Procedures for Wind resource assessment
and their impact on the levelized cost of
Energy (based on the MEGAVind cost model),
Head of Section Hans E. Jørgensen, DTU Wind Energy
&
Lars Landberg
Group Leader, Renewables. Strategic Research and
Innovation
DNV GL – Group
Motivation
• What is the relation between the economy of a wind farm project
and uncertainty?
• Is it really necessary to use development expenses (DEVEK) and
how are these related to the Levelized Cost of Energy LCOE?
DTU Wind Energy, Technical University of Denmark
Some definitions
• The levelized cost of energy is defined as (MEGAVind cost model)
developers prespective (pre-tax):
𝑇
𝐿𝐶𝑂𝐸 =
𝐼𝑡 + 𝑂𝑡 + 𝐴𝑡
/
𝑡
𝑡=𝑘 (1 + 𝑊𝑛 )
𝑇
𝐸𝑡
𝑡
𝑡=𝑘 (1 + 𝑊𝑟 )
• The weighted average cost of capital W is :
𝑊𝑛 =
𝐸𝑞𝑢𝑖𝑡𝑦
𝑅𝑒
𝑇_𝑉𝑎𝑙𝑢𝑒
+
𝐷𝑒𝑏𝑡
𝑅𝑑
𝑇_𝑉𝑎𝑙𝑢𝑒
• Debt Service Coverage Ratio (DSCR) defined as
𝐷𝑆𝐶𝑅 =
𝑁𝑒𝑡 𝑜𝑝𝑒𝑟𝑎𝑡𝑖𝑛𝑔 𝑖𝑛𝑐𝑜𝑚𝑒
𝐷𝑒𝑏𝑡 𝑠𝑒𝑟𝑣𝑖𝑐𝑒
DTU Wind Energy, Technical University of Denmark
Vesterhav syd (an example)
20 x 10 MW
1031 GWh
DTU Wind Energy, Technical University of Denmark
Production based on mesoscale models
22 submission:
Location: Høvsøre
Level : 100 m
1 year, 10 min averages
of U and D
Reference Høvsøre mast
Production estimates:
± 15 %
DTU Wind Energy, Technical University of Denmark
Assumptions
------ AEP input
1031 ;FixedAEPinputPrYear [GWh]
------ CAPEX
1.50 ;TurbinePriceSimple [M€/MW]
0.600 ;FoundationPriceSimple [M€/MW]
0.080 ;ElecInfraPriceSimple [M€/MW]
0.040 ;OtherInfraPriceSimple [M€/MW]
0.350 :AssembInstalPriceSimple [M€/MW]
------ OPEX input
0.02 ;OPEX cost €/kWh
------ Capital input
25
;NYears
0.30 ;EquityPCT [fraction]
0.05 ;RateDebt [fraction]
0.12 ;RateMarket[fraction]
0.03 ;RateRiskFree [fraction]
1.70 ;CompanyRiskProfile [fraction]
0.30 ;TaxRate [fraction]
0.02 ;Inflation Fraction
DTU Wind Energy, Technical University of Denmark
--- Wind farm
20
;Number of turbines
138.0 ;HubHeight [m]
10.0 ;RatedPower [MW]
220.0 ;Diameter [m]
0.90 ; AEPlossFactor
------ DEVEX input
20.0 ;DEVEX cost M€
3
;OffsetYearsDEVEX
Economical constraints
• DSCR has to be 1.3 based on the P90 production estimate (over 10 year)
• The P90/P50 ratio determines the size of the debt i.e the ratio between
Equity and Debt combined with the DSCR of 1.3
• Assume calculations give E:ratio of 30 %
DTU Wind Energy, Technical University of Denmark
LCOE as function of Equity ratio
Increase the Devek with 10 Meuro (tower offshore)
Decrease uncertainty from
12% to 7 % equals Equity from
base case 30% to 25%
70
Euro/MWh
68
66
64
LCOE
62
Case 1
60
58
56
0
0.1
0.2
0.3
Equity Ratio
DTU Wind Energy, Technical University of Denmark
0.4
0.5
Summary
• The uncertainty of a project determines the amount equity you need to
put in your project and vice versa also determines how big the senior
debt can be (loan with a very low interest rate).
• Measurements on location is necessary to reduce the uncertainty and
even if the tower cost 10 Meuro this can be paid back over 3-4 years on
Vesterhav syd.
• Highly qualified consultants can be of large value for the economics in a
project
DTU Wind Energy, Technical University of Denmark