-
36 Languages:
Power - Wind turbine - 20,700 kW / Jamaica
Case study assignment
A developer has proposed the construction of a 20 MW wind farm in the southwestern part of Jamaica. The output of this wind farm - the first major wind project on the island - would be sold to the local utility. The developer has proposed the use of twenty-three 900 kW Vestas wind turbines. You have been hired by a funding agency to prepare a preliminary feasibility study of the project, as a quick first verification that the proposal is reasonable.
Site information
The project site is located on a ridge, 900 to 1,000 meters above sea level, near the community of Wigton, Manchester, about 60 km west of Kingston. Meteorological towers have been installed on the site for the past several years, and measurements at 50 m indicate average wind speeds of 8.3 m/s.
The wind farm is to be constructed on land that is owned by a bauxite mining company and that will be leased to the developer for a 20-year period. A minor road accesses the site and the area is in close proximity to a small port. There are no transmission lines nearby and therefore a line will have to be constructed to an interconnection point approximately 11 km away. The costs of travel to and accommodations near to the site are modest.
Financial information
The project developer, a government-owned entity, has negotiated the sale of wind-generated electricity to the local utility at a price of US$0.056/kWh for the first five years of operation, and US$0.05051/kWh for the next 15 years. The twenty-year contract between the two parties is for energy only. The developer plans to sell the GHG emissions reductions for US$10/tonne of CO2 equivalent under the Clean Development Mechanism; the vast majority of the Jamaican electricity supply is generated from oil-combusting power plants.
The developer has already arranged much of the financing for the project. A commercial loan for US$16 million has been negotiated, the developer can put up US$3.2 million in equity, and a grant of US$7 million has been provided by an international donor. Additional financial figures are provided by the developer: the debt interest rate is 14%, the debt term is 15 years, their discount rate is 15%, they expect an inflation rate of 10%, and they foresee the US dollar, currently worth 65 Jamaican dollars, appreciating by around 7.5% per year against the Jamaican dollar.
Prepare a RETScreen study, documenting any assumptions that you are required to make, and report on the significant conclusions from this analysis.
Solution
The worked-out solution is the data file selected from within the RETScreen Project Database. The user automatically downloads the Project Database file while downloading the RETScreen software.
Teacher's notes
Results
In 1995 the Petroleum Corporation of Jamaica (PCJ) began investigating the possibility of using wind energy for electricity generation. A wind farm, the first of its kind on the island, was commissioned in 2004 through a wholly owned subsidiary of PCJ, Wigton Windfarm Limited.
The project is located on a ridge, 900 to 1,000 m above sea level, near the community of Wigton, Manchester, about 60 km west of Kingston. The 20.7 MW wind farm is expected to supply the local electric utility, Jamaica Public Service Company (JPS), with at least 7 MW of power, on average. Wind energy production from April to August 2004 was 24.3 GWh, with a peak of 20.8 MW and an average supply of 8.9 MW.
The project has met and exceeded expectations but in its limited time of operation has also experienced its first significant downtime with the passing of a major hurricane through the Caribbean. Damage to the equipment was not severe but did require some repair, including the repairs to the transmission line to the interconnection site.
System description
The wind farm consists of 23 NEG Micon NM 52/900 wind turbines, each with a rated power of 900 kW. The hub height is 49 m. Each turbine has its own low/medium voltage transformer situated inside the tower base. The turbines are sited on a ridge, approximately 100 m apart, in two rows separated by 300 to 350 m. Each turbine is connected to a project-site substation. Interconnection to the utility grid substation is via a 69 kV transmission line.
Lessons learned
The use of renewable energy in the Caribbean islands is on the increase and countries like Jamaica, which has to import a major portion of its energy resources, will benefit greatly from the growth of indigenous energy sources. Some of these benefits will include improved energy and economic security due to diversification of the energy mix, import reductions (namely for petroleum) and subsequent improvements in the balance of trade, and technology transfer and building of local expertise in wind technology. To accelerate the realization of these benefits, public policies promoting renewable energy technologies need to be developed more fully, so that market, institutional and cultural barriers can be quickly overcome.
