Example A: We’re going to calculate a Simple Payback for a Home Power Grid-Tie Wind Power Net-Metering System. This hardware is an ARE442 Wind Generator rated at 10 Kw used in Example A, the installed cost (IC) is $48,000. Now, we can calculate its economic Simple Payback. IC = $48,000 AKWH = 21,600 KWH (Using 1,800 KWH/month from Manufacturer) $/KWH = 41 Cent/KWH in Kauai FCR = Fixed Charge-Rate (Cost of Capital), 9% AOM = Use 1% of IC which equals $480 Using the Simple Payback equation above this Wind Project as a Simple Payback (in years) can be written: SP = IC/(AKWH * $/KWH – IC * FCR – AOM) SP = 48,000/(21,600 * 0.41 – 48,000 * 0.09 – 480) SP = 9.56 Years As you can see from this example, these calculations are brutal. In this example the Annual Operations and Maintenance Costs are very high $480. For most wind projects, these costs are usually smaller, given normal operating conditions for Wind Zones I-IV. Calculating your Simple Payback gives you a gauge to measure the merit of your financial structure. Furthering our example, you can see the immediate impact of State Rebate programs. In Oregon there is a Business Energy Tax Credit called BETC. This tax rebate is defined as either 50% over 5 years (10% per Year), or can be taken upfront for a Pass-through value of 35%. Applying this rebate, using the 35% up-front pass-through the Installed Cost (IC) of $48,000 becomes $31,200. SP = $31,200/(21,600 * 0.41 – 31,200 * 0.09 – 480) SP = 4.77 Years Clearly, the impact of State Rebates and other mechanisms to be discussed can dramatically impact the profitability of your Wind Project. NOTE: At the time of this writing State Rebates for Hawaii are still being formulated, this is included to illustrate the impact of state rebates, if they apply to your Wind Project. sitemap