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A Levelized Cost of Energy (LCOE) Model for Wind Farms That Includes Power Purchase Agreement (PPA) Energy Delivery Limits

[+] Author Affiliations
Maira Bruck, Navid Goudarzi, Peter Sandborn

University of Maryland, College Park, MD

Paper No. POWER2016-59608, pp. V001T10A007; 9 pages
doi:10.1115/POWER2016-59608
From:
  • ASME 2016 Power Conference collocated with the ASME 2016 10th International Conference on Energy Sustainability and the ASME 2016 14th International Conference on Fuel Cell Science, Engineering and Technology
  • ASME 2016 Power Conference
  • Charlotte, North Carolina, USA, June 26–30, 2016
  • Conference Sponsors: Power Division, Advanced Energy Systems Division, Solar Energy Division, Nuclear Engineering Division
  • ISBN: 978-0-7918-5021-3
  • Copyright © 2016 by ASME

abstract

The cost of energy is an increasingly important issue in the world as renewable energy resources are growing in demand. Performance-based energy contracts are designed to keep the price of energy as low as possible while controlling the risk for both parties (i.e., the Buyer and the Seller). Price and risk are often balanced using complex Power Purchase Agreements (PPAs). Since wind is not a constant supply source, to keep risk low, wind PPAs contain clauses that require the purchase and sale of energy to fall within reasonable limits. However, the existence of those limits also creates pressure on prices causing increases in the Levelized Cost of Energy (LCOE). Depending on the variation in capacity factor (CF), the power generator (the Seller) may find that the limitations on power purchasing given by the utility (the Buyer) are not favorable and will result in higher costs of energy than predicted. Existing cost models do not take into account energy purchase limitations or variations in energy production when calculating an LCOE. A new cost model is developed to evaluate the price of electricity from wind energy under a PPA contract. This study develops a method that an energy Seller can use to negotiate delivery penalties within their PPA. This model has been tested on a controlled wind farm and with real wind farm data. The results show that LCOE depends on the limitations on energy purchase within a PPA contract as well as the expected performance characteristics associated with wind farms.

Copyright © 2016 by ASME
Topics: Wind farms

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