Photo
Wind farm - Grid-connected, Wigton, Jamaica
References
The information for this case study was graciously furnished by G. Alleng (Center for Energy and Environmental Policy, University of Delaware), R. Wright (Petroleum Corporation of Jamaica) and D. Barrett (Petroleum Corporation of Jamaica).
Case study assignment
A developer has proposed the construction of a 20 MW wind farm in the southwestern part of Jamaica. The output of this wind farm - the first major wind project on the island - would be sold to the local utility. The developer has proposed the use of twenty-three 900 kW Vestas wind turbines. You have been hired by a funding agency to prepare a preliminary feasibility study of the project, as a quick first verification that the proposal is reasonable.
Site information
The project site is located on a ridge, 900 to 1,000 meters above sea level, near the community of Wigton, Manchester, about 60 km west of Kingston. Meteorological towers have been installed on the site for the past several years, and measurements at 50 m indicate average wind speeds of 8.3 m/s.
The wind farm is to be constructed on land that is owned by a bauxite mining company and that will be leased to the developer for a 20-year period. A minor road accesses the site and the area is in close proximity to a small port. There are no transmission lines nearby and therefore a line will have to be constructed to an interconnection point approximately 11 km away. The costs of travel to and accommodations near to the site are modest.
Financial information
The project developer, a government-owned entity, has negotiated the sale of wind-generated electricity to the local utility at a price of US$0.056/kWh for the first five years of operation, and US$0.05051/kWh for the next 15 years. The twenty-year contract between the two parties is for energy only. The developer plans to sell the GHG emissions reductions for US$10/tonne of CO2 equivalent under the Clean Development Mechanism; the vast majority of the Jamaican electricity supply is generated from oil-combusting power plants.
The developer has already arranged much of the financing for the project. A commercial loan for US$16 million has been negotiated, the developer can put up US$3.2 million in equity, and a grant of US$7 million has been provided by an international donor. Additional financial figures are provided by the developer: the debt interest rate is 14%, the debt term is 15 years, their discount rate is 15%, they expect an inflation rate of 10%, and they foresee the US dollar, currently worth 65 Jamaican dollars, appreciating by around 7.5% per year against the Jamaican dollar.
Prepare a RETScreen study, documenting any assumptions that you are required to make, and report on the significant conclusions from this analysis.
Solution
The worked-out solution is the data file selected from within the RETScreen Project Database. The user automatically downloads the Project Database file while downloading the RETScreen software.
Teacher's notes
- The analysis has been done in two currencies, thousands of Jamaican dollars (kJM) and United States dollars (USD). While the use of thousands of Jamaican dollars avoids very large figures in the Cost Analysis page, it unfortunately results in very small numbers for the "Electricity export rate" and the CE production credit. In fact, the CE production credit displays as "0.000" even though there is a non-zero number entered for it.
- There is no annual land lease costs foreseen for the twenty-year duration of the project.
- Since the contract for energy sales is in US dollars, the fuel cost escalation rate is, in Jamaican dollars, 7.5% per year, the expected rate at which the Jamaican dollar will depreciate against the US dollar. It is assumed that the GHG credit will be priced in US dollars at a fixed rate, and therefore 7.5% is used as the GHG credit escalation rate.
- The financial viability of the project is greatly enhanced by the US$7 million grant. Even if the grant were significantly smaller, however, (say, 50% of its value), the IRR of the project would still exceed the 15% hurdle rate.
- Although the two-tiered tariff is not actually a production credit, the two-tiered tariff has been modelled in RETScreen by applying the CE production credit, set to the difference in the two tariffs, to the first five years of the project. The CE credit escalation rate has been set to the same value as the fuel cost escalation rate.
- The sale of GHG reduction credits enhances the financial feasibility of the project but is associated with some uncertainty regarding the transaction fees to be paid for administration costs of projects operating under the Clean Development Mechanism.
- High downtime losses are foreseen due to the frequent occurrence of hurricanes within the Caribbean. Indeed, it could be argued that the annual contingencies for O&M in the Cost Analysis page should be at the high end of the range suggested by RETScreen (i.e. 20%) due to tropical storms, rather than the 10% entered currently.
