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
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