Document Actions
Estimated Energy Production & Value
Estimating Energy Production & Value
Energy Production
Once a reliable estimate of the expected wind resource has been determined and a turbine selected, an estimate of energy production is made using the power curve of the turbine. This is typically expressed as a capacity factor, a percentage that when applied to nameplate capacity will give the predicted energy production. For example, estimated kilowatt-hour production per year for a 3 MW system with a 30% capacity factor would be:
30% x 3,000kWh (3 MW) x 8,760 (number of hours in a year) = 7,884,000 kWh.
How much revenue will result from that production requires knowing what the sale price will be per kilowatt-hour, which is specified in a Power Purchase Agreement (PPA).
The Avoided Costs currently filed for PGE and Pacificorp provide for three pricing options (the fixed price, the deadband, and the gas market options—see Oregon PUC e-dockets for docket UM1129 at http://www.puc.state.or.us/). Each of these options specifies two prices—one for On-Peak and one for Off-Peak—which are substantially different, reflecting the higher value of energy produced during peak periods. PPA's with other utilities may also specify peak and non-peak prices. Therefore, a reasonably accurate estimate of when energy will be produced during each day will also be needed to estimate the value of that energy when sold. This is provided by the on-site hourly wind data, with some adjustment made by an expert meteorologist to account for the duration of wind measurements and the long-term consistency of the time period they occurred. Of considerable concern, especially when debt and outside financing is used and PPA peak vs. off-peak pricing is significantly different, is the amount of variability in the production: between peak and off-peak periods and year-to-year. The amount of variability will determine how much financing is available and may motivate implementing various production risk mitigation strategies.
Power Purchase Agreements and Price per kWh
Power Purchase Agreements (PPAs) are legal contracts between buyers and sellers of energy, and specify important details of the transaction, including the term of the contract and price paid for energy. Under the Federal PURPA rules, utilities are required to purchase power from Qualifying Facilities (QFs), which are defined as production facilities that have a nameplate capacity of less than 80 MW and have utility ownership of less than 50%. See the Energy Purchase and Sales section for more details on negotiating PPAs.
