4/24/20081Economic AnalysisAndrew KusiakIntelligent Systems Laboratory2139 Seamans CenterThe University of Iowa Intelligent Systems LaboratoryThe University of Iowa Iowa City, Iowa 52242 - [email protected]: 319-335-5934 Fax: 319-335-5669http://www.icaen.uiowa.edu/~ankusiakMapping Energy Value Stream9 Value stream encompasses all activities creating values9 Scope of value stream: Entire process9 End activity: A Customer9The University of Iowa Intelligent Systems Laboratory9Objects in the value stream: materials, components, people,money, information, etc.Mapping Energy Value StreamTypes of value stream maps based on the flow:9 Material9 Information The University of Iowa Intelligent Systems LaboratoryTypes of value stream maps based on the time and objectives:9 Current conditions9 Ideal state9 Future state (e.g., 3-6 months from now)Mapping Energy Value StreamPurpose of value map:9 Communicate9 Discover wasteThe University of Iowa Intelligent Systems Laboratory9 Identifying sources of waste9 Plan actions to eliminate the waste4/24/20082Mapping Energy Value StreamAnalyzing value based on the value map:9 Who is the end-customer?9Wh t l d t b ?The University of Iowa Intelligent Systems Laboratory9What value do customers buy?9 What stream of activities leads to this value?Mapping Energy Value Stream9 Value stream maps of importance9C lit ith th d li th d l iThe University of Iowa Intelligent Systems Laboratory9Commonality with the process modeling methodologiesTurbine Installation Cost9 Installation costs include a foundation, normally made of reinforced concrete, road construction (necessary to movethe turbine and the sections of the tower to the building site), a transformer (necessary to convert the low voltage (e.g., 475 V) The University of Iowa Intelligent Systems Laboratory(y g(g,)current from the turbine to, e.g., 10-30 kV current for the local electrical grid, telephone connection for remote control and surveillance of the turbine, and cabling costs, i.e., the cable from the turbine to the local 10-30 kV power line Installation Costs Differ 9 The cost of roads and foundations depends on soilconditions, i.e., building a road capable of carrying allturbine components9 Distance to the nearest highway 9 The cost of getting a mobile crane to the site The University of Iowa Intelligent Systems Laboratorygg9 The distance to a power line suited to handle the turbine power 9 Transportation costs of all turbine components can not be ignored9 An Internet connection and remote control centeris necessary, however, the cost is usually low4/24/20083Economies of Scale 9 Connecting many turbines in the same location offers cost advantages 9 Yet, the electric grid limits to the amount of powerit h dlThe University of Iowa Intelligent Systems Laboratoryit can handle 9 The grid may need to be reinforced, e.g., the high voltage electrical grid need to be extended9 Numerous parties may be involved in the grid modification,which is usually location (e.g., state) dependentOperation and Maintenance Costs for Wind Turbines 9 Wind turbines are designed to operate for 120,000 + hours over the design lifetime of 20 + years9Dt h tht it ti t i ll l fThe University of Iowa Intelligent Systems Laboratory9Data shows that maintenance cost is typically low for newturbines and it increases as the turbines age (which is natural)9The terms of maintenance contacts vary, form fixed annualcost to the cost per service performed (expect growing competition in this area)Economies of Scale 9 Besides the economy of size of an individual turbine, the wind park economy of scale is of importance9 The economy of scale benefits stem from maintenance, administration, and so on 9This is particularly true for rotor blades and gearboxes thatThe University of Iowa Intelligent Systems Laboratory9This is particularly true for rotor blades and gearboxes thatmay be overhauled in batches rather than individually 9 The price of a new set of rotor blades, a gearbox, or a generator may be in the order of magnitude of 15-20 %of the price of the turbineTurbine Design Lifetime 9 Wind turbines are usually designed to last, e.g., 20 - 25 years 9 Designing components to last longer might be a waste9 The designed lifetime, e.g., 20 - 25 years, needs to be carefullyevaluated as it impacts the individual system and component design/selectionThe University of Iowa Intelligent Systems Laboratorydesign/selection9 The actual lifetime of a wind turbine depends both on the quality of the turbine and the local climatic conditions, e.g., turbulence at the site9 Offshore turbines may last longer, due to lower turbulence at seas4/24/20084Income from Wind Turbines Energy Output from a Wind Turbine 9 The energy production of a wind farm varies with The University of Iowa Intelligent Systems Laboratorythe windiness of the site 9 The sensitivity of energy production in the wind speed varies according to the probability distribution of the windThe Availability Factor 9 Wind turbines undergo scheduled and unscheduled maintenance9 Turbines achieve availability factors above 98%, i.e., the machines are ready to run more than 98% of the time 9 The total energy output is generally affected less than 2%, asid bi ld d hdld i d iThe University of Iowa Intelligent Systems Laboratorywind turbines seldom undergo scheduled maintenance during high winds9 Such a high degree of reliability is remarkable, compared to other technologies 9 The availability factor is therefore usually ignored ineconomic analysisWind Energy and Electricity Rates 9 Electric utilities are interestedin purchasing energy during the peakThe University of Iowa Intelligent Systems Laboratoryin purchasing energy during the peak loads as this way they avoid runningless efficient generating units 9 Electric utilities may use a variablerate depending on the time of day theelectricity is purchased Environmental Credit 9 Governments promote the use of renewable energy sources 9 Environmental credits are often offered to wind energy utilities and turbine manufacturersThe University of Iowa Intelligent Systems Laboratoryand turbine manufacturers9 The PTC (Production Tax Credit) legislature is frequently acted on and extended by the US Congress4/24/20085Capacity Credit 9 Large consumers of electricity may be charged for theenergy (kWh) they use, and for the maximum amount of power (kW) they draw from the grid 9 The reason is that the electric utilities need to maintain higher total generating