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Power - Wind turbine - 40,000 kW / Denmark
Case study assignment
A public electric utility has approached you, a wind project developer, to prepare a project due-diligence report on the financial viability of building an offshore windfarm near the harbour of Copenhagen, Denmark. The project is to feed electricity to the national grid and to be partially owned and financed by an investors' co-operative.
Site information
The proposed site, the Middelgrunden shoal, has long been used as a waste dumpsite. It now has a water depth of 2-6 meters and is restricted for ship traffic. The Risø National Laboratory has established an average wind speed of 7.2 m/s at 50 m height at the site. The windfarm is to consist of twenty 2 MW turbines from Bonus Energy A/S. The turbines have a hub height of 64 m and a rotor diameter of 76 m. Bonus provides the following power curve data for the turbine:
Case study assignment
A public electric utility has approached you, a wind project developer, to prepare a project due-diligence report on the financial viability of building an offshore windfarm near the harbour of Copenhagen, Denmark. The project is to feed electricity to the national grid and to be partially owned and financed by an investors' co-operative.
Site information
The proposed site, the Middelgrunden shoal, has long been used as a waste dumpsite. It now has a water depth of 2-6 meters and is restricted for ship traffic. The Risø National Laboratory has established an average wind speed of 7.2 m/s at 50 m height at the site. The windfarm is to consist of twenty 2 MW turbines from Bonus Energy A/S. The turbines have a hub height of 64 m and a rotor diameter of 76 m. Bonus provides the following power curve data for the turbine:
For the greenhouse gas analysis, the conventional generation fuel mix that the wind energy would displace is approximately as follows: 17% #6 oil, 28% natural gas and 55% coal.
Financial information
For the project's 25-year analysis period, assume a 2.5% inflation rate and a 9% discount rate. The initial feasibility study for the project has provided the following cost estimates:
Financial information
For the project's 25-year analysis period, assume a 2.5% inflation rate and a 9% discount rate. The initial feasibility study for the project has provided the following cost estimates:
For this due-diligence study, you are not required to estimate detailed project costs but rather can use the values provided here.
Based on previous experience, operation and maintenance costs, including major parts replacements, are expected to average €0.009/kWh. The use of the government-owned site is free-of-charge to the project. The feasibility study was paid in full by a grant from the Danish Energy Agency. The project is to be financed primarily through equity.
For the first 6 years of production, the project is guaranteed a power purchase price of €0.044/kWh plus a green energy premium of €0.036/kWh. In subsequent years, the total price (including green premium) is projected to be €0.057/kWh, escalating at 2.5% per year.
Prepare a RETScreen study, documenting any assumption 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
The 40 MW Middelgrunden Windfarm is one of the first and, as of mid-2002, the world's largest offshore windfarm. Located just east of the harbour of Copenhagen, Denmark, the windfarm started production in late 2000 and now provides more than 3% of the city's electricity needs. The ownership of the project is shared equally between the Copenhagen Utility and a wind energy co-operative with over 8,500 members. Co-op members (mostly individuals) financed their half of the project by purchasing shares, each corresponding to 1 MWh of production and costing €567 each.
While the project came in slightly over budget, the turbines have also performed better than expected, supplying 100 GWh/yr of energy on average as compared to the minimum 89 GWh/yr guaranteed by the manufacturer.
System description
The twenty 2 MW turbines from Bonus Energy A/S are located 3.5 km offshore and spaced 180 m apart in a slightly curved row 3.4 km in length. The three-bladed turbines have a hub height of 64 m and a rotor diameter of 76 m. The hollow concrete foundations (each with the lower section of the turbine tower, transformer and switchgear) were floated out to the site and submerged to form gravity anchors. The rotor, nacelle and upper tower section were assembled in the harbour, brought to the site by barge and installed by means of an 80 m crane operating from a jack-up platform. Energy from the turbines is transported to shore via a 30 kV submarine cable.
At a total investment cost of about €1,300/kW, the project is one of the lowest cost offshore windfarms to date.
Lessons learned
It can be argued that nowhere has wind energy been more successful than in Denmark, where it currently provides over 15% of the country's electricity demand. However, finding acceptable sites for new wind projects on land is becoming increasingly difficult, mostly due to limited public acceptance of large windfarms in a densely populated countryside. In much of Europe, offshore siting of turbines is seen as the next stage in expanding the use of wind energy. As of mid-2002, only about 90 MW of wind power capacity has been installed offshore, all of it in Europe. This compares to over 26,000 MW of capacity installed worldwide on land. However, in Denmark alone, five large new offshore windfarms are close to construction or in advanced stages of planning, representing about 770 MW of new capacity that is to be in place by 2006.
