Economic Analysis of Wind Projects
Dear GIA
This Application Note presents and illustrates key elements associated with the economic analysis of wind energy projects and is aimed at municipalities, cooperatives, investors, and companies that want to install wind parks on their premises.
Over the past decade, wind energy capacity has increased significantly, mainly driven by national support schemes. This enabled technological improvements and cost reductions per unit of installed power. More recently, with the global financial crisis (and the associated tight financing conditions) behind us, appetite for wind investments has increased. According to WindEurope, wind energy investments in Europe increased by 5% in 2016 with respect to 2015 (totaling €27.5bn of new investments in 2016). Wind energy investmentsaccounted for nearly 90% of the new renewable energy finance in 2016, compared to approximately 70% in 2015.
Wind investments can provide an attractive risk/return profile, as well as other potential benefits such as risk diversification and a hedge against rising fuel prices. Currently, revenues from wind projects are usually based on PPA revenues plus subsidies, which tend to be market-based (e.g. a premium over a market price). However, the characteristics of recent wind energy auctions and Power Purchase Agreements (PPA) being closed worldwide show that in some cases wind is already cost-competitive with traditional energy sources.
The viability of wind projects will depend upon a business model based on a stable scheme that enables long-term predictable revenue streams, regardless of whether it is market driven (PPA) or politically driven (FiT). Financing costs are highly dependent upon the stability of the regulatory framework (the more stable, the lower the financing costs) and the risk profile of the investment (financing cost decreases with increasing accuracy in estimates, better risk management, more industry experience, and more standardization).
In all cases, an economic analysis of the investment opportunity is required before undertaking the project. Several financial indicators are useful for assessing the viability of the project, including IRR, NPV, and payback period, among others. Moreover, it is advised that conservative assumptions be used in the financial model and sensitivity analysis be performed to consider the impact of different scenarios on profitability.
Even though a wind energy investment is exposed to different risks (technical, legal, and financial, among others), there are many ways these risks can be reduced throughout the lifetime of the project. For instance, technology risk can be reduced by installing proven wind turbines, relying on warranties, and performing preventive maintenance.
This Application Note presents and illustrates key elements associated with the economic analysis of wind energy projects and is aimed at municipalities, cooperatives, investors, and companies that want to install wind parks on their premises.
Over the past decade, wind energy capacity has increased significantly, mainly driven by national support schemes. This enabled technological improvements and cost reductions per unit of installed power. More recently, with the global financial crisis (and the associated tight financing conditions) behind us, appetite for wind investments has increased. According to WindEurope, wind energy investments in Europe increased by 5% in 2016 with respect to 2015 (totaling €27.5bn of new investments in 2016). Wind energy investments accounted for nearly 90% of the new renewable energy finance in 2016, compared to approximately 70% in 2015.
Wind investments can provide an attractive risk/return profile, as well as other potential benefits such as risk diversification and a hedge against rising fuel prices. Currently, revenues from wind projects are usually based on PPA revenues plus subsidies, which tend to be market-based (e.g. a premium over a market price). However, the characteristics of recent wind energy auctions and Power Purchase Agreements (PPA) being closed worldwide show that in some cases wind is already cost-competitive with traditional energy sources.
The viability of wind projects will depend upon a business model based on a stable scheme that enables long-term predictable revenue streams, regardless of whether it is market driven (PPA) or politically driven (FiT). Financing costs are highly dependent upon the stability of the regulatory framework (the more stable, the lower the financing costs) and the risk profile of the investment (financing cost decreases with increasing accuracy in estimates, better risk management, more industry experience, and more standardization).
In all cases, an economic analysis of the investment opportunity is required before undertaking the project. Several financial indicators are useful for assessing the viability of the project, including IRR, NPV, and payback period, among others. Moreover, it is advised that conservative assumptions be used in the financial model and sensitivity analysis be performed to consider the impact of different scenarios on profitability.
Even though a wind energy investment is exposed to different risks (technical, legal, and financial, among others), there are many ways these risks can be reduced throughout the lifetime of the project. For instance, technology risk can be reduced by installing proven wind turbines, relying on warranties, and performing preventive maintenance.
(Source:http://www.leonardo-energy.org)
0 nhận xét:
Đăng nhận xét