Question

DATA:
The basic information about the wind farm:
Wind farm capacity (MW) 50
Capital investment (€) 65 000 000
Period of operation (years) 20
Decommissioning costs (€) 3 000 000
O&M costs (€/kWh) 0.0091
Annual energy production (kWh) 110 000 000

QUESTIONS:
Please use the information given above to answer the following questions.

In order to make this calculation, we need to convert some of the information we have
into annual figures:

The levelized cost of energy (LCOE) from a wind farm.
Once again, we need the capital cost of the wind farm (€) and the O&M costs in euro for
each year (€/year) - calculated in exercise above. Finally, we will need the
decommissioning costs (€).

1. Again, using the NPV function, what is the present value of all the maintenance costs
for the 20 years of operation (€)? Hint: For calculating NPV of costs, the sign of each
annual entry should be negative. Note also that the initial capital investment should
not be included here.
Electricity selling price, tariff (€/kWh) 0,075
Annual discount rate (%) 8

2. What is the present value of the payment cost made to decommission the wind farm
(€)? Hint: Use the PV function but take care as the annual payment is zero and the
decommissioning cost is the future value.
3. Finally, add these two together with the initial capital cost to give the present value of
all the costs (€).
4. What is the levelized annual cost (€/year)?
5. What is the levelized cost of energy (LCOE) for the wind farm (€/kWh)?
6. What is this in €c/kWh?

Please help in solving this wind farm project economics.

Please be very specific in your solution & explain any formulas that are used because I am really confused.

Thank you,

J.

Answer 1