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Proceedings of The European Wind Energy Association Special Topic Conference on the Economics of Wind Energy

Article by: Paul Gipe

The special topic conference was held in Helsinki Finland 5-7 September, 1995 by the European Wind Energy Association in collaboration with the Finnish Wind Power Association.

For a good perspective on the growth of wind energy in Germany there are papers by ISET in Kassel and the German bank responsible for financing many of the installations. ISET’s paper uses data compiled from reports of more than half the wind turbines installed in Germany to estimate costs, reliability, and performance trends. The paper by the Deutsche Ausgleichsbank (DtA) explains the integral role the bank has played in financing 90% of the turbines installed in Germany.

 A paper by a consultant to Sweden’s NUTEK describes a model for calculating the cash flow of installing a wind turbine under Swedish conditions. The paper includes several diagrams of the sensitivity of cash flow to various parameters.

For those following the development of wind-diesel systems is a paper by Risoe on the penetration of wind into the Cape Verde network. During a six-month test period wind supplied 16% of the network’s generation. During February 1995 wind turbines provided 36% of genertion at one site with manual operation of the turbines. Despite lower than expected diesel fuel savings, the wind projects are more economic than projected because of improvements in wind technology, say the authors.

 Wind advocates in the American Midwest who are interested in the costs of interconnection will find the paper by a researcher at Halmstad University of interest. The paper examines the cost of transformers, line extensions, and protection devices for the 175 turbines that had then been installed in Sweden. The author concludes that interconnection had up to that time cost about 5% of total project costs. With utility cooperation, says the author, costs could be held to this figure for future installations even as some local networks become saturated with wind turbines.

Another paper in the same session examined how to minimize the cost of interconnection. The proposal by DEFU is to stop wind turbines when voltage increases to a pre-determined level instead of strengthening local grids to handle the voltage rise.

 There are also several interesting papers on external costs. One paper by Risoe concluded that global external costs for a coal-fired plant are $0.002-$0.026/kWh versus that of wind energy of $0.0002-$0.002/kWh. Thus the external costs of wind energy are an order of magnitude lower than that of coal. In another paper addressing the same subject, Risoe, in collaboration with BTM Consult, estimates that the fuel savings from wind energy are worth $0.005-$0.045/kWh and capacity credits $0.03-$0.07/kWh. Incorporating offsets for the external costs of coal, the report concludes that wind energy is worth from $0.005-$0.07/kWh for energy and $0.03-$0.095/kWh for capacity.

 Windpower Monthly’s David Milborrow presented an examination of the cost trends in Great Britain, Germany, and Denmark. Milborrow found little correlation between turbine size and the price of the turbine, that is there was little evidence of economies of scale. He did find, however, that the cost of foundations and operations declined with increasing size. Despite the higher cost of turbines in Germany than in Britain, Milborrow found that the overall project costs between German and Britain were similar. Overall costs were lower in Denmark.

 The 250 page proceedings of the EWEA Special Topic Conference on the Economics of Wind Energy is available from Harri Vihriälä, the Finnish Wind Power Association, P.O. Box 846; FIN-00101 Helsinki, Finland; fax: +358 34 532 0648; email: vihriala@cc.tut.fi for 500 FIM, 160 DM, 70 pounds, $104 plus postage of 90 FIM in Europe and 130 FIM elsewhere.

Titles of the papers and their authors

Opening Session

Wind Power from the Treasurer’s Point of View by Ian Mays, President of the European Wind Energy Association

Session A: National Programmes & Operation Experience

Wind World Wide–Review of the Wind Energy World Market by Ruud de Bruijne, Netherlands Agency for Energy and the Environment

 Wind Energy Make Difficult Start in Estonia by R. Post, The Hiiumaa Centre for the Biosphere Reserve and V. Selg, Talinn Technical University, Estonia

 Status and perspectives of Wind Turbine installations in Italy by B. Luciano, A. Arena, G. Mizzoni, and L. Pirazzi, ENEA, Italy

 The Success Way to Use Wind Energy in Schleswig-Holstein Germany: One Thousand ECS in Six Years by H. Klinger, Investmentbank Schleswig-Holstein, Germany

 Financial Assistance for Investments in Wind Power in Germany–Business Incentives Proved by he Deutsche Ausgleichsbank by M. Koch, Deutsche Ausgleichsbank, Germany

 Rationality of the Subsidy Regime for Wind Power in Sweden and Denmark by P. Helby, University of Lund, Sweden

 Status and Perspectives for Wind Energy in Finland by E. Peltola and J. Wolff, VTT Energy, Finland

Session B: Grid Issues and Avoided Direct Costs

Panel B1

 A Model for Calculating the Economy of Wind Power Plants by G. Grusell, Grusell Energy AB, Sweden

 Financing the U.I.’s Renewable Energy Boom by David Lindley, National Wind Power Ltd.