- The average atmospheric pressure and annual average temperature were estimated by adjusting the data from the Kingston/Norman Manley meteorological station for the 1,000 m difference in altitude between the weather station and the site. A 1,000 m increase in altitude will normally be associated with a roughly 6 ºC decrease in temperature. At 1,000 m, the average air pressure will be around 90 kPa.
Results
In 1995 the Petroleum Corporation of Jamaica (PCJ) began investigating the possibility of using wind energy for electricity generation. A wind farm, the first of its kind on the island, was commissioned in 2004 through a wholly owned subsidiary of PCJ, Wigton Windfarm Limited.
The project is located on a ridge, 900 to 1,000 m above sea level, near the community of Wigton, Manchester, about 60 km west of Kingston. The 20.7 MW wind farm is expected to supply the local electric utility, Jamaica Public Service Company (JPS), with at least 7 MW of power, on average. Wind energy production from April to August 2004 was 24.3 GWh, with a peak of 20.8 MW and an average supply of 8.9 MW.
The project has met and exceeded expectations but in its limited time of operation has also experienced its first significant downtime with the passing of a major hurricane through the Caribbean. Damage to the equipment was not severe but did require some repair, including the repairs to the transmission line to the interconnection site.
System description
The wind farm consists of 23 NEG Micon NM 52/900 wind turbines, each with a rated power of 900 kW. The hub height is 49 m. Each turbine has its own low/medium voltage transformer situated inside the tower base. The turbines are sited on a ridge, approximately 100 m apart, in two rows separated by 300 to 350 m. Each turbine is connected to a project-site substation. Interconnection to the utility grid substation is via a 69 kV transmission line.
Lessons learned
- A few critical factors have contributed to the financial viability of this project: a good wind resource, the availability of a capital grant to offset initial costs, the price negotiated for the energy generated from the site, the nearby port, and the low-cost availability of land.
- The possibility of selling carbon credits from annual emissions reductions will provide additional benefits to projects of this type, making them more financially attractive.
- Interruptions by tropical storms will be an integral part of wind energy development in the greater Caribbean and appropriate planning is needed to allow for and manage the effects of these interruptions.
- Research is needed in the areas of determining appropriate capacity factor and energy pricing in negotiating power purchase agreements.
The use of renewable energy in the Caribbean islands is on the increase and countries like Jamaica, which has to import a major portion of its energy resources, will benefit greatly from the growth of indigenous energy sources. Some of these benefits will include improved energy and economic security due to diversification of the energy mix, import reductions (namely for petroleum) and subsequent improvements in the balance of trade, and technology transfer and building of local expertise in wind technology. To accelerate the realization of these benefits, public policies promoting renewable energy technologies need to be developed more fully, so that market, institutional and cultural barriers can be quickly overcome.
Photo
Wind farm - Grid-connected, Wigton, Jamaica
References
- JPSCO, Renewable Energy: The JPSCO Experience, CARILEC Renewable Energy Conference, St. Lucia, November 4-5, 2002.
- McLeod, W., WIGTON Windfarm Experience, CARILEC's Wind Power Development in the Caribbean, Kingston/Jamaica, Nov 30-Dec 2, 2004.
- Nugent, D., Wigton 20 MW wind farm: The JPSCO Perspective, CARILEC's Wind Power Development in the Caribbean, Kingston/Jamaica, Nov 30-Dec 2, 2004.
- Wright, R., Financing sustainable energy in developing countries such as Jamaica, Roundtable on Energy Efficiency - Tourism Sector, Kingston, Jamaica, December 9-11, 1997.
- Wright, R., The Value of Wind Energy, CARILEC's Wind Power Development in the Caribbean, Kingston/Jamaica, Nov 30-Dec 2, 2004.
The information for this case study was graciously furnished by G. Alleng (Center for Energy and Environmental Policy, University of Delaware), R. Wright (Petroleum Corporation of Jamaica) and D. Barrett (Petroleum Corporation of Jamaica).
