Business Case For Wind (UK)
Published: 26 July 2010
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15 pages, 11 figures
Executive Summary
A strong policy environment since the introduction of feed-in tariffs in the UK, lower operating costs, reduction in firm emissions and the strengthening of stakeholder relationships is fostering interest in investments in wind energy. This report helps decision makers involved in energy procurement and meeting environmental goals to assess the financial and environmental business case of investing in wind energy in the UK. The Verdantix model captures the key cost and revenue components of a wind turbine installation for eight turbine sizes: 6, 15, 50, 100, 250, 330, 500 and 1,000kW. Based on the assumptions embedded in the model, the Verdantix analysis calculates that investments in a wind turbine generate a positive net present value at and above 50kW (£69,000) to £3,164,000 for a 1,000kW installation. Additionally, switching to wind energy generates carbon savings over the lifetime of the investment for all turbine sizes. Other considerations when investing in wind include site specific variances in wind, ability to secure planning permission and cost of connecting to the grid.
TABLE OF CONTENTS
BUSINESS CASE FOR CORPORATE INVESTMENT IN WIND TURBINES (UK)
Favorable Policy Environment Driving Corporate Interest In Renewables
ASSESSING THE BENEFITS FROM INVESTMENTS IN WIND ENERGY
Defining The Business Case For Wind Turbines
Firms Need To Create A Twenty Year Financial Business Case
Environmental Business Case Calculates Carbon Reductions
MAXIMIZE THE BUSINESS BENEFITS OF INVESTING IN WIND TURBINES
Investments Generate Positive Returns In Base Case
Benefits Depend Critically On Scale And Wind Resource
Companies Need To Manage Financial Risks Through Early Planning
TABLE OF FIGURES
Figure 1. Tariff Level Depends On Capacity Of Turbine Installed
Figure 2. Five Energy Price Scenarios Over 20 Year Lifetime Of Investment
Figure 3. Carbon Price Floor For EU ETS Carbon Price Growth Scenario
Figure 4. CRC Carbon Price Increases At Beginning Of Each Phase Of Scheme
Figure 5. Base Case Assumptions For Wind Turbine Investment
Figure 6. NPV Improves For Larger Wind Turbines
Figure 7. Payback Period Is Less Than Three Years For A 1MW Installation
Figure 8. ROI Reaches 36% For A 500kW Wind Turbine Installation
Figure 9. Switching To Wind Energy Can Reduce Firm’s Carbon Emissions
Figure 10. Exporting Generated Energy To The Grid Reduces The NPV
Figure 11. Changing NPV For Different Energy Price Inflation Scenarios