Environmental Engineering Reference
In-Depth Information
variations that must be expected in cost, operational, and economic data, such as price in-
creases, inflation, and changing interest rates. Like any model, the accuracy and validity of
the COE estimates depend on the quality of the input data. In this case the economic projec-
tions for the out-years of the project are the most vulnerable to error.
COE Case Study
A large utility in California, the Pacific Gas and Electric Company (PG&E), applied the
EPRI TAG model in a case study reported by Smith and Ilyin [1991]. COE estimates were
made for the period from 1981 to 1990 for a wind power station located in the Altamont Pass
area of California.
Wind Turbine Costs
During the 10-yr period from 1981 to 1990, the price of the wind turbines alone, installed
on a prepared site, was estimated to decrease from $2,200/kW to $900/kW. These estimates
are for medium-scale wind turbines, with power ratings from 100 to 500 kW at a rated wind
speed of about 13 m/s.
Balance of Station Costs
The capacity cost in Equation (13-1) is for a fully-operational or turnkey power plant,
and therefore it includes not only the cost of the generating equipment but also the balance
of station costs for land, roads, substations, transformers, and transmission lines within the
plant area. For a wind power plant these add from $200/kW to $300/kW onto the installed
cost of the wind turbines themselves.
Operations and Maintenance Costs
Industry-wide, O&M costs decreased from about $0.04/kWh in 1981 to less than $0.01/
kWh by 1993. For this study O&M costs in the Altamont Pass area were estimated to range
downward from $0.03/kWh in 1981 to $0.009/kWh in 1990.
Capital Recovery Factor
This case study used a capital recovery factor of 0.065, based on a real annual interest
rate ( i.e. , one that factors out inflation) of 5 percent and a plant service life of 20 years.
COE Estimates
With these input data, the EPRI TAG method produced COE estimates that decreased
from $0.52/kWh in 1981 to $0.06/kWh in 1990, with both estimates expressed in 1990 dol-
lars. Future COEs can potentially decrease to under $0.05/kWh at sites that are rated as
Class 5 or higher (see Table 8-1). Such sites have an annual average wind speed of at least
7.5 m/s at an elevation of 50 m, and an annual average wind power density of at least 500
W/m 2 . This reduction in COE would require reductions in installed capacity cost down to
the $700/kW to $900/kW range and O&M costs of about $0.007/kWh. This amount of cost
reduction is considered possible with the innovative, efficient, and lightweight turbines that
are being developed.
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