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| | [[Portal:Wind|► Back to Wind Portal]] | | [[Portal:Wind|► Back to Wind Portal]] |
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| | = Overview = | | = Overview = |
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| − | To determine the economic feasibility of wind power projects, a financial analysis should be carried out. The analysis should include factors such as site evaluation, cost of materials and so on to effectively determine the financial feasibility of the project. | + | To determine the economic feasibility of [[Wind Energy - Introduction|wind power]] projects, a financial analysis should be carried out. The analysis should include factors such as site evaluation, cost of materials and so on to effectively determine the financial feasibility of the project. |
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| | = Indicators for Cost-effectiveness<br/> = | | = Indicators for Cost-effectiveness<br/> = |
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| | Indicators for potential cost-effectiveness<ref>Contents of this page are from: GTZ/TERNA (n.D.): Feasibility Study for Wind Park Development in Ethiopia. Eschborn</ref> can be a.o. | | Indicators for potential cost-effectiveness<ref>Contents of this page are from: GTZ/TERNA (n.D.): Feasibility Study for Wind Park Development in Ethiopia. Eschborn</ref> can be a.o. |
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| | *min. wind speed 6 m/s for 10m | | *min. wind speed 6 m/s for 10m |
| | *planned, installed capacity of about 20 MW | | *planned, installed capacity of about 20 MW |
| | *supportive framework conditions (local and national) | | *supportive framework conditions (local and national) |
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| − | [[Economical_Feasibility_of_Wind_Energy_Projects#toc|►Go to Top]]<br/>
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| | = Estimation of Costs<br/> = | | = Estimation of Costs<br/> = |
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| | *Computation of long-run marginal costs (lifetime average costs) of wind energy generation | | *Computation of long-run marginal costs (lifetime average costs) of wind energy generation |
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| − | [[Economical_Feasibility_of_Wind_Energy_Projects#toc|►Go to Top]]
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| | = Estimation of Benefits<br/> = | | = Estimation of Benefits<br/> = |
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| | *Positive external effects: estimation/approximation of environmental benefits (avoided emissions from thermal plant) | | *Positive external effects: estimation/approximation of environmental benefits (avoided emissions from thermal plant) |
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| − | [[Economical_Feasibility_of_Wind_Energy_Projects#toc|►Go to Top]]
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| | = Economic and Financial Analysis = | | = Economic and Financial Analysis = |
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| | *Outline of the projects’ expected financial performance and risks (cash-flow and liquidity analysis) according to internationally accepted accounting standards | | *Outline of the projects’ expected financial performance and risks (cash-flow and liquidity analysis) according to internationally accepted accounting standards |
| | *Description of possible financing options and discussion of financial support measures/schemes. This shall include an analysis of current lending strategies of major development banks, focal areas of the relevant institutions as well as a description of typical loan conditions in case the projects were considered suitable by the lenders. | | *Description of possible financing options and discussion of financial support measures/schemes. This shall include an analysis of current lending strategies of major development banks, focal areas of the relevant institutions as well as a description of typical loan conditions in case the projects were considered suitable by the lenders. |
| − | *Discussion of alternative operational schemes for the wind park under support of an experienced wind park operator <ref>GTZ/TERNA (n.D.): Feasibility Study for Wind Park Development in Ethiopia. Eschborn</ref> | + | *Discussion of alternative operational schemes for the wind park under support of an experienced wind park operator<ref>GTZ/TERNA (n.D.): Feasibility Study for Wind Park Development in Ethiopia. Eschborn</ref> |
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| − | [[Economical_Feasibility_of_Wind_Energy_Projects#toc|►Go to Top]]
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| | = Financial Analysis - Example from Namibia<ref>Source: GIZ 2000: Wind Energy Projects in Morocco and Namibia pp. 10fckLRgtz2000-en-wind-energy-projects-marocco-namibia</ref><br/> = | | = Financial Analysis - Example from Namibia<ref>Source: GIZ 2000: Wind Energy Projects in Morocco and Namibia pp. 10fckLRgtz2000-en-wind-energy-projects-marocco-namibia</ref><br/> = |
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| − | The investment costs and expenditures on '''operation and maintenance (O&M)''' for the sites and system configurations are given in the table below: Cost Overview of Selected Wind Parks in Lüderitz (March 1999) | + | <u>The investment costs and expenditures on '''operation and maintenance (O&M)''' for the sites and system configurations are given in the table below:</u> |
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| + | Cost Overview of Selected Wind Parks in Lüderitz (March 1999) |
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| − | {| border="1" cellspacing="1" cellpadding="1" style="width: 100%" | + | {| cellspacing="1" cellpadding="1" border="1" style="width: 100%" |
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| | | bgcolor="#cccccc" | '''Site'''<br/><br/><br/> | | | bgcolor="#cccccc" | '''Site'''<br/><br/><br/> |
