Wind Energy Glossary
Welcome to the Wind Energy Glossary! You'll find definitions and explanations for many common terms related to wind energy on this page. Scroll through the list, or use the search functions to find the term you're looking for. When you find it, click on the term to get more information.
Glossary Term | Definition |
|---|---|
| Accelerated Depreciation | With accelerated depreciation, wind projects can reduce the assessed value of their equipment on their financial balance sheets over a shorter period of time than other real assets. |
| Aggregation | Bundling several wind energy projects together so that they are treated as one larger project (when purchasing turbines, interconnecting, or maintaining a project, for example,) in order to spread out costs over more turbines or projects. This can have the effect of improving project economics. |
| Alternative Minimum Tax (AMT) | AMT can be thought of as a different tax system with different rules and deductions; taxpayers must compute their taxes under both the regular tax and AMT rules and then pay the greater of the two. The purpose of the AMT is to prenvet those in the higher tax bracket from getting by from year to year tax free. |
| Anemometer | A device used to measure wind velocity as part of a wind resource assessment study. Cup anemometers are the standard type used today, with 3 cups spinning on a vertical axis. The anemometer typically is installed on a guyed tilt-up tower at the anticipated location and height of the potential wind turbine. |
| Anemometry Equipment | The set of meteorological measuring and logging devices used to collect wind data for a wind resource assessment study. Equipment set typically includes: tower, anemometer, wind vane, temperature sensors, heating device, and data logger |
| Asset/Equity Ratio | Total assets divided by shareholder equity. The asset/equity ratio is often used as a measure of leverage, or how well a project utilizes investment capital to realize return for investors. |
| Attractive Nuisance | A hazard that is likely to attract children, who are unlikely to fully comprehend the danger posed by the hazard. A landowner may be liable for injuries to children caused by the hazard even if the children are trespassing. |
| Avoided Cost | The rate that utilities are required to pay independent power producers according to the Public Utilities Regulatory Policy Act (PURPA). Avoided cost is the simply the cost that the utility would have incurred for producing the same amount of power. This is not a favorable rate to recieve as an independent power producer. |
| Business Metrics | A system of parameters or other quantitative assessments of a business that can be measured periodically and systematically. Business metrics are often used to keep track of how well a business is meeting its objectives. |
| Clean Renewable Energy Bonds (CREBs) | A CREB is a special type of tax credit bond providing rural electric cooperatives, municipal electric utilities, and government entities (including tribal councils) the equivalent of an interest-free loan for financing qualified energy projects. |
| Cogeneration | The simultaneous production of heat energy and electrical of mechanical power from the same fuel in the same facility. Cogeneration is achieved through the capture and recycle of rejected heat that escapes from an existing electricity generation process. |
| Commercial Scale Wind | Refers to wind energy projects greater than 100 kW where the electricity is sold rather than used on-site. This category can include large arrays of 100 or more turbines owned by large corporations, a single locally-owned wind turbine greater than 100 kW in size, or anything in between. |
| Commissioning | The process of connecting the turbine to the transmission lines and making sure it is operating within its normal or defined parameters. |
| Community Wind | Locally-owned, commercial-scale wind projects that optimize local benefits. Locally-owned means that one or more members of the local community has a significant direct financial stake in the project other than through land lease payments, tax revenue, or other payments in lieu of taxes. |
| Community-Based Energy Development (C-BED) | 2005 Minnesota law requiring Minnesota utilities to establish tariffs for wind energy projects meeting specific requirements for local ownership. The tariff sets a framework for negotiation of power purchase agreements between utility companies and qualifying community-based energy projects where the payment for energy in the first 10 years of the project is higher than in the last ten years. |
| Cost-of-Service Ratemaking | A system for establishing prices in which a utility is reimbursed for the legitimate costs it encounters in serving customers, plus a specific percentage for profit. |
| Covenant | A promise in an indenture, or any other formal debt agreement, that certain actitivities will or will not be carried out. The purpose of a covenant is to give the lender more security. Covenants can cover everything from minimum dividend payments to levels that must be maintained in working capital. |
| Coverage Ratio | A type of accounting ratio that helps measure a company's ability to meet its obligations satisfactorily. A coverage ratio encompasses many different types of financial ratios. Typically, these kinds of ratios involve a comparison of assets and liabilities. The better the assets "cover" the liabilities, the better off the company is. |
| Debt Service Coverage Ratio (DSCR) | The ratio of net operating income to the amount of money that is required to make regular debt payments. A DSCR of greater than one means that the project is taking in enough income to cover payments on loans. A number of less than one means that the project will have to dip into reserves or other financial resources to cover debt payments. |
| Debt vs. Equity | An amount of money borrowed and owed by one party to another is considered debt. For example: bonds, loans, and commercial paper. Equity is a term whose meaning depends very much on the context, but in general, it refers to ownership in any asset after all debts associated with that asset are paid off. |
| Debt-to-Capital Ratio | A measurement of a company's financial leverage, calculated as long-term debt divided by long-term capital. Total debt includes all short-term and long-term obligations. Total capital includes all common stock, preferred stock, and long-term debt. |
| Decommissioning | The process of dismantling a turbine and restoring the site to pre-project conditions. |
| Demand | The amount of electricity drawn from an electric system at a given time, measured in kilowatts. |
| Demand-Side Management (DSM) | The process of managing the consumption of energy. DSM programs include, for instance, offering discounts on new, high efficiency appliances so that consumers get rid of their older, less efficient models. |
| Depreciation | An accounting method used to attribute the cost of an asset over the span of its useful life. The cost, of a portion thereof, can be assigned as a loss on the project's balance sheet to reduce the tax base of the project. |