Wind resource assessment is the most important step in planning a community wind project because it is the basis for determining initial feasibility and cash flow projections, and is ultimately vital for acquiring financing. Your project will progress through several stages of assessment:
- Initial Assessment
- Detailed site characterization
- Long-term validation of data
- Detailed cash flow projection and acquiring financing
You may be able to conduct the initial assessment yourself with a little research and help from someone with technical background and knowledge about wind energy production projections. You will need to hire an experienced professional for stages 2-4 and make sure that the methods for data collection and validation are accurate and acceptable to your lender. It is also very important to discuss with your lender and potential investors what they require in terms of wind resource due diligence at the beginning, middle, and end of the process so that you do not waste time and money moving down the wrong path.
This section of the Toolbox will walk you through the basics of wind resource assessment. The main topics covered here include:
- Wind Resource Assessment Basics
- A Bankable Wind Resource
- Wind Resource Assessment Companies
- Anemometer Loan Programs
- Additional Resources
1.The Initial Assessment
This step utilizes existing data from state wind resource maps, nearby publicly available wind resource data, and other weather measurement sites to make rough projections about the financials of your project. This step should be used as an indicator to justify a more substantial investment ($10,000- $50,000) to install equipment and hire professionals for a detailed site characterization.
Initial assessment of the site is fairly simple in most states with publicly available high resolution wind resource data. Recent advances in computer modeling and the internet have made public wind data sources easily accessible.
Wind Maps The first place to look for wind resource information is to seek out underlying data projections that may have been used to create state wind resource maps.
However, you will want to import the image into a geographic information system (GIS) tool in order to zoom in and accurately identify your specific parcel. Topographic maps can also help to identify the tops of ridges and highest points in areas to help you relate the general data found on a wind resource map to the sites in an area that have the highest potential. The wind resource maps include a “Wind Power Class” to help define the potential of a particular wind resource. Generally speaking, a site that appears to have class 4 wind speeds (7-7.5 m/s at 50 m OR 15.7-16.8 mph), is considered promising for commercial scale wind. Class 3 is marginal, and class 5 is excellent. These maps can be used to make rough production estimates at sites.
Wind resource maps should not be used to make detailed production estimates because there is a relatively large uncertainty in the wind speeds they predict. The wind speed estimate should be considered to be accurate to within only +/- 10 to 15% what the actual winds at a site may be, and any energy estimate generated using the wind maps should be considered to be +/- 20% accuracy or more.
Existing Data Other resources for public data include state energy offices and the University of North Dakota Energy and Environmental Research Center web site.
You may even be able to find existing wind data collected close to your site. Public data can be found for airports and other public facilities, but these data are often compromised by being sited in sheltered areas and collected on short (10 meter) towers.
With a typical wind turbine power curve (the instantaneous power output of a specific turbine design at various wind speeds) and some experience with computer programming or an Excel spreadsheet, you can take a wind resource dataset collected on a met tower and scale it up to your expected turbine hub height using an assumed wind shear coefficient to calculate rough estimates for production. When creating an initial estimate of production, it is also important to consider the average air density for the site and make sure that the power curve you are using is adjusted for the site density.
Once you couple these rough production estimates with some assumptions about how the project will be structured as a business, interest rates on loans, various incentives available to the project, and the installed costs, you can then begin to see what kind of power purchase agreement is needed to make the economics of the project work out. You can use this cash flow model to begin testing the sensitivity of your project to various factors such as reduced production numbers, unexpected expenses (e.g. equipment failure after the warranty has expired, etc.), or higher than expected interconnection costs.
Keep this initial cash flow model and continually refine your assumptions as you move through detailed wind resource assessment and other steps of the development process so that you can begin to make apples to apples comparisons on how different decisions will affect project economics.
If the numbers are not looking good at this point, the project site should be reconsidered or the project must be structured differently. This phase is very important because it will either justify spending substantial up-front funds to develop the site or show you that your money would be better spent on another site or investment.
2. Detailed Site Characterization
Once you have determined from preliminary evaluations that you have a promising site to install wind turbines and you plan to continue with the project development, you will need to hire an expert to perform a detailed wind resource site assessment with wind measurement equipment at your site for at least one year. This is necessary to assure you, your investors, and your banker that the project is feasible. The level of detail of your study, however, will depend on the size of your intended project. The larger the project or investment under consideration, the larger and more expensive resource assessment effort is warranted.
The instrumentation used for wind resource assessment includes three major components:
- anemometers and wind direction vanes, which are sensors to measure the wind speed and direction,
- a data logger, and
- a meteorological mast, or tower.
Measurement of temperature and pressure, which requires additional sensors, is also standard. Meteorological towers typically are at least 50 m (164 ft) lattice or monopole towers supported by guy wires.
Computer Modeling of Wind Resource. Site-specific measurements using anemometers are considered by some to be the most reliable estimates of the wind resources for a project. However, they can be quite costly and require from one to several years to complete. Other methods also exist where large scale computer weather models are created to extrapolate wind conditions at a specific site from historical data. Many times these computer models of a site’s wind resource can be less expensive than taking meteorological readings for a year or more. As scientists and lending institutions are beginning to understand weather modeling and the wind industry better this method of resource assessment is becoming more accepted by lenders, but sometimes they may require a combination of site specific meteorological measurements coupled with computer models from long-term weather data for validation of conditions at the site.
