The Aesthetic Excuse

Americans have long been known for our obsession with appearances. Our collective beauty obsession and the pursuit of perfection have spawned multiple magazines, miracle creams and, no doubt, trips to the therapist’s office.

You may be wondering why I’m discussing the American aesthetic on a blog about wind energy. Did you know that there is a movement against wind energy based almost entirely on the aesthetics of wind turbines?

Perhaps it’s just me but I cannot find a single aesthetically pleasing thing about a power plant. I’ll admit, my opinion may be unfairly influenced by the ever present aroma of chemical pollutants or the surprising sting of smog as it hits my eyes – but I just don’t get it. I cannot find any logic to the argument that since some people in our country don’t like the way that turbines look, we’re going to continue poisoning ourselves by building more of what is apparently seen as the more attractive option – the conventional power plant.

I’ve included some photos for comparison:

Feel free to tell me how crazy I am for not finding the smoke spewing, pollutant belching power plant more aesthetically pleasing than a wind farm.

Wind turbines, some of which are designed to be no taller than a cell tower, are an excellent way to produce our own clean, renewable energy. We've grown accustomed to the sight of cell towers, water towers and utility poles on the horizon - why not turbines?

I think we can all agree that it is in our best interest to be less reliant on foreign powers for our energy needs. We all share a common desire to protect that which is dear to us. Decisions that will affect the future of the prairies, lakes, beaches, rivers and mountains of this great country should not be made based on someone’s idea of beauty.

*Power plant photo from www.coal-is-dirty.com, Wind farm photo from www.focalenergy.nl

Renewable Energy and Leadership in Energy and Environmental Design (LEED) Certification

In the recent years there has been a big push toward attaining LEED certification of buildings. In this entry I will describe the connection between renewable energy and LEED points, and describe ways to finance a renewable energy project that does not impact the cost.

When a "Design and Build" company proposes a LEED design to a developer, it chooses the most cost effective components of the design such that the points add up to the desired LEED level. For instance, if a designer wants to achieve a Gold level of LEED certification, then it needs 39 to 51 points. Inserting renewable energy generation into a project is a very expensive way to achieve this Gold target. There are several other significantly less expensive design options to accomplish the same goal.

My whitepaper argues that such a simplistic way of evaluating a renewable energy project is seriously flawed. A more sophisticated look reveals that on a variety of financial measures, a LEED design with renewable energy can be a very attractive investment in the long run. A wind project in a Class 3 wind area can yield substantial positive cash flow.

The whitepaper also describes financing mechanisms like performance contracting or other similar methods to pay for wind projects with no upfront costs.

Article written by Dr. Pramod Jain

Email Pramod at pramod@frombeginningtowind.com

Visit Wind Energy Consulting and Contracting Inc.

Cost of Energy for Small Wind Projects

In this entry I will talk about the cost of energy for small wind projects. The previous blog addressed how the cost of energy is computed and presented the cost of energy generation for utility scale turbines. The focus of this blog entry will be on turbines that are rated 10KW or less.

To recap, the cost of energy production depends on average annual energy production (AEP), total cost of installation, recurring cost for operations and maintenance, and the discount rate.

Three turbines will be compared in this analysis: Bergey 10KW with 7m rotor diameter and 30.5m hub height; SkyStream 2.4KW with 3.7m rotor diameter and 13.7m hub height; and MariahPower 1.2KW with 1.2m width and 6.1m height. The first two are horizontal axis wind turbines (HAWT) and the third is a vertical axis wind turbine (VAWT).

The following parameters will be used for comparison purposes:

• Wind conditions: 7m/s at 50m, which is Class 3 wind regime
  
• Operations and maintenance costs: 1c per kWh of energy produced
  
• Annual sinking fund for repairs: 0.75% of total installed cost
  
• 3% inflation in costs
  
• Wind shear of 0.15; this is used to compute wind speed at hub height while assuming wind speed of 7m/s at 50m
  
• Life of wind project: 20 years
  
• Annual Energy Production (AEP) is computed based on power curves provided by the manufacturer
  

The following table contains average AEP, the installed cost and cost of energy.

Turbine	AEP	Total installed cost	Total installed cost per KW	Cost of Energy/ kWh
Bergey 10KW	18.76 MWh	$65K	$6,500	$0.365
SkyStream 2.4KW	5.3 MWh	$18- 20K	$7,500 – $8,333	$0.3596
MariahPower 1.2kW	2 MWh	$9 - 10K	$7,500 - $8,333	$0.4672

Note the cost of energy does not include incentives or tax credits.

Since VAWT do have a hub-height, for computation purposes the hub height was assumed to be the height of pole plus half the height of the turbine, which is equal to 6m for the Mariah Power VAWT. If the VAWT is installed on a roof, then the hub-height would have to be appropriately adjusted, although the impact of turbulence due to air flow along the edge of the building would reduce energy production.

Next, let us examine the impact of the investment tax credit (ITC) grant of 30% that is part of the current stimulus package. In cases where the investment per KW is large, the ITC is preferable over the production tax credit (PTC). For a more detailed description, see WECC whitepaper on the stimulus package.

Turbine	Cost of Energy/ kWh with 30% ITC grant
Bergey 10KW	$0.267
SkyStream 2.4KW	$0.2555
MariahPower 1.2kW	$0.3308

Note that as a result of the ITC grant the reduction in cost of energy is a little less than 30%.

Next, let us look at depreciation, the other major tax benefit. The stimulus package allows a bonus depreciation of 50%, in addition to the accelerated depreciation already allowed for renewable energy items, if the project is put in place before the end of 2009. When a project utilizes the 30% ITC grant, the depreciable basis of the project must be reduced by 50% of the grant amount. The following are costs per kWh when bonus depreciation is coupled with 5-year MACRS depreciation.

Turbine	Cost of Energy/ kWh with 30% ITC grant, bonus dep. & 5-yr MACRS
Bergey 10KW	$0.1758
SkyStream 2.4KW	$0.1657
MariahPower 1.2kW	$0.2133

Note, bonus depreciation in addition to accelerated depreciation leads to a further reduction of about 33% of the cost of energy than with the 30% ITC grant.

On the benefits front one other item requires mention: Renewable Energy Credits (RECs). RECs are a tradable certificate of proof that 1 kWh of electricity was produced using a renewable source. They are typically sold to businesses seeking to reduce their carbon footprint or to government agencies trying to meet renewable portfolio standards set by state or national mandate. Their pricing depends on market conditions related to the current supply and demand of RECs. The price of a REC is typically in the range of 0.5c to 2c.

In conclusion, if a small wind project is able to use all of the tax benefits of ITC and depreciation, then the cost of electricity is reduced by more than 50% of the original installed cost without incentives.

Article written by Dr. Pramod Jain

Email Pramod at pramod@frombeginningtowind.com

Visit Wind Energy Consulting and Contracting Inc.