1 / 28

Some thoughts on the cost of wind energy Andrew Garrad Garrad Hassan and Partners

Some thoughts on the cost of wind energy Andrew Garrad Garrad Hassan and Partners Cost effectiveness of wind energy EWEC Milan May 2007. Cost Price Value. Economics. ?. Politics Engineering Competition Volume Reliability Grid integration Financing. Wind speed!. Cost drivers.

buckminster-church
Download Presentation

Some thoughts on the cost of wind energy Andrew Garrad Garrad Hassan and Partners

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Some thoughts on the cost of wind energy Andrew Garrad Garrad Hassan and Partners Cost effectiveness of wind energy EWEC Milan May 2007

  2. Cost Price Value Economics ?

  3. Politics Engineering Competition Volume Reliability Grid integration Financing Wind speed! Cost drivers

  4. €21 billion Without M and A 8.6 BoP Power Purchaser 4.5 12.75 1.6 1.6 1.6 1.6 10.5 Turbines New capital Developers Others O and M Finance 7 Component Services Cash flow in 2006 € billions per annum Owner 70,000 MW installed 15,000 MW new Who’s who in the wind industry

  5. Equity Financing Debt Financing Construction Operations Development Site Selection and Design Turbine supply BoP Installation Operations & Maintenance Power Purchase Project model Who’s who in the wind industry

  6. Scope for cost reduction?  Time scale? 5 Years Site Selection and Design Project development • High demand • High profit • High cost • Project pipelines exchanging hands at high margins • Increased supply will reduce costs • Country dependent • Long lead items • PPA • Wind resource assessment • Permitting • Grid connection Construction Operations Development Who’s who in the wind industry

  7. Turbine supply BoP Installation Turbine and BoP supply Construction Construction Development Who’s who in the wind industry

  8. Maximum existing capacity? Annual world capacity (MW)

  9. Reduction through technology and volume Commercial price development (from price list) History of wind

  10. 124m “Commodity machines” 50m 40m 20m 15m The growth of commercial machines…. Will it continue? Better & better Bigger & bigger 1980 1990 2000 History of wind

  11. Tower head mass normalised to 52m Similar technology Concensus not achieved … or hidden disparity? Normalised tower head mass

  12. GE 3.6 MW turbine – typical configuration Enercon turbine – direct drive Winwind – a hybrid Permanent magnets? The jury is still out! Superconductors?

  13. Scope for cost reduction?  Time scale? 3 Years Turbine supply BoP Installation Turbine and BoP supply • High demand • Both turbine and BoP • High cost • Increased supply will reduce costs • Key components • New large suppliers • Volume • Technology Construction Construction Development Who’s who in the wind industry

  14. Scope for cost reduction? X Time scale? - Years Operations & Maintenance Operations and maintenance • Neglected area • No global supplier • Present costs optimistic? Operations Who’s who in the wind industry

  15. Power Purchase Power purchase and incentives Operations Who’s who in the wind industry

  16. Characterisation of incentives – Annual MW Highly political Political cum commercial Mad! Renewable obligation effective! Competitive market -Hopeless!

  17. The philosophy of the incentive does not matter If it is consistent and produces adequate returns It will work! Characterisation of incentives – Annual MW

  18. Scope for cost reduction? X Time scale? - Years Power Purchase Power purchase and incentives • Not a cost • Area of substantial change • Manifestation of political will • Long term PPAs reduce price • Move to merchant? • Tradable credits Operations Who’s who in the wind industry

  19. Scope for cost reduction?  Time scale? 3 Years Project model • Plenty of equity • Is it the “right sort”? • Speculative or utility? Equity Financing Who’s who in the wind industry

  20. Scope for cost reduction?  Time scale? 0 Years Project model • Fast evolution • Area of substantial change • Individual project to portfolio • Capital markets • Re-finance to keep client • Plenty of competition Debt Financing Who’s who in the wind industry

  21. But what about time scale? Equity Financing Bank Financing   Construction Operations Development      Site Selection and Design Turbine supply BoP Installation Operations & Maintenance Power Purchase Summary Who’s who in the wind industry

  22. Cost index (or guess!)

  23. The myth of intermittency is a cost!

  24. 24 hours ahead Example of portfolio forecasting… • Results for a portfolio of 7 wind farms. • Portfolio capacity 250 MW • Max wind farm separation ~ 800 km Aggregation through the grid!

  25. Wind is variable Wind is predictable Intermittency is binary – on or off Conventionals are intermittent Renewables are not Explosion of a myth

  26. The grid is the key!

  27. Transmission system operator 2012? 2005 2003 Respectability trajectory! 1980 Wind energy’s path to respectability Co-operation 3 stages of wind energy’s relationship with the TSO’s Animosity 3 main arguments for wind energy Ridicule + Least cost Environmental + Security of supply

  28. Thank you!

More Related