Computer modeling and direct measurement each have their positives and negatives and can be a substantial cost to the project. As a result, determining the method and scale of your measurement and subsequent production forecast hinges on an evaluation of the costs and benefits of such an effort as well as what your lender and investors are comfortable with. The measurement program that you undertake should carry a cost that is consistent with both the scale of your proposed project investment and with the uncertainty of the resource in your area. The next section gives an overview of what degree of resource assessment is needed for both on-site commercial and large-scale community wind projects.
You will need to ask your banker what specific wind resource information your bank requires in order to confidently finance your project, as each bank may have slightly different requirements. Many lenders follow the general guidelines described below based on the proposed project size and the estimated wind class.
1-10 Megawatt Commercial-Scale Projects
If you are contemplating a multi-million dollar wind project in an area where no wind measurements have been taken, it is wise to take two or more years of measurements with one or more multilevel meteorological towers to characterize your wind resource.
If the terrain surrounding your site is rugged or you are installing several turbines, it may be appropriate to install several met towers with anemometers as close to the expected wind turbine hub height as possible to ensure that you have a reliable estimate of the variation of wind speed across your site. Many lenders for large wind turbine projects will hire independent meteorologists to perform due diligence and validate the developer’s estimates of the available wind resources.
For a community project with a cluster of commercial-scale turbines, you will usually need to collect at least a full year's worth of wind data. You should have anemometers at three different heights on the tower, with two anemometers at each height to document a good cross section of the wind at your site as well as provide some redundancy in case one of your instruments stops working and to aid in validation of the data.
The height of your anemometers depends on how tall your turbine(s) will be and the added cost associated with a taller meteorological tower in relation to how much confidence the added height will add to the production estimates for your project. The ideal approach is to collect one set of measurements at hub height, one at the lowest point the tip of the blade reaches, and another at the highest point that the tip reaches.
This can be difficult, however, as many anemometer towers are not tall enough to reach the hub height of modern commercial scale turbines and you will have to compromise some confidence in your production estimates to cut costs. However wind resource assessment companies and meteorologists have gotten much better over the years at extrapolating data from wind resource measurements from shorter towers to today’s 80, 90 and 100 meter wind turbine hub heights.
You should use heated anemometers to prevent lost data during icing events and verify the accuracy of the data collected, although these should be used together with calibrated, unheated anemometers as the accuracy of heated anemometersis not sufficient to allow an accurate assessment of the wind resource. If you are not sure where on your land you should site your turbine(s), you should place one measurement tower at the highest point on your land to get an idea of your best resource, and another elsewhere in order to extrapolate information across your site. Wind resource assessment companies and consultants can help you to determine the best placement of meteorological towers on the property.
10-50 Megawatt Commercial-Scale Projects
Multiple towers with heated anemometers and non-heated, calibrated anemometers are recommended for commercial-scale wind developments, especially in marginal Class 4 areas or sites with complex terrain terrain where icing events regularly occur. Heated anemometers help to distinguish an icing event from a bad sensor which may need replacing. They also provide additional information about wind characteristics during icing events.
For sites with strong Class 5 resources that are well characterized, multiple towers may not be needed and modeling can be used to optimize the turbine layout.
It is important that you know how to interpret the information your wind resource assessment consultant will provide you with in terms of your project’s economics as well as what your banker will require. See the Bankable Wind Resource section of this Toolbox for detailed information about typical wind resource data results.
3. Long-Term Validation of Data
This stage compares data at the site to long term weather data over the course of ten years or more. This will help determine whether the data represents a low, medium, or high wind year and allow adjustments to your long-term production estimates.
Once you have collected both short-term and long-term data from the site and from other sources, you can make some comparisons between historical data and that collected at your site. If there is an airport or a weather station within several miles of your site with similar topography to your site, with the help of your meteorological consultant you can determine if the on-site data was collected during a year that was windier or less windy than the historical average. This will help to ensure that your production estimates are descriptive of the site and not inflated due to an abnormally windy year. It is important that you consult with your investors as well as your lending institution throughout the process to make sure that your methods are acceptable to them.
Computer models are based on many years of historical weather data and in more and more cases can stand on their own or complement data taken with a meteorological tower with instrumentation at a project site.
4. Detailed Production Estimates and Cash-flow Projections
You will use your detailed site profile to combine validated production and revenue estimates from the sale of electricity produced with initial financing sources and any incentives available to your project. This projection is to help you show your lenders and investors that the project will be able to cover debt and generate required returns. It is important to note that you will refine these revenue estimates as the project progresses, and your lender should understand this. The lender wants to see that you are performing due diligence, you understand the type of business you are participating in, and that you are realistic about the project outcomes.
Once you have a solid estimation of the wind at your site and can show that the project is financially viable, you can take it to the bank. You can use the projected cost of your project, the cost of financing that your institution is willing to offer you, as well as the required returns from investors and other assumptions to determine the price of energy you need to negotiate to ensure a positive project cash flow.