Photo
Wind farm - 40 MW - Middelgrunden, Copenhagen, Denmark
References
Based on previous experience, operation and maintenance costs, including major parts replacements, are expected to average €0.009/kWh. The use of the government-owned site is free-of-charge to the project. The feasibility study was paid in full by a grant from the Danish Energy Agency. The project is to be financed primarily through equity.
For the first 6 years of production, the project is guaranteed a power purchase price of €0.044/kWh plus a green energy premium of €0.036/kWh. In subsequent years, the total price (including green premium) is projected to be €0.057/kWh, escalating at 2.5% per year.
Prepare a RETScreen study, documenting any assumption 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 total power purchase price (including green energy attributes) starts at €0.080/kWh for years 1 through 6 and drops off to a fixed €0.057/kWh for the rest of the project's life. To model this in RETScreen, the "Electricity export rate" (i.e. purchase price) is set to €0.057/kWh for the life of the project and a premium of €0.023/kWh is added as a "CE production credit" in the first six years.
- All component costs include transport and installation.
- The cost of the feasibility study is credited as an incentive or grant on the Financial Analysis worksheet.
- All costs are final, as-built costs reported by H.C. Sørensen. Only the grid connection cost is approximated based on feasibility study projections.
Results
The 40 MW Middelgrunden Windfarm is one of the first and, as of mid-2002, the world's largest offshore windfarm. Located just east of the harbour of Copenhagen, Denmark, the windfarm started production in late 2000 and now provides more than 3% of the city's electricity needs. The ownership of the project is shared equally between the Copenhagen Utility and a wind energy co-operative with over 8,500 members. Co-op members (mostly individuals) financed their half of the project by purchasing shares, each corresponding to 1 MWh of production and costing €567 each.
While the project came in slightly over budget, the turbines have also performed better than expected, supplying 100 GWh/yr of energy on average as compared to the minimum 89 GWh/yr guaranteed by the manufacturer.
System description
The twenty 2 MW turbines from Bonus Energy A/S are located 3.5 km offshore and spaced 180 m apart in a slightly curved row 3.4 km in length. The three-bladed turbines have a hub height of 64 m and a rotor diameter of 76 m. The hollow concrete foundations (each with the lower section of the turbine tower, transformer and switchgear) were floated out to the site and submerged to form gravity anchors. The rotor, nacelle and upper tower section were assembled in the harbour, brought to the site by barge and installed by means of an 80 m crane operating from a jack-up platform. Energy from the turbines is transported to shore via a 30 kV submarine cable.
At a total investment cost of about €1,300/kW, the project is one of the lowest cost offshore windfarms to date.
Lessons learned
- Offshore windfarms are generally more expensive to build and operate than on-shore projects. Costs drop however as experience with such projects grows. Middelgrunden demonstrates that large, financially successful offshore projects are achievable.
- The favourable project economics are due in large part to the price guarantees and green power premiums available to the windfarm in Denmark.
- Operations that may be routine on land are often complicated offshore. An offshore project therefore requires particular attention to planning, logistics and coordination.
- Financing of wind projects via the co-op model has proven very successful in Denmark. The involvement of a large co-operative also helped secure critical public support for a project located so close to a city.
It can be argued that nowhere has wind energy been more successful than in Denmark, where it currently provides over 15% of the country's electricity demand. However, finding acceptable sites for new wind projects on land is becoming increasingly difficult, mostly due to limited public acceptance of large windfarms in a densely populated countryside. In much of Europe, offshore siting of turbines is seen as the next stage in expanding the use of wind energy. As of mid-2002, only about 90 MW of wind power capacity has been installed offshore, all of it in Europe. This compares to over 26,000 MW of capacity installed worldwide on land. However, in Denmark alone, five large new offshore windfarms are close to construction or in advanced stages of planning, representing about 770 MW of new capacity that is to be in place by 2006.
Photo
Wind farm - 40 MW - Middelgrunden, Copenhagen, Denmark
References
- Belotserkovsky, Vadim, "Personal communication," GPCo Inc., 2002.
- Delft University (report coordinator), Offshore Wind Energy - Ready to Power a Sustainable Europe, December 2001.
- Middelgrundens Vindmøllelaug cooperative, Website: http:// www.middelgrunden.dk.
- Sørensen, H.C. et al., "Prestudy for the Danish Offshore 750 MW Wind Program," International Society of Offshore and Polar Engineers, ISOPE 2000 Conference Seattle 2000.
- Sørensen, Hans Christian, "Personal communication," SPOK ApS, 2002.
- Sørensen, H.C., Hansen, J., Experience from the Establishment of Mid-delgrunden 40 MW Offshore Wind Farm, SPOK ApS & SEAS Wind Energy Centre.
