Wind and Solar Renewable Energy

1. Wind and Solar Renewable Energy Sept , 2011 David Wright Duke Energy

2. What We Will Cover • Basics of Utility Electricity • History of Wind Energy • Science of Wind Energy • Types of Wind Turbines • Wind Farm Construction • Renewable Wind Operations • Other Types of Renewable Energy • Solar, Biomass, Hydroelectric & Geothermal • Renewable Energy - Property Valuation Issues

3. The ‘Drivers’ of an AC Generator • Steam • Water • Hot Gas • Wind

4. The Grid • Two Types, Transmission and Distribution • Transmission System • Operates at ‘higher’ voltages • Covers larger geographic areas • Crosses state lines • Owned and operated by various entities, Utilities, Federal Government, etc. • Distribution System • Operates at ‘lower’ voltages • Covers smaller geographic areas • Brings power ‘to the people’ • Owned and operated by your local utility, CLF&P

5. The Grid http://www.oncor.com/images/content/grid.jpg

6. NASA’s wind turbine program was a partnership between NASA, DOE, and NSF Began in 1973 and continued on until around 1988 Worked with the Bureau of Reclamation on the WTS-4 at Medicine Bow, WY History of Wind Energy, NASA

7. Mod 2 Mod 0a Mod 5b Mod 1 NASA Turbine Program WTS-4 4MW Hamilton Standard

8. History of Wind Energy, California Wind Rush • California tax incentives and improvements in technology led to a boom in construction starting in the early 1980’s

9. History of Wind Energy, Modern Wind Turbines • 3 blade, upwind, HAWT, of massive proportions. Multi MW capacity • Constructed both on land, and offshore

10. Science - Wind Shear The change in the wind’s speed, or direction,due to the effects of the earth’s surface Speed shear (left) and directional shear (right). From the National Weather Service at http://www.srh.weather.gov/srh/jetstream/mesoscale/windshear.htm

11. 0.0 = Water Surface 0.5 = Smooth surface, concrete runway, mowed grass 1.0 = Open agricultural areas, very scattered buildings, softly rounded hills 1.5 = Agricultural land with some houses, some sheltering hedgerows, dist 1250 meters 2.0 = Agricultural land with some houses, more sheltering hedgerows, dist 500 meters 2.5 = Agricultural land with many houses, many sheltering hedgerows, dist 250 meters 3.0 = Villages, small towns, many hedgerows, forests, and rough or uneven terrain 3.5 = Large cities with tall buildings 4.0 = Very large cities with tall buildings and skyscrapers Science - Roughness Classes Disruption of wind flow by upstream objects. From (Nelson 2004), his Figure 9.2

12. Science – Continued Growth • The rotor swept area and height of tower continues to increase

13. Science – Continued Growth • Increase in swept area and height of tower improve production

14. Science - Wind Density

15. Types of Wind Turbines • Many variations exist in the evolution of wind turbines for producing electricity • Number of blades, 1, 2, 3, 4 etc. • Upwind vs. Downwind • Vertical axis, (VAWT) vs. Horizontal axis, (HAWT) • Synchronous vs. Asynchronous generators • Tower height and materials • Terrestrial and Off-shore

16. Not very common Required a counterweight to operate Higher rotational speed Noise and visual intrusion 1 Bladed Turbines

17. Saves the cost and weight of one rotor blade Require higher rotational speed than 3 bladed The hub and rotor need to be hinged 2 Bladed Turbines

18. 3 Bladed Turbines • The most common design based on years of testing and research • Gives good ‘balance’ between cost and energy output • Upwind turbine design on tubular towers most prevalent

19. Vertical Axis Wind Turbines • Several designs; most commonly referred to as the Darrieus, Savonius, and Giromill type • The only commercially manufactured VAWT, was of the Darrieus design, by a company called Flo Wind

20. Wind Farm Construction • 12 sites constructed to date • Standard design template

21. How a Wind Turbine Works • Most large modern wind turbines work in the same way • They are 3 blade, upwind, HAWT, with an asynchronous generator • The slow moving rotor is connected to a shaft, which is connected to the gearbox, and then another shaft is connected to the generator • The nacelle is rotated into the wind by an automatic yaw control • The rotor speed is governed by ‘pitching’ the blades

22. How a Wind Farm Works Multiple wind turbines are connected electrically to the grid

23. Wind Farm Construction • Environmental Concerns • Integration with wildlife • Integration with livestock • Effect on water and erosion • Effect on grass and trees

24. Leading Causes to Total Avian Deaths *Based on a review of literature and known mortality data conducted in December 2010 (January 2011-Tetra Tech, Inc.)

