Economics - Wind Energy: Renewable Energy and the Environment - page 254

TABLE 12.4
Percent Component Costs for Wind Farm Installation

%

Turbine 74-82

Foundation 1-6

Electric 1-9

Connection to the grid 2-9

Finance 1-5

Land 1-3

Roads 1-5

Consultants 1-3

is higher because the world demand for wind turbines is higher than production. A comparison of
the estimated components of the cost of energy shows, as expected, that capital cost is the major
component [15], and the primary installed cost is for the wind turbine (Table 12.4). The installed
cost for offshore wind farms is around 1.5 times that for wind farms on land.

12.7.2 B ENEFITS
Wind farms represent rural economic development with the primary benefit of long-term stable
income (no fluctuations compared to commodity prices) to the landowner. Representative num-
bers are for a wind farm (30 MW or greater) using capacity factors of 30% in wind class 3 and
35% in wind class 4. A 50 MW wind farm would require 1,200 ha (1 ha 2.5 acres), which can
include ten to thirty landowners. Around 1-3% of the land is removed from production, primar-
ily for roads. The return on land removed from previous use is around $10,000-16,000/ha/year,
a much greater return per hectare than farming or ranching. In contrast to oil and gas leases, the
return to the landowner is less from wind farms; however, there is the big advantage of a nonde-
pletable resource.
The rural economic development also includes construction and then operation. During con-
struction there will be 100-200 jobs for 4-8 months, around 1 man-year per MW. The administra-
tion and operation and maintenance of wind farms results in ten to fourteen full- time jobs per 100
MW. This shows why state legislatures and local entities are now promoting wind power, and also
promoting the manufacturing of turbines and components in their state.
The Colorado Green Wind Power Project near Lamar, Colorado, is an example. Construction
started in the summer of 2003. The 162 MW project consists of 108 GE wind turbines (1.5 MW)
on a lease of 4,450 ha from fourteen landowners. The footprint from the wind farm is about 2%
of the land. During construction there were 200 to 300 jobs, and after completion, there were
around 15 local jobs. The wind farm pays around $2 million per year in property taxes. After
construction, the project was purchased for $212 million by Shell Wind and PPM Energy from
GE Wind.

12.7.3 S ALE OF E LECTRICITY
The crunch number for a project is the sale price of electricity generated by the wind farm. For
some older contracts for wind farms in Texas, the sale price was below $0.025/kWh for a 15-year
contract. The only way this could happen was with the production tax credit, accelerated deprecia-
tion, tax abatements, and renewable energy credits (RECs). For wind farms being installed today