ES 300 HW #6
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North Carolina State University *
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Course
300
Subject
Industrial Engineering
Date
Jan 9, 2024
Type
docx
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Uploaded by lynx1power
ES 300 – Homework 6
1.
Break even electricity price for a wind farm
Download the file “HW6.xlsx” from Moodle. It’s a spreadsheet (surprise!)
with levelized cost of electricity (LCOE) calculations for a hypothetical
onshore (land-based) wind farm. The LCOE calculation has two main
components: 1) the financing charge ($/MWh); and 2) operations cost (fuel,
variable O&M, etc.).
a.
From the lectures and this worksheet, explain what the LCOE means in
lay person’s terms.
-The cost of the project annually divided by the average generation
annually (Levelized cost of electricity)
b.
What exactly is the “financing charge” in the worksheet? Use the
embedded Excel formulas to define what this is (you may have to look
up what the PMT() function does).
-The total annual payment for the loan counting the regular payments,
at a 6% interest rate over 20 years divided by annual output.
c.
What’s the biggest single factor contributing to wind power’s costs?
-Wind turbines
d.
What type of cost would influence the LCOE of a fossil fuel based power
plant that wind turbines do not experience?
-The cost of fuel, as wind power does not require fuel
e.
How has the LCOE of onshore wind power has changed over the last 20
years?
-
Turbine size has gone up (more production), and other improvements
have brought cost of production down.
f.
Why are wind speeds a primary consideration of wind developers when
deciding the physical location of a wind farm?
-Because wind speeds determine the output of wind power generation,
and with higher wind speeds, more revenue can be generated regardless
of electricity market prices.
g.
What factor listed in the spreadsheet corresponds to wind speeds?
-The capacity factor
h.
Perform a sensitivity analysis on the LCOE of wind. First multiply the
capacity factor by 0.75
and 1.25 and report the new LCOE in each case.
-
.75 it goes up to $37.18/MWh
-
1.25 it goes down to $23.91/MWh
i.
Change the capacity factor back to 40%. Now do the same sensitivity
analysis for capital costs. Report the new LCOE in each case.
-
.75 it goes down to $22.66/MWh
-
1.25 it goes up to $35.10/MWh
j.
Change the capital cost back to $1,000,000 per MW. Now perform a
similar sensitivity analysis on the wind farm’s interest rate on debt.
Report the new LCOE in each case.
-
.75 it goes down to $25.94/MWh
-
1.25 it goes up to $31.99/MWh
k.
What do you think would cause the wind farm’s interest rate to increase,
and what underlying challenge associated with wind energy could cause
this?
-In areas with noticeably less than optimal wind speed the interest rates
from loans would become higher for the manufacturing of wind plants in
those areas. While wind is a renewable resource, it is not always
cooperative for our purposes.
l.
From your analysis, to which factor (part h, part i or part j) is the LCOE
least
sensitive?
-The LCOE is least sensitive to part j, the interest rate on debt.
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