BC HYDRO WIND RESOURCE OPTION ENGAGEMENT MAY 5, 2015 WIND - - PowerPoint PPT Presentation

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BC HYDRO WIND RESOURCE OPTION ENGAGEMENT MAY 5, 2015 WIND - - PowerPoint PPT Presentation

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BC HYDRO WIND RESOURCE OPTION ENGAGEMENT MAY 5, 2015 WIND RESOURCE ENGAGEMENT AGENDA Review impact of updated turbine characteristics on net CF Review updated wind costs and assumptions 2 WIND RESOURCE ENGAGEMENT SUMMARY OF PROPOSED

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MAY 5, 2015

BC HYDRO WIND RESOURCE OPTION ENGAGEMENT

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AGENDA

  • Review impact of updated turbine characteristics on net CF
  • Review updated wind costs and assumptions

WIND RESOURCE ENGAGEMENT

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SUMMARY OF PROPOSED CHANGES TO TURBINE CHARACTERISTICS

  • Increase hub height (HH) from 80m to 100m
  • Use uniform turbine size of 3 MW (no impact)
  • Increase loss factor from 11.6% to 12.75%
  • Update power curves based on current/forward looking turbine

technology

WIND RESOURCE ENGAGEMENT

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POWER CURVES UPDATE

WIND RESOURCE ENGAGEMENT

0.00 0.10 0.20 0.30 0.40 0.50 0.60 0.70 0.80 0.90 1.00 0.0 5.0 10.0 15.0

Normalized Power Output Wind Speed (m/s)

Class I ‐ 2009 Wind Data Study Class I ‐ 2013 ROU Class I ‐ 3MW (2015) Class II ‐ 2009 Wind Data Study Class II ‐ 2013 ROU Class II ‐ 3MW (2015) Class III ‐ 2013 ROU Class III ‐ 3MW (2015)

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SUMMARY OF PROPOSED CHANGES IN TURBINE CHARACTERISTICS

WIND RESOURCE ENGAGEMENT

Average net CF percentage point increase from 2013 ROU due to updated power curves Average net CF total percentage point increase from 2013 ROU (includes updated power curves, 100 HH and new loss assumptions) Average net CF total percentage point increase from 2009 BC Hydro Wind Data Study IEC Class I 1.3 3.5 8.1 IEC Class II 1.9 3.6 7.9 IEC Class III 1.0 3.4 8.2

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WIND RESOURCE ENGAGEMENT

IMPACT OF CHANGES IN TURBINE ASSUMPTIONS ON NET CF

5 10 15 20 25 30 35 40 <20% 20‐25% 25‐30% 30‐35% 35‐40% 40‐45% 45‐50%

Number of Projects Net Capacity Factor

2009 Wind Data Study 2013 ROU 2015 ROU (Preliminary)

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WIND CAPITAL AND O&M COSTS UPDATE

Cost information obtained through:

  • Wind project cost review by Hatch
  • Survey of developers active in BC, conducted by GE Power &

Water

  • EPC cost review for Canadian wind projects by Borea

Construction (confidential report)

WIND RESOURCE ENGAGEMENT

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HATCH COST REVIEW FOR BC WIND PROJECTS

  • Cost analysis includes pre-construction costs, turbine supply

agreement, BoP costs, and owner’s cost during construction

  • Out of scope for Hatch analysis
  • Financing costs
  • Transmission/interconnection costs
  • Off-site road access
  • Wind Participation Rent and community/FN accommodation

calculated separately (based on CF/revenue)

WIND RESOURCE ENGAGEMENT

Common to all resource

  • ptions
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HATCH COST REVIEW ‐ APPROACH

  • Based on line item analysis for a base case wind project in each
  • f the four regions (PC, NC, SI, VI)
  • Cost estimates based on information from publically available

sources and interviews with turbine vendors, EPC contractors and developers

  • Total capital cost adjusted to reflect that larger projects benefit

from economies of scale

WIND RESOURCE ENGAGEMENT

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BASE CASE PROJECT ASSUMPTIONS

