Feasibility Study - Wind Energy

The term Feasibility Study related to wind energy projects is used for assessments of very different extensiveness. Feasibility studies consider the results from wind measures (cp.assessing wind potentials). If the results from wind measures indicate that technical and economical operation of wind energy (projects) can be considered viable or at least expectable, a feasiblity study will be conducted. Based on the wind resource appraisal and other relevant inputs, the feasibility study shall be conducted to

• Determine the optimum unit size of the wind turbines under the technical and transport infrastructure conditions of country
• Optimize the technical lay-out of the wind park site
• Assess the comparative economic and financial viability of the project and propose a decision for implementation

The European Wind Energy Association defines the main contents of a feasibility study as follows:

• The technical aspects already regarded during the pilot study are assessed in a more detailed manner, including on-site wind monitoring to determine a draft design and layout for the installation.
  
• an economic assessment is conducted to establish the commercial viability of the project;
  
• an appraisal and scoping exercise to identify specific environmental constraints and opportunities is implemented
  
• possible planning constraints are assessed
  

Especially the economic assessment of the wind park viability includes several large subtasks to determine all economic parameters and variables of a wind project:

• An energy production estimation to define expected financial returns
• A complete estimation of costs (investment, operation and maintenance, costs of project development)
• An economic assessment of the project benefits concerning economic development and welfare of the region or country. Influence on electricity prices and potential for poverty reduction are important aspects of these economic assessments.
• An assessment of financing options with focus on potential participation with the Clean Development Mechanism (CDM)
• A financial analysis based on the estimation of costs an including a cost-benefit analysis, which allows an exact statement concerning investment returns. Discussion and evaluation of different operation models have to be included.
  

The project appraisal related to environmental and social constraints should be based also on a dialogue with the local population and planning authorities.

Capacity Credit

Any kind of electrical power plant is required to answer the crucial question: To what extent is a specific energy production unit with an installed nameplate capacity available to meet system demand?

Typically the answer is derived from a statistical analysis of this period, when a unit or technology is not available, even if it is supposed to be working, generally termed as forced outage. For conventional generation units this is mainly a technical question, whereas for intermittent resources like wind, solar and hydro power, it is a question of fuel availability: is wind, water or solar radiation available when it is needed? And if yes, what amount is available and how does the intermittency influence the rest of the electrical supply system? The answer is given by the capacity credit, which should consider each of the posed questions.

There are various definitions of the term capacity credit (CC), and several synonyms are used in parallel, each bearing a similar variety of definitions. The two most common synonyms of CC are "firm capacity" and "capacity value".

The CC can be defined as the firm capacity, which can be replaced by a certain amount of installed wind power or any other energy source. It can be used either as a value in MW or as a percentage of the installed wind capacity. This is the terminology used in recent studies throughout industrialised countries, where wind energy is replacing other forms of energy. In developing countries, which pursue high goals for improving the electrification rate, it is important to analyse how much capacity wind energy can add to the current system.

Economic Analysis

Following the "World Bank Handbook for Economic Analysis of Investment Operations" , the main purpose of an economic analysis is to help to design and select projects that contribute to the welfare of a country. Whereas the financial analysis evaluates the project from the point of view of the operating company or Independent Power Producer (IPP), the economic
analysis evaluates the project from the point of view of the whole economy of the country.
The purpose of the investigation is to compare from a macroeconomic standpoint the benefits of the project with the costs it incurs, as is customary in any cost-benefit analysis. The standard of evaluation for costs and benefits is a monetary quantification. To the greatest possible extent, the project impacts are evaluated in terms of economic market prices. Shadow prices are employed, i.e., internal accounting prices that free the day-to-day (market) prices from multifarious biases. In other words, shadow prices represent an attempt to illuminate the actual costs of a product or service for the economy as a whole. In comparison with micro- and macro-economic prices, shadow prices are devoid of taxes and charges, duties and subsidies.

References

Portal:Wind