Renewable Energy Technology Assessments - Kauai Island Utility ...

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Kaua’i Island Utility Cooperative Renewable Energy Technology Assessments 9.0 Wind increased by 50 percent and crane costs by 25 percent to represent the difficulties of working in rough terrain. The costs for each project assume a limited amount of civil works to bring roads and transmission to the wind farm. The Hanapepe and Anahola sites are not readily accessible and will require significant infrastructure upgrades. An additional $1.7 million (5 miles of road and 3 miles transmission) has been allocated for Hanapepe and an additional $0.9 million (3 miles road, 1 mile transmission) has been allocated for Anahola to account for additional road and transmission extensions which would likely be required. For each project, indirect costs were added using 10 percent of material and labor costs plus $1,000,000 to cover development costs such as permitting, environmental studies, outreach, etc. This fixed development cost makes the smaller project significantly more expensive on a per MW capacity basis. Installing three distributed generation installations for a total capacity similar to the central plant projects would decrease the cost per MW capacity closer to the level for the other projects, but development would still be more expensive since separate permits, road improvements, etc., would be required for each project. Based on the foregoing assumptions, the resulting capital cost estimates are shown in Table 9-3. Table 9-3. Kauai Wind Project Capital Costs Sites Scenario Capital Cost Cost per kW Kalaheo, Poipu: Flat 6.6 MW $10,750,000 $1,630 Omao, Maha’ulepu: Ridge 6.6 MW $11,150,000 $1,690 Hanapepe Ridge 6.6 MW + T&R * $12,850,000 $1,945 Anahola Ridge 6.6 MW + T&R * $12,050,000 $1,825 Kokee Ridge 2 MW $4,450,000 $2,250 * Additional transmission and road costs 9.6.2 Operating and Maintenance Costs The operating and maintenance costs assumed one full time employee at a cost of $90,000/year. Major maintenance activities would be contracted as required. Operating and maintenance costs varied with scenario and the results are listed in Table 9-4. The main factor effecting O&M costs was number of turbines. A capacity factor of 35 percent was assumed for variable O&M which approximately matches most of the easily developable wind sites. 21 March 2005 9-22 Black & Veatch
Kaua’i Island Utility Cooperative Renewable Energy Technology Assessments 9.0 Wind Table 9-4. Kauai Wind Project Annual O&M Costs. Scenario Fixed, $/yr Variable, $/yr Total O&M, $/yr Total $/MWh Flat 6.6 MW $257,765 $35,000 $292,800 14.6 Ridge 6.6 MW $258,149 $35,000 $293,150 14.7 Ridge 2 MW $148,698 $10,800 $159,500 26.6 9.6.3 Applicable Incentives There are several federal incentives available for the development of wind energy facilities. The federal production tax credit provides an $18/MWh incentive for ten years following the initial commercial operation date of the facility. A reduced depreciation cycle of five years is also offered. At the state level, there is a 20 percent state tax credit, with a cap of $250,000, on the installation of wind energy equipment. The project owner must be a taxable entity to receive these incentives. The PTC and state credit are included for the developer ownership scenario in the life-cycle cost analysis. Various federal grants and low interest loan programs may also be applicable to these projects; however, the exact impact of these programs is uncertain and not quantified at this time. Therefore, no incentives are included for the KIUC ownership scenario in the life-cycle cost analysis. 9.6.4 Life-cycle Economics The life-cycle cost of providing power from each of the proposed wind energy projects was evaluated by calculating the levelized cost. Table 9-5 provides a summary of the wind project performance and economic assumptions as well as the results of the life-cycle cost analysis. Figure 9-12 shows an example life-cycle cost calculation for the Omao wind project. 21 March 2005 9-23 Black & Veatch
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