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Publication Number: CEC-300-2008-004
Abstract:
Many of California’s wind power facilities are aging. Despite interest by policymakers in encouraging wind project repowering, as well as efforts by the state’s utilities to contract with such projects, repowering activity has been somewhat slow. This report addresses one of the primary barriers to wind repowering: the general lack of economic incentive to replace all but the most poorly functioning of the wind turbine fleet. In particular, the report provides a scopinglevel analysis of the economic attractiveness of repowering to wind project owners. The study finds that aging wind facilities may often be more profitable, in the near term, in continued operations than they would be if they pursued repowering. In particular, the study finds that for a large number of existing wind projects, payment levels well above the 2007 market price referent and well above the presumed cost of a new wind project at a new site may be necessary to accelerate wind turbine replacement. If and when the production tax credit expires, this necessary payment level will increase further. To encourage early repowering, it may be necessary to consider a more proactive state policy, one that offers an explicit financial incentive for the replacement of aging wind projects. If policy makers wish to encourage repowering, it may also be significantly less expensive to do so while the production tax credit is available. Even with such an incentive policy, however, a variety of other barriers will continue to thwart the replacement of aging wind projects; as such, it is unclear whether addressing the financial barriers will be sufficient to motivate significant repowering investments. Finally, the state should only develop a program to financially encourage repowering if it determines that the costs of doing so are worthwhile given the potential benefits. Keywords: Wind power, repowering, economic analysis
Author(s): Ryan Wiser, Ric O'Connell, Mark Bolinger Commission Division: Renewables Program (300)
Office/Program: Existing Renewable Facilities
PIER Program Area:
Date Report Completed: August 2008
Date On Line:
08/18/2008
Acrobat PDF File Size: 32 pages,
272 kilobytes
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