This section gives an overview of much of the information your banker will need from you to evaluate your project. You can use this as a starting point to talk with your banker about the necessary information to confirm that your project is economically feasible.
Wind turbines are similar to crops in that they have good and bad production years. Your banker will want a realistic assessment of the energy production and revenues of your project during a poor wind year in order to be sure that you will be able to cover any loan payment that you have. A wind resource is “bankable” if a project’s estimated production and financial performance are acceptable to a bank that is lending money to the project. Since most community wind projects require some type of borrowing to pay for the initial investment required to install a turbine, the “bankability” of a project is a key factor in getting it built.
What is a bankable wind resource?
- The wind energy blowing across the potential project site provides enough power to generate revenue sufficient to pay back a loan; and
- The project developer has collected enough solid data to demonstrate this to the lending institution involved in the project.
As bankers consider giving you a loan, they will be evaluating the risks of the project and the interest rate they will charge to mitigate that risk. Several conditions must be met before most banks will issue a loan to a wind project. Different bankers are likely to have different perspectives on what makes a wind project bankable; however, all resource evaluations need to rest on an assessment of the year-to-year variations in wind availability over the long term.
The entire financial performance of a project is built upon projections of how much the turbines will generate, which depends on the quality of your wind resource. Wind resources vary from year to year and these variations will affect the cashflow of the project. Quantifying this annual variation will give your banker and investors valuable information about how much risk is associated with low production years and how your business plan will deal with these fluctuations in cash flow.
Your wind resource assessment process will provide you with wind data at certain heights and times of the year. You will need to analyze that data and calculate figures described below to build a case for acquiring financing for your project. The following list is designed to allow you to become familiar with typical requirements and may not be comprehensive. You will need to discuss with your lending institution what they specifically will require from your project before providing you with financing.
Monthly averages of wind speed
Average monthly wind speed information will inform the banker how the wind resource at your site varies over the course of the year and how seasonal variations will affect the project cash flow. As shown in Table 1, the monthly average wind speeds at 30, 50 and 70 meters above the ground should be reported as well as extrapolations to the expected turbine hub height utilizing site-specific wind shear estimates.
An acceptable wind resource for a project is very site specific. It depends on many factors that relate to the total installed cost of the project, the incentives available to the project, the rate at which the energy might be sold, and the investors’ required rate of return.
Projected monthly production
Your banker will likely be more interested in your monthly power production estimates (which take into consideration your wind resource frequency distribution), as the amount of electricity produced is directly proportional to the revenue of the project. Power production projections, as shown in Table 2, demonstrate to the bank whether or not the project will perform well enough to cover the debt service on a loan from the bank.
Wind shear and the optimal height for your turbine
Wind shear is a calculation used to describe the differences in wind speed at two different heights. In general, turbulence decreases and wind speed increases as height increases above the earth’s surface. Wind shear calculations come in handy when you use anemometer wind data from a 30 or 50 meter tower to extrapolate wind speeds to the proposed turbine’s hub height. In addition, wind shear data can help you determine the optimal height of your turbine. For instance, average wind shear coefficients below 0.1 indicate little difference in wind speeds between 60 meters and 80 meters, and taller towers may not generate enough additional power to justify the added cost of the taller towers.
Wind shear at a site can vary substantially from year to year and from month to month. If these variations in wind shear are not properly taken into account, the production estimates for a project could be substantially off. You banker will want to know that wind shear has been calculated correctly and “worst case” forecasts are incorporated into estimated production numbers.
Wind rose of your site
A wind rose shows the direction that the wind blows and the frequency of that direction at a particular location. Wind roses are used in wind projects to portray the amount of energy that comes into the wind project from various directions. The wind rose helps developers site the turbines in such a way as to minimize wake losses from other turbines at the site. The banker will want to make sure that the layout of the project optimizes output. Using the wind rose while explaining the layout of the project will help to build your case.
Average wind direction by month, coupled with detailed site maps, can help show where the wind is coming from and how much production might be reduced from obstructions in the area as well as future development.
Detailed maps (such as shown above), along with aerial photos and plat drawings of your site showing project boundaries and turbine locations, are important to show the physical layout of the project in relation to topography, buildings, other wind projects in the area and the wind rose. Together with proof of site control, this documentation will help demonstrate that your project is sited properly for maximum production and show that you have the required permissions to construct the project on the land.
Annual energy production for good years and bad years
Your banker will want to know how bad years of production compare to the average and what kind of fluctuations in cash flow the project can expect to better assess the risk associated with lending to the project (Table 5). You will also want this information so that you can structure the investor payments so the project can stay in the black in low production years.
Projected cash-flow model
Your lending institution will want to know all of the assumptions that you have made, including your project ownership structure, the likely terms of your power purchase agreement, and your projected cash flows, both to make sure that your assumptions are reasonable and that the project will be able to meet the required debt service coverage ratio. Table 6 is an example of what your project's cash flow may look like.The Financing section of the Toolbox has a sample pro forma that will give you an idea of the data your banker will need.
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