25. Renewable Wind Operations • Remote Operations • “Eye in the sky” • 24/7 coverage • 2 employee / shift • Approx. 600 turbines / employee • 6 states, 12 sites • Third party contracts • Wind and solar ops • New expanded center • Asset Management • Land lease payment • NERC compliance • PPA contract management • Parts management • Financing activities

26. Renewable Wind Operations • Condition-based monitoring • Industry leader in this area • Allows for small uptower repairs • One “find” pays for the system • Estimated 2010 O&M expense reduction $1.4MM

27. Other Forms of Renewable Energy • Renewable Energy is defined as “Energy which comes from natural resources such as wind, sunlight, rain, tides, and geothermal heat, which are naturally replenished”.

28. Other Forms of Renewable Energy • Solar Energy • Solar Photovoltaic • Solar Thermal • Biomass Energy • Direct Combustion • Anaerobic Digestion • Biofuels • Hydroelectric Energy • Run of River • Tidal • Wave • Geothermal Energy • Direct-use geothermal • Hydrothermal geo-energy

29. Growth Moving Forward • In 2010, Duke Energy started with 3 solar energy plants. • By the end of 2012 Duke will own approximately 20 sites Nation Wide. • As time goes on, Duke Energy plans to continue to grow and expand their solar business investing more interest in clean renewable energy sources.

30. 1,900 MW 2012

31. Solar Energy

32. Solar Photovoltaic • Photovoltaic Panels • Ground Mount Fixed • Ground Mount with Tilt Drivers • Roof Top Panels

33. Solar Photovoltaic

34. Solar Photovoltaic • Solar cell – A semiconductor device which generates direct current (DC) electricity when exposed to sunlight. Also known as a photovoltaic cell. Each cell generates approximately 0.5 volt. Solar cells can be wired in series or in parallel to produce higher voltage and current. Made from crystalline silicon or thin film amorphous silicon • Solar Panel – A collection of solar cells, wired in series and/or in parallel, and enclosed in a protective housing.

35. Solar Photovoltaic • Power inverters • These panels will create DC current that will be sent to a power inverter to make it useable, AC current. • Standardizing • Panels continue to get smaller while improving power output • Duke Plans to wait for technology to settle into it’s most efficient product before standardizing.

36. Solar Photovoltaic

37. Solar Thermal • 2 Basic Designs • Direct heating of air, water, solids, • Heat transfer for power generation

38. Biomass Energy • Biomass – A renewable energy source from organic matter such as plants, animal wastes, and algae • Biomass gives off energy in one of several ways • Thermal Conversion – Combustion • Chemical Conversion – ‘Black Liquor’ • Biochemical Conversion – Fermentation and Anaerobic Digestion.

39. Anaerobic Digestion • Anaerobic digestion – A series of processes in which microorganisms break down biodegradable material in the absence of oxygen, used for industrial or domestic purposes to manage waste and/or to release energy.

40. Hydroelectric • Run of River Hydroelectric • Wave Energy • Tidal Energy

41. Geothermal Energy • 2 Main uses of geothermal energy • Direct-use geothermal – Primarily heat pumps, storage. For space heating. • Hydrothermal geo-energy – Use of stored heat in magma to heat water/steam to produce electricity.

42. Valuation Issues - Government Incentives • Production Tax Credits • This is a per KW production tax credit. • How should production tax credits be treated for property tax valuation purposes? • Credits are available for 10 years and do have value to a qualifying buyer, but the benefit is diminishes each year the facility is in service. • Does this diminishing value warrant an economic obsolescence adjustment during the first ten years, or an accelerated depreciation?

43. Valuation Issues - Government Incentives • Cash Grants • The grant is a one time receipt of cash and has no value to a potential buyer other than a reduction in the cost of assets to arrive at FMV. • The grant is recorded as a reduction in PP&E. • For property tax purposes this reduction in capital cost has raised some questions. • WY & TX have agreed to the concept of reductions in capital cost.

44. Valuation issues - Utilization Factors • The utilization of a Wind or Solar facility is limited, and therefore we must take into account “Utilization Factors” when valuing these assets. • Typically studies are performed prior to building a facility that will give expected utilization factors. We can then compare these to actual utilization in order to determine if an adjustment is warranted for any given year. • Also, industry averages of utilization can be used to set a standard for comparison to actuals.

45. Summary of Valuation Adjustments • Renewable Energy and Property Tax Valuation • With new forms of renewable energy and government incentives we have to realized the importance of potential valuation adjustments. • Renewable energy is not always economically viable, but necessary to meet carbon reduction requirements. • It’s important to look at cost and income approaches, taking into account government incentives, in order to determine if there’s a case for economic obsolescence adjustments. • And finally taking into account utilization factors.

46. Thank You For Your Time If you have any questions or concerns feel free to contact me. David Wright – 704-382-6125