forecasting improves
Non-firm power


population centers
major grid connections
Cape Wind project met with strong resistance by Cape
Cod residents
Limited offshore sites

Sea floor drops off rapidly on east and west coasts


North Sea essentially a large lake
Intermittent federal tax incentives
83
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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Founded in 1999, Community Energy is one of the nation's leading wind developers and
suppliers of renewable energy credits. Community Energy offers NewWind Energy credits from the 7.5 MW wind farm located
in Southeast Colorado owned jointly by Lamar Light & Power and Arkansas River Power Authority. Purchase NewWind Energy
credits starting at $4 per month for 200 kWh. www.NewWindEnergy.com or call 1 (866) WIND-123
Based in Boulder, Renewable Choice Energy is a leading provider of wind energy credits from
wind farms across the country. You can purchase wind credits starting at $5/month (250kWh). We’ve partnered with the local
Whole Foods Market to offer a free $20 or $50 gift card for new wind customers. www.RenewableChoice.com or get info at
Whole Foods Market in Boulder or call 1 (877) 810-867010-8670
Since 1997, Xcel Energy's Windsource® program has provided customers with a clean
renewable energy option that helps protect Colorado’s environment. Xcel Energy’s Windsource program and is the largest wind
green pricing program in the United States. Customers pay a slight premium for 100% clean, wind energy from Colorado wind
farms. Windsource in Colorado is Green-e certified by the Center for Resource Solutions. Windsource costs $0.97 per 100 kWh
block in addition to your regular energy charge. www.xcelenergy.com/windsource-co or call 1(800) 824-1688.
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