  • Base case reflects median project size in each region
  • Assume generic `best case scenario` site conditions:
  • Good site access via existing public roads and located in

proximity to services in a small community

  • No considerable importation/exportation of material required
  • No rock blasting
  • Minimal number of waterway crossings
  • Does not cover costs associated with challenging topography

with high relief approaches

WIND RESOURCE ENGAGEMENT

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CAPITAL AND O&M COSTS FOR BASE CASE PROJECTS ($/KW)

WIND RESOURCE ENGAGEMENT

Project Phase NC (195 MW) PC (117 MW) SI (117 MW) VI (48 MW) Pre‐Construction 50 80 67 137 Wind Turbines* 1,384 1,383 1,366 1,415 BoP 635 686 603 759 Owner’s Costs during Construction 198 225 196 238 Total Capital Cost 2,268 2,374 2,231 2,549 Annual O&M Cost 68 73 67 74 * Cost estimates based on a 20-yr project life. For a 25-yr project, expect 3-4% increase in turbine cost.

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CAPITAL AND O&M COSTS FOR A 102 MW WIND FARM ($/KW)

WIND RESOURCE ENGAGEMENT

Project Phase NC PC SI VI Pre‐Construction 78 86 71 75 Wind Turbines 1,396 1,383 1,367 1,403 BoP 699 695 610 654 Owner’s Costs during Construction 221 227 200 215 Total Capital Cost 2,394 2,391 2,248 2,347 Annual O&M Cost 79 74 68 72

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ADJUSTMENT OF COST FOR SIZE OF PROJECT

WIND RESOURCE ENGAGEMENT ‐ 500,000 1,000,000 1,500,000 2,000,000 2,500,000 3,000,000 50 100 150 200 250 300 350

Capital Cost ($/kW) Installed Capacity (MW)

PC NC SI VI

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SURVEY OF DEVELOPERS ACTIVE IN BC

  • Organized/conducted by GE Power & Water
  • Small number of respondents, but all reputable, active in BC and

experienced with bringing wind projects to completion

  • Cost estimates based on a 100 MW+ project
  • Includes engineering, development fees, insurance, FN

accommodation, legal fees, BoP (i.e. everything but turbine costs)

  • Respondents asked to specify if project site is plateau or complex
  • Results:

US $1,060/kW for plateau site US $1,400/kW for complex site

WIND RESOURCE ENGAGEMENT

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COMPARISON OF CAPITAL COSTS ($/KW)

WIND RESOURCE ENGAGEMENT

Hatch IPP Survey (Plateau Site)* IPP Survey (Complex Site)* Development, BoP, Owner’s Costs 881‐1,010 1,180 1,550 Turbine Cost 1,370‐1,400 1,330** 1,390** Total 2,250 – 2,395 2,510 2,940

* Cost estimates were provided in USD. Exchange rate of 1 USD = 0.9 CAD was used to convert to CAD. ** Turbine costs estimated by GE

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EPC ESTIMATES BY BOREA CONSTRUCTION

General learnings:

  • BoP cost estimates for PC region in line with Hatch’s estimates
  • BoP costs in Peace region can be competitive with rest of

Canada

  • Project site (water crossings, terrain complexity, etc) matters
  • Can substantially increase BoP costs

WIND RESOURCE ENGAGEMENT

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PUTTING EVERYTHING TOGETHER…

  • Hatch cost estimates are representative of `best case scenario`

sites in the four regions of BC

  • These sites exist, but likely do not overlap with high wind speed

sites (presumably more complex terrain)

  • Concern – combination of high wind speed sites and low cost

estimates will underestimate UECs Feedback from Stakeholders?

WIND RESOURCE ENGAGEMENT

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FUTURE TURBINE PRICING

  • Turbine prices have fallen ~30% from peak in 2008/2009
  • No significant additional reductions expected in foreseeable

future

  • Future trends in turbine pricing?
  • Future wind energy price reductions usually attributed to

changes in wind turbine technology which lead to cost reductions and/or improvements in turbine efficiencies

  • Market/economic conditions can drive turbine prices higher

(e.g. as seen in 2004-2009 period)

  • Propose to treat future turbine pricing as scenarios

WIND RESOURCE ENGAGEMENT