WINDENERGY











4P720


Assignment 5:
Economy of a wind farm

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 The assignment 5 is focused on the economics of offshore wind energy. One of the first
thing which is done before the construction of a wind farm is an economic study. In this
assignment, a 300 MW wind farm is planned to be built in the location BARD Buitengaats,
Netherlands. The wind turbines which will be used are turbines GE 2.5 XL. And so the wind
farm will be composed of 120 wind turbines. The aim of the exercise is to determine if the
wind farm will be economically viable.

• Investment costs

Thanks to the LPC spreadsheet given, the composition of the investment costs is known. The
main investment is the wind turbines. Two example of other wind farms were given in this
sheet: the Princess Amalia and the OWEZ wind farms. They already exist so the investment
for the wind turbines is known. The OWEZ is composed of 36 wind turbines of 3 MW and
the Amalia is composed of 60 wind turbines of 2MW. Thanks to those data, the following
prices can be guess for the wind turbines:

Power of the wind turbine 3 MW 2 MW

Price 3.33 M€ 3 M€
Table 1: price of a wind turbine

So the price of a wind turbine depends on its power but is in the range of 3M€ (million of
euro). As our wind turbine is a 2.5MW one, the price can be assumed by doing the average of
the two other prices. So the price of our wind turbine is 3.16 M€.
And the investment for wind turbines of the wind farm is 380 M€.

The other investment costs can be assumed by considering the environment of the wind farm.
Characteristics like depth or the distance from the shore are really important to determine the
other costs. The table 2 gives those characteristics for different wind farms:

Our project Amalia wind farm OWEZ wind farm

Total power (MW) 300 120 108
Number of wind turbines 120 60 36
Depth (m) 40 20 30
Distance to the shore (km) 56 23 18
Table2: characteristics of some wind farms

The investment called support structures takes into account the sea bed preparation. It is
obvious that this cost depends on the depth of the sea and also of the surface used for the wind
farm. This cost is higher for Amalia wind farm than for OWEZ, even if the OWEZ wind farm
is located in a deeper area. The main influence for this cost is so the number of wind turbines.
As our wind farm will have 120 wind turbines in a deep location, the support structures cost
guessed is 50 M€.

The next cost is the OWEC installation. The OWEC is the base on what the wind turbines are
fixed. It seems that the distance of the shore and the number of wind turbines influence this
cost. But even though Amalia wind farm has twice more wind turbines than OWEZ one, the
prices are similar. So it is the distance from the coast that influences more. Furthermore, our
wind farm will be located much farer from the shore than the others. And it is also much
bigger. That is why the cost of OWEC is 32 M€.

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The cost of offshore grid connection depends on the distance of the wind farm from the shore
and also from the number of wind turbines. But it is obvious that this cost is double for
Amalia wind farm in comparison with the OWEZ cost. And the number of wind turbines is
double for the Amalia wind farm in comparison with OWEZ wind farm. So as our wind farm
has 120 wind turbines and Amalia has 60, the cost of grid connection is double: 120 M€.

The cost of insurance was more difficult to determine. Indeed only the Amalia wind farm has
insurance. Our choice was simply to keep the same cost for the insurance: 50 M€.

The cost of the project management is calculated in the LPC spreadsheet. It reaches 11.6 M€.

As a conclusion, the addition of all those costs gives the total investment: 644 M€. Our
investment costs distribution is shown in figure 1.

Our Investment Costs Distribution

Wind turbines

Support structures

OWEC installation

Offshore grid
connection
Insurance

Project management

Figure 1

• Accessibility and availability

To calculate the accessibility of the wind farm, we needed a wind profile to know when the
wind speed is above 10 m/s. The FINO 1 offshore platform which measures the wind on a
coast of Germany gave us an example of wind profile. Moreover the location of FINO 1 is
pretty close to the location of our wind turbine. In the FINO 1 data base, there was a wind
speed profile at 33 meters. But only the wind speed profile at 10 meters is necessary.