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| | <br/>In a first step, the costs of electricity generated by wind farms were compared with the actual electricity costs under status quo conditions. The economic analysis evaluated the utilisation of wind energy for electricity generation from the country’s point of view, assuming that Namibia continues to rely on imports from the RSA as per purchase agreement of 1996. This assumption was changed in the sensitivity analysis, taking into account alternative supply options and a different policy environment (e.g., greater degree of energy self-sufficiency).<br/>In the financial analysis, the key assumption was that the benefits of wind energy are measured in terms of avoided costs of bulk energy supplies from NamPower, valued in terms of the currently prevailing wholesale tariffs, adjusted upwards by 12% to account for the pending increase in tariffs. The forecast horizon (project lifetime) covers the period 2000 - 2020, with the pay-back period starting in 2001. Payments, i.e., cash in- and/or outflows, are due at the beginning of each year, expressed in N$ at constant prices of 1999. | | <br/>In a first step, the costs of electricity generated by wind farms were compared with the actual electricity costs under status quo conditions. The economic analysis evaluated the utilisation of wind energy for electricity generation from the country’s point of view, assuming that Namibia continues to rely on imports from the RSA as per purchase agreement of 1996. This assumption was changed in the sensitivity analysis, taking into account alternative supply options and a different policy environment (e.g., greater degree of energy self-sufficiency).<br/>In the financial analysis, the key assumption was that the benefits of wind energy are measured in terms of avoided costs of bulk energy supplies from NamPower, valued in terms of the currently prevailing wholesale tariffs, adjusted upwards by 12% to account for the pending increase in tariffs. The forecast horizon (project lifetime) covers the period 2000 - 2020, with the pay-back period starting in 2001. Payments, i.e., cash in- and/or outflows, are due at the beginning of each year, expressed in N$ at constant prices of 1999. |
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| − | <u>The above costs were then translated into '''“Long Run Marginal Costs” (LRMC)''', indicating the generation costs of wind power during the lifetime of the wind park:</u>
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| − | {| border="1" cellspacing="1" cellpadding="1" style="width: 100%" | + | <u>The above costs were then translated into '''“Long Run Marginal Costs” (LRMC)''', indicating the generation costs of wind power during the lifetime of the wind park:</u> |
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| | + | {| cellspacing="1" cellpadding="1" border="1" style="width: 100%" |
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| | | style="background-color: rgb(204, 204, 204)" | '''Wind Park Lüderitz'''<br/> | | | style="background-color: rgb(204, 204, 204)" | '''Wind Park Lüderitz'''<br/> |
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| | <u>The following table presents these mutually exclusive options as there are:</u> | | <u>The following table presents these mutually exclusive options as there are:</u> |
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| | *A capital grant or | | *A capital grant or |
| | *an equivalent “wind energy levy” on electricity consumption (based on 1,700 GWh in 1997). | | *an equivalent “wind energy levy” on electricity consumption (based on 1,700 GWh in 1997). |
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| | Alternative Break-Even Requirements for Wind Parks in Lüderitz | | Alternative Break-Even Requirements for Wind Parks in Lüderitz |
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| − | {| border="1" cellspacing="1" cellpadding="1" style="width: 100%" | + | {| cellspacing="1" cellpadding="1" border="1" style="width: 100%" |
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| | | style="background-color: rgb(204, 204, 204)" | '''Site'''<br/> | | | style="background-color: rgb(204, 204, 204)" | '''Site'''<br/> |
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| | The above figures indicate that an assumed CO<sub>2</sub> bonus of N$ 100 per ton of avoided CO<sub>2</sub> would warrant the support schemes to a large extent, but sources for grant financing have still to be found. As a result of the workshop held in March, all Namibian stakeholders gave their firm committments to further pursue the wind energy option, provided that the international donor community would make available the additional financial support required to make the project economically and financially viable. | | The above figures indicate that an assumed CO<sub>2</sub> bonus of N$ 100 per ton of avoided CO<sub>2</sub> would warrant the support schemes to a large extent, but sources for grant financing have still to be found. As a result of the workshop held in March, all Namibian stakeholders gave their firm committments to further pursue the wind energy option, provided that the international donor community would make available the additional financial support required to make the project economically and financially viable. |
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| − | [[Economical_Feasibility_of_Wind_Energy_Projects#toc|►Go to Top]]
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| | = Further Information = | | = Further Information = |
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| | *[[Economic Analyses of Wind Energy Projects|Economic Analyses of Wind Energy Projects]]<br/> | | *[[Economic Analyses of Wind Energy Projects|Economic Analyses of Wind Energy Projects]]<br/> |
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| − | [[Economical_Feasibility_of_Wind_Energy_Projects#toc|►Go to Top]]
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| − | == References<br/> ==
| + | = References<br/> = |
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| | <references /> | | <references /> |
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| | + | [[Category:Financing_Wind]] |
| | + | [[Category:Namibia]] |
| | [[Category:Wind]] | | [[Category:Wind]] |
The level of investigation and cost estimates shall be of sufficient accuracy and detail to satisfy the needs of financiers and decision makers.
The outline of project costs should include:
However, the economic benefits of wind energy according to the avoided costs of electricity imports ranging from 32 N$/MWh to 74.5 N$/MWh (including line losses) depending on the spot price of the South African Power Pool, make any wind park economically unfavourable, and even the financial analysis adds little to this because it is based on the same assumptions as the economic analysis, except for the financial value attached to wind energy, which is 90 N$/MWh (the rate NamPower is assumed to charge for wholesale energy supplies).
In a sensitivity analysis it was therefore investigated how the given parameters have to be changed in order to achieve the financial viability of the wind park. Even by taking into account increasing electricity tariffs due to new power generating facilities such as the
Kudu Gas Combined Cycle Power Plant, there is still a considerable amount of grant financing or other financial support required to make a wind park at Lüderitz commercially viable.