 Tariff Based Value of Wind Energy by J. Räkköläinen, M. Vikko, H. Antila and P. Lautala, Tampere University of Technology, Finland

 Running-in and Economic Re-assessment of 15% Wind Energy Penetration in Cape Werde by J. Hanse, J. Tanke, P. Norgaard, Risø, Denmark, and J. Delgado, Electra, Rep. de Capo Verde

 Remote Power Supply by Wind/Diesel/Battery Systems–Operational Experience and economy by R. Kniehl, CES, G. Cramer and K.-H. Tönges, SMA Regelsysteme, Germany

 Panel B2

 Wind Energy a Competitive Electricity Supply Environment by G. Strbac and N. Jenkins, UMIST, U.K.

 Costs of Grid Connection of Wind Turbines by G. Sidén, Halmstad University, Sweden

 On Minimizing the Cost of Wind Turbine Grid Connection by J. Tande, P Nørgaard, Risø and P Jørgensen, DEFU, Denmark

Session C: Avoided Costs

The Avoided External Costs of Using Wind Energy by A. Markandya, Harvard Institute for International Development, USA

 The Role of Wind Energy in the Programme of Power Supply for Northern Russia Territories by P. Bezroukikh, Ministry for Fuel and Energy, Russia

 Environmental External Effects for Wind Power and Coal by L. Schleisner, H. Meyere, P. Morthorst, Risø, Denmark

 Value of Energy from the Wind by S. Frandsen, J. Tanke, P. Morthorst, Risø, and B. Madsen, BTM Consult, Denmark

 Technical and economical Aspects of Wind Energy Applications in Germany by N. Stump, R. Windheim, Forschungszentrum Julich, M. Durstewitz, M. Hoppe-Kilpper and W. Kleinkauf, ISET, Germany

 Estimating of the External Cot of Energy Production Based on Fossil Fuels in Finland and a Comparison with Estimates of External Costs of Wind Power by T. Otterström, Ekono Energy, Finland

 The Environmental Costs of Wind Energy in Spain by P. Linares, CIEMAT-IEE, Spain

Session D: The Role of Wind Energy in Future Energy Supply

Integrating Wind and Solar Power into the Energy Systems of the 21st Century by Chris Flavin, Worldwatch Institute, USA

 Energy Costs from European Windfarms by D. Milborrow, Windpower Monthly, UK

 The Alternatives Offered by Wind Energy for Supporting Regional Development in Eastern Canada by P. Failler and J.-L. Chaumel, University de Québec à Rimouski, Canada

 An Improved Market Penetration Model for Wind Energy Technology Forecasting by P. Lund, Helsinki, University of Technology, Finland

Session E: Technical Innovations

McCabe Wind Energy Systems by F. McCabe, Levr/Air, R. Norton, USA and G. MacMichael Technical College, Galway, Ireland

 LID-3000: Ice Detection and Deicing System Improves the Economics of a Wind Turbine in the Arctic Weather Conditions by J. Mäkinen, Labko Ice Detection Oy, Finland

 A Neuro-Fuzzy Controlling Algorithm for Wind Turbine by L. Lin and J.-T. Eriksson, Tampere University of Technology, Finland

 Directly Driven Generators for Wind Power Applications by P. Lampola, Helsinki, University of Technology, Finland

 Reducing Costs of Wind Power with a Gearless Permanent Magnet Generator by H. Vihriälä, R. Perälä, L. Söderlund and J.-T. Eriksson, Tampere University of Technology, Finland

 Cost Effectiveness of Off-Shore Wind Power, A Case Study by Y. Rinta-Jalouppi, PrizzTech, Finland
Finnish Wind Power Association.