We assumed that in an off-shore location, the roughness length is z0 = 0.0002 meters. Thanks
to the formula which is V(H) in the power point of the first lecture, we found the wind speed
profile at 10 meters.
=log 0log 0

The wind speed profile found is:

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 25

wind
speed
at
10
m

20


15


10


5


0

12/04/2008
 01/06/2008
 21/07/2008
 09/09/2008
 29/10/2008
 18/12/2008
 06/02/2009


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Figure 2

The number of hours during when the wind speed is above 10 m/s is 2140. So the
inaccessibility is 2.5×2140 = 5350h.
The accessibility is so: =8760−53508760=0.39

Thanks to the accessibility, the availability of the wind farm can be calculated. The
availability of a wind turbine takes into account the maintenance time needed. For our wind
farm, each wind turbine is shut down three times a year for maintenance during 72 hours.
Each time, it takes 3.5 hours to reach the wind turbine and to land the boat. So each wind
turbine is shut down 3×75.5 hours per year.
But the maintenance is possible only if the wind turbine is accessible. It means that the
maintenance team has only 0.39×8760 hours a year to repair the wind mills.
The unavailability of the wind farm is so: =3∗75.5 ∗8760=0.066

As a consequence, the availability of the wind farm is A= 1-U =0.934.

A = 93.4%
• Capacity factor and revenue

The capacity factor is the real production of the wind turbine divided by the maximum
production possible. To calculate the real production of the wind turbine, the wind speed
profile at 90 meters was needed. One wind speed profile at 90 meters can be found in the
FINO 1 data base. Thanks to those data, the Weibull distribution at 90 meters can be drawn,
see figure 3.

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 weibull
distribu2on
h=90

0,1

0,09

0,08

0,07

0,06

0,05

0,04

0,03

0,02

0,01

0

0
 5
 10
 15
 20
 25
 30


Figure 3
The Weibull distribution multiplied by the P(V) curve that we did in the second assignment
allowed us to calculate the energy yield of a wind turbine. Each year one wind turbine in this
off-shore location will produce 12.39 GWh. To take into account the maintenance time, this
number has to be multiplied by the availability. So the net yearly yield is 11.57 GWh.

The capacity factor is: =11,570∗1208760∗300=0.53

The P(V) curve that we calculated in assignment 2 shows that the wind turbine produce its
maximum power for a wind speed above 11.4 m/s (Vrated). Thanks to the weibull distribution,
the number of hours with a wind speed above 11.4 m/s can be calculated: 3679 hours. To take
into account the availability of the wind farm, this number is multiplied by the availability. So
the number of hours when the production of the wind turbines is max, is 3436 hours.
So the power duration curve can be drawn as in figure 4.

Figure 4: power duration curve

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This curve shows how much power is available for a given amount of hours. It also helps us
to determine that hour wind farm is an intermediate power production because it is reliable for
more than 2000 hrs/yr. So the selling price of the electricity is 0.055€/kWh (See additional
information in the assignment 5).
But financial support is given by the state so the selling price of one kWh is 0.17€.
The yearly revenue can be calculated: (0.92 is the array and conversion efficiency)

R = 0.17×11.56.106×120×0.92 = 2.16.108 €/yr

R = 216 M€

• kWh costs

We considered that the economic life time is 15 years because the contract with the selling
price of 0.17 €/kWh is signed for 15 years.
We used the LPC spreadsheet to determine the cost of production of one kWh:
Investment
Wind turbines 3,80E+08
Support structures 5,00E+07
OWEC installation 3,20E+07
Offshore grid connection 1,20E+08
Insurance 5,00E+07
Project management 1,16E+07
Farm total 6,44E+08

Economic parameters
Economic lifetime 15
Discount rate 5,00%

O&M, decommissioning
Decomissioning rate 5%
Decomissioning cost 1,49E+06
Annual O&M costs 1,29E+06
Availability 93,4%

Energy yield
Annual energy yield (100%
avail) 1,49E+09
Array+conversion efficiency 92,00%

Total investment 6,44E+08

annual O&M cost 1,29E+06
decommissioning rate 5%
annual net energy 1,28E+09
economic lifetime 15
discount rate 5,00%
LPC 0,0507
Table 3
So the cost of one kWh is 0.0507€.

• Economy

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The last but not least question is: Is our wind farm economically viable? The answer is yes!

Indeed the time ROI of the wind farm is 5 years with a discount rate of 5%. The table 4
summarizes all the costs and revenue.
Total investment Maintenance /yr Production cost Revenue
664 M€ 1.29 M€ 70.4 M€ 216 M€
Table 5: summary of the different costs and revenue.

So the revenue per year B is the revenue minus the production and maintenance costs:
B = 216 – 70.4 – 1.29 = 144 M€/yr

In year 5, the present value of the investment is: = 1+0.05−5=821
 €

with i the investment in year 0 and 0.05 the discount rate.

In year 5, the total money earn is: =
 ×1511+0.05− =
821
 €

The time ROI of the wind farm is 5 years because K=I. In year 6, all the money earned can be
reinvested in another project.

As a conclusion, the time ROI of the wind farm is low and so the financial support of the
Dutch government is enough to get our wind farm economically viable.

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