1Project preparation Niels-Erik Clausen

Ris National Laboratory

Training program in wind energy and project development

Phuket, 11-15 September 2006

Module 1.1

Wind Energy Course, Phuket, 11-15 Sept 20062

The project cycle - GovernmentProject preparation identification and formulation > ....> project proposal

document feasibility study > revised project proposal appraisal > revised project proposal project document appropriation > Government Agreement

Project implementation detailed design and construction (e.g. turn-key) monitoring and reviews

Project completion performance verification, commissioning tests and Taking-

over evaluation during liability period

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Project Development Steps

Measurements & data management Wind resource assessment Site selection Sketch design for power system analysis Feasibility study Environmental Impact Assessment (EIA) Power Purchase Agreement (PPA) EPC bidding and evaluation Construction Operation & Maintenance

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Feasibility analysis

Needs analysis Correspondence with national plans / policy Technology and site assessment Appropriate organisation Environmental analysis Public acceptability

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Financial analysis Budget / investments Investors Stakeholder analysis National energy

policy supporting wind power

Market analysis (the open power market)

Power purchase agreement (PPA)

Economic / financial analysis

Internal rate of return (IRR)

Cost Investments

Land, wind turbine, foundation, grid connection

Operation & maintenance Main overhauls Dismounting

Benefit Production (kWh)

Wind climate, siting, wind turbines performance

Power sales price ($/kWh) Subsidies

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Example: wind power economy

Wind turbine: Rated power: 600 kW Rotor diameter: 43 m Hub height: 50 m

Wind statistics: Height: 50 m Roughness length: 0,055

m A = 7,9 m/s, k = 2,0 Air density: 1,225 kg/m3

Production: Annual energy output:

1,5 GWh

Investment: Wind turbine: USD 450 000 Installation: 30% of USD 450000

= USD135 000 Lifetime: 20 years Interest rate: 5 %

Maintenance (annually): 1,5% of 450000 = USD 6750

Land lease + insurance USD 7000 Electricity cost: 4,1 USc/kWh Income (annually): 1,5GWh @

0,05USD = USD 75 000 Profit USD 14000

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Technical analysis

Need for the power Wind resources Land available and

accessible Wind power adaptable

into the power system Sketch design

Number of wind turbines

Size of wind turbines Wind farm layout Grid connection

Needs Energy / services needs Power demand

development Alternatives

Energy conservation Energy efficiency Alternative generation

Thermal power plants Nuclear power

generation Hydro power

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Pre-project activities

Carry out feasibility / financial / technical analysis

Set up appropriate organisation Get legal project acceptance Ensure necessary capital (investors) Acquire land necessary Prepare tender documents Negotiate (turn key) supplier contract Supervise installation Take over the project

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(Turn key) supply

Tender documents Contractual

conditions Technical

specifications Climate conditions Design wind

conditions Grid connection

requirements Power control

requirements etc

Contract (turn key) Civil works Foundation Equipment supply Erection Grid connection Warranty period Performance

guarantee and test