Economics of Wind Power
Project duration: 1/2010 - 12/2010
The importance of renewable resources, especially wind power, in power generation mixes is undisputed. Today, wind power provides the bulk of renewable power generation. Over the last three years we have analyzed the economics and risks of wind power production in different studies. In 2010 we have studied problems related to pipeline-based power transmission from offshore wind parks, the economics of repowering, and aspects of portfolio optimization.
ECONOMICS OF PIPELINE-BASED POWER TRANSMISSION FROM OFFSHORE WIND PARKS
In this study we investigate the economic feasibility, risks and financing opportunities for the large-scale transmission of offshore wind power from the North Sea by means of a Power Transmission Pipeline (PTP), that is embedded in an undersea tunnel, and an offshore substation that is required as an interface between the incoming sea cable and the PTP. In a detailed sensitivity analysis, we evaluate the impact of parameter variations and the robustness of the results obtained.
PORTFOLIO ANALYSIS OF ONSHORE WIND PARKS IN GERMANY
In this study, we analyze five onshore parks in Germany by means of portfolio theory. Portfolio optimization based on the Markowitz approach has been applied to wind power projects in the past. We move beyond the standard Markowitz approach by adjusting risk and return concepts through application of fuzzy portfolio selection methods. We innovate by transferring fuzzy portfolio selection methods from the financial domain to the energy domain, and apply it to an onshore wind portfolio. The main idea behind fuzzy portfolio selection is that it accounts for the uncertain estimates of decision-makers with regard to risk and return. These estimates are expressed as membership functions. By using this approach we move from the standard optimization paradigm to a satisficing paradigm. The satisficing paradigm accounts for the fact that many problems are ill-structured and based on incorrect decisions due to social and economic disturbances. In this study we use the semi-mean absolute deviation as a downside risk measure. This fuzzy portfolio approach is used to find the optimal portfolio given an investor’s uncertain estimates of risk and return.
REPOWERING ONSHORE WIND PARKS
Since most suitable wind energy sites in Germany are already being exploited, an increase in installed power can be achieved through off-shore wind parks as well as repowering of on-shore plants, i.e. replacement of outdated installations. In this study, we have examined the economics of repowering projects in Germany including risk. We find a high potential of units suitable for repowering as well as good economic conditions, making on-shore repowering a lower-risk and lower-cost alternative compared to the development of off-shore wind energy. However, repowering has lagged behind expectations in the past. Obstacles have been removed by the amended Renewable Energies Act 2009 (EEG 2009), which now includes higher compensation and less strict regulations for power increases, a change in excise tax making repowering projects more appealing to municipalities, and guidelines on how to deal with regulation planning.
Madlener R., Glensk B., Weber V. (2011). Fuzzy Portfolio Optimization of Onshore Wind Power Plants, FCN Working Paper No. 10/2011, Institute for Future Energy Consumer Needs and Behavior, RWTH Aachen University, May.
Juckenack S., Madlener R. (2011). Optimal Time to Start Serial Production: The Case of the Direct Drive Wind Turbine of Siemens Wind Power A/S, FCN Working Paper No. 6/2011, Institute for Future Energy Consumer Needs and Behavior, RWTH Aachen University, March.
Supervised student research
Jochemich C. (2010). Pipeline-based Power Transmission Systems for Offshore Wind Parks: Cost Analysis and Financing Models (in German, confidential), Study thesis, Chair of Energy Economics and Management, Faculty of Business and Economics, RWTH Aachen University, April.
Juckenack S. (2010). Determination of the Optimal Time to Start Serial Production of Innovative Process Technologies: The Case of the Direct Drive Wind Turbine of Siemens Wind Power A/S. Diploma thesis, Chair of Energy Economics and Management, Faculty of Business and Economics, RWTH Aachen University, May.
Schumacher M. (2010). Repowering von Onshore-Windenergieanlagen (Repowering of Onshore Wind Energy Plants; in German), Study thesis, Chair of Energy Economics and Management, Faculty of Business and Economics, RWTH Aachen University, July.
Weber V. (2010). Fuzzy Portfoliooptimierung von Onshore-Windkraftwerken (Fuzzy Portfolio Optimization of Onshore Wind Power Plants; in German). Study thesis, Chair of Energy Economics and Management, Faculty of Business and Economics, RWTH Aachen University, December.