Economic & Environment

1. Characteristics of Wind Power

Comparing with the conventional power plant and hydropower station, wind power is greatly flexible which can be constructed in a decentralized or centralized way with the capacity variously from hundreds kW to thousands kW due to its small single capacity. Another characteristics are because the funds are comparatively easy to be financed with the short construction period, merely requiring a year span from awarding of the purchasing contract to running which are to be great advantage of turnover and repaying of fund at an early date.

In the past 20 years, wind power has advanced rapidly in technologies, with high content of hi-tech and increased reliability of sets. Technologies for single capacity below 1000 kW have been mature. The 1500 kW generator sets have started its commercialization. Although the current production cost for wind power is still higher, it will still continue to be declined along with the increment of production quantity and technical improvement.

The wind power is be of prominent advantage in environment-friendly, without any toxic gases and waste emissions, and no requirement of immigration. Although wind power field covers a large amount of lands, the actual utilization areas are comparatively small for the foundation of wind generator and road, not affecting on the normal production of agricultural fields and pastoral farm. The places with versatile winds are usually belonging to the desolate sands or mountains. The construction of wind power field takes full use of the land, but develop the travel resources as well.

Due to the random variation of wind velocity, the unstable performance of wind power may lead to a certain degree of undulation. If the capacity of wind power were 10% lower than that of the grid, no any obvious effects would be occurred. So far the pumped storage power station has been built within many grids to adjust the peak, making this problem in wind power overcome and the wind resources fully utilized. 

2. Economical Efficiency of Wind Power

1).        Electric Quantity and Electric Price for Grid-Connected Wind Power 

The annual generation quantity of generator mainly depends upon the on-site wind resources condition. General speaking, regarding the generation sets from 200 to 600 kW, under the condition that the annual average wind velocity is 7m/s, its annual utilization hours can reach 2400 to 2800 hours, that is the capacity co-efficient of 27% to 32%. The available rate, that is the percentage that trouble-free times cover the whole year times, can reach 95% to 98%. For example, wind power field with the capacity of 10,000 kW, it can provide about 25 million kWh electricity to connect to the grid.

The former electricity department has once appeared publicly the regulations on wind power grid connection, with which core content was that the grid management department should allow the wind power field connect to the nearby grid and should purchase the total electric quantity connected to the grid; the electric price for grid-connected wind power field should be defined under the principle of generation cost plus repayment capital with interest and reasonable profits, taking account of bearing capacity of consumer, and the value-added tariff should be collected in addition to the electric price. For those parts that are higher than the average electric price of the grid, the balance should be shared equally by the total grid, and will be purchased by the electricity company.

This regulation theoretically reflected the social effects of wind power, its input bearing by the society. In actual practice, due to the fact that the electric quantity of wind power takes up a comparatively small percentage in the grid, the increased burden towards the consumer is very little; as a result the operability is thus available. This regulation had intentions to cultivate the wind power market, to make the client that invested on the wind power field developed in a sustainable way, to drive the initiation of local large-scale wind generator manufacturing, and to promote the scientific research on wind energy technologies. But the incentives prices on wind power still depended upon the importance attached by the provincial leaders and finally approved by the provincial price bureau.

2).        Current Wind Power Cost and Calculations on Electric Price During Repayment Period in China

If it is calculated in accordance with the wind power installed capacity for per kW, supposing the situation that the main engines are imported with the C.I.F price of 7000 Yuan/kW, and local-made tower framework, medium-sized wind field, and annual utilization of 2500 hours, then the annual generation quantity will be 2500 kWh, and 20 years of service life and 1 year of construction period. Due to the short construction period for wind power, if still in accordance with the electric quantity of 2000kWh, the total generation quantity for 21 years will be 52000 kWh. If the total project investment were 11000 Yuan/kW, and the annual operation expenses were calculated in light of 5% of the total investment, then the electric price of grid connection after the repayment can be equal to the highest electric price of power plant (0.48 Yuan/kWh, 1996).

Under the limit condition that the financial earning rate in the total investment will not be lower than 12%, the financial earning rate in the capital in cash will not be lower than 15%, and the repayment method is temporarily defined to repay according to the capability; the first circumstance is to estimate the cost of wind power, not taking account of interest and taxes, under the condition that 80% are no-interest load, 20% are own fund and the repayment period is 10 years:

a.        the average total production expenses in utilization period: 0.43Yuan/kWh

b.        the electric price for grid connection during the repayment period: 0. 84Yuan/kWh

c.        the financial earning rate for the total investment:  12.2%

d.        the financial earning rate for the capital in cash:  41.3%.

The second situation is to strike for favorable policy with lower interest and lower taxes. The discount interest load covers 80%, the annual rate is 6%, repayment period is 10 years and the own funds takes up 20%. The import taxes and value-added tax derived from importing are totally 5%. 12 years depreciation, no requirement of collecting the income tax during the repayment period, and 33% of income tax to be collected after the repayment period, no value-added taxes.

a.       the average total production expenses in utilization period:   0.51Yuan/kWh

b.       the electric price for grid connection during the repayment period: 0. 91Yuan/kWh

c.       the financial earning rate for the total investment:  12.5%

d.       the financial earning rate for the capital in cash:  24.7%.

From the above calculations, it is showed that the average total production expenses during the utilization period for wind power are approaching to that of newly invested hydropower and thermal power plant. However, in order to repay the load, the electric price remains greatly higher than that of conventional power plants during the repayment period. Thanks to the sound social effects, it is still required the government support and incentives policy.