by Diane Benjamin CPA reg.
Many factors are not available for analysis of this project. This process must continually be updated when REAL data becomes available. Some of the factors are:
- Cost per KWH for purchased electricity over the next 20 years – it most likely will not remain constant
- Amount of electricity generated by the turbine – will vary depending on wind & down time
- The exact life span of the turbine – it’s estimated at 20 years
- Disposal or refurbishing costs after 20 years
- Amount of electricity needed to run the college each year – will very depending on the temperature, weather conditions, and future expansion
The actual electricity use from April 2011 to March of 2012 was obtained. They used 9,460,928 KWH at a cost of $644,543. The cost per KWH ranged from a high of .074958286 to a low of .59876448. Average cost: .068126875
Remember, the winter of 2011-2012 was VERY mild and is probably not representative of future needs.
The turbine is expected to generate at least 3795 MW or 3,795,000 KWH. I rounded that figure up to 3,800,000 for my calculations. This benefits the college. Obviously, they still have to buy a lot of electricity.
How much did the turbine cost?
This is the cost using their 15 yr projections 20 yr projections 3% inc
Total Construction costs: $5,168,408 5,168,408
Interest Paid on 15 yr loan 671,380 671,380
Ongoing Measurement 273,428 394,433
Insur/Warr/Maintenance 1,510,073 2,207,175
Reserve 185,989 268,704
Total Cost $7,809,278 $ 8,710,100
Subsidies Received 1,462,500
Since the subsidies still came from taxpayers, I am including them in all calculations. Numbers issued by the college do not include them.
What does all this mean so far? For this project to BREAK-EVEN, it needs to save $435,505 a year for 20 years (8,710,100/20)
They might generate 3,800,000 KWH or more, only time will tell.
- If this amount is valued at the AVERAGE COST paid in the last year, total savings would be $258,882 (3,800,000 x .068126875)
- If this amount is valued at the LOWEST COST paid in the last year, total savings would be $227,531 (3,800,000 x .59876448)
- If this amount is valued at the HIGHEST COST paid in the last year, total savings would be $284,841 (3,800,000 x .074958286)
No matter what number is used, it doesn’t come close to saving the $435,505 figure needed to break even.
The ONLY way this project breaks even is if two things happen:
1) The turbine generates a lot more KWHs.
2) Electricity rates skyrocket
Since the EPA is shutting down coal fired power plants, electricity rates could skyrocket.
The energy savings predicted by the school are considerably higher. They start at $380,551 in the first year and ending 15 years later at $550,822. I don’t know how they arrived at their numbers. They are also expecting revenue of $11,434 over 15 years for REC Revenue. Since this amount is relatively insignificant, I assume their figure is correct. These figures do not include any disposable or refurbishing costs when the turbine needs replaced or scrapped. There is currently no used turbine market, so estimates range from getting paid for scrap or up to $500,000 to refurbish.
Click on any of the images below to enlarge.
This is the electricity used worksheet prepared by the college:
The projections worksheet prepared by Heartland College: