Economics - Wind Energy: Renewable Energy and the Environment - page 241

3. Initial installed cost
Purchase price, shipping costs, installation costs (foundation, utility intertie, labor, etc.),
cost of land (if needed)
4. Production of energy
Type(s) and size(s) of wind turbines
Warranty, company (reputation, past history, number of years in business, future pros-
pects), reliability, availability
Wind resource
Variations within a year, variations between years
5. Selling price of energy produced or unit worth of energy and anticipated energy cost
changes (escalation) of competing sources
6. Operation and maintenance costs
General operation, ease of service, emergency services and repairs, insurance, infrastruc-
ture (are service personnel available locally?)
7. Cost of money (interest rate, fixed or variable)
8. Inflation (estimated for future years)
9. Legal fees (negotiation of contracts, titles, easements, permits)
10. Depreciation if system is a business expense
11. Any national or state incentives
12.2 GENERAL COMMENTS
The general uncertainty regarding future energy costs, dependence on imported oil, reduction
of pollution and emissions, and to some extent availability, has provided the driving force for
the development of renewable sources. The prediction of energy costs escalation is a hazardous
endeavor, as the cost of energy is driven primarily by the cost of oil. Oil was $15-25/barrel in
the 1990s, and predictions in the late 1990s were for a gradual increase to $30/barrel by the year
2020. However, oil reached $30/bbl in 2003 and then soared to $130/bbl in 2008. Price increases
have not been and will not be uniform, in terms of either time or geography. At the point in time
where demand exceeds production, there will be another increase in the price of oil. Some experts
predict that the peak of world oil production will occur in this decade, while others predict it will
be from 2016 or even into 2040. The most important factors are the estimated total reserves and
what is the amount recoverable. As price increases, it becomes economic to recover more from
existing reservoirs and to produce oil in more difficult reservoirs: polar, deep sea, tar sands, and
even oil shale.
Every effort should be made to benefit from all incentives for installing a wind turbine, mainly
national and state incentives. The cost of land is a real cost, even to those using their own land. This
cost is often obscured because it occurs as unidentified lost income. Wind turbines occupy space
and will reduce the amount of land available for farming or ranching. For wind farms, the amount
of land taken out of production can run from 0.5 to 1.5 ha/turbine.
Wind turbine availability is important in determining the quantity of energy produced. For
optimum return, the machine must be kept in operation as much of the time as possible, consistent
with safety considerations. Background information on machine performance, including failures,
should be sought out and used to estimate the downtime. Availability for earlier machines was
low; however, recent figures reached 98%. The distribution of this energy throughout the year can
affect the value of the energy. If most of the energy comes during a time of increased demand on
the utility system, or during the time energy is needed on the site, then that energy is clearly of
more value.
Wind turbines can produce electricity for consumption on or near the site, to sell to a utility, or
both. The higher the selling price, the more economically feasible the project becomes. In general,
where there are one or a few wind turbines, the owner will use part of the energy and sell the excess