Sixth Northwest Conservation

1
Sixth Northwest Conservation Electric Power
Plan Proposed Wind Plant Capital Cost Assumption

• Jeff King
• Northwest Power and Conservation Council
• Portland, OR
• August 21, 2008

2
Wind resource cost elements

• Capital cost
• Wind plant development and construction cost
  (uniform)
• Transmission development and construction cost
  (WRA-specific)
• Operating costs
• Fixed wind plant operation and maintenance
  (uniform)
• Fixed transmission operation and maintenance
  (WRA-specific)
• Variable wind plant operation and maintenance
  (uniform)
• Variable transmission operation and maintenance
  (WRA-specific)
• System integration costs
• Regulation load following
• Storage shaping

3
Windpower Cost Assumptions(2006 dollar values)
5th Plan (2004) Biennial Report (2006) Preliminary 6th Plan (Q1 2008) Proposed 6th Plan
Overnight wind plant development and construction cost (/kW) 1170 1500 1650 1950
Transmission (/kW/yr) 23 Unchanged 20 To be addressed at later GRAC
Fixed OM (/kW/yr) 23 30 22 To be addressed at later GRAC
Learning effects on real fixed costs (20 yr average) -2/yr None in near-term See following slide To be revisited at later GRAC
Variable OM (/MWh) 1.16 1.50 1 To be addressed at later GRAC
Regulation Load-following (/MWh) 5.20 - 11.20 Unchanged 5.10 - 10.90 Initial discussion to follow
4
Preliminary thinking on forecast construction
cost escalation (to be revisited at later GRAC)
5
Normalizing reported plant costs

• NPCC database contains reported plant costs
  (estimates or completion costs) for 36 WECC
  projects totalling 4450 MW. 2001- present
• Reported costs were normalized to "overnight"
  2006 dollar values
• Unless otherwise stated, reported costs are
  assumed to be construction costs less project
  development cost and financing fees.
• The cost vintage is assumed to be the year
  reported or, for completion costs, the beginning
  of 12 mo construction period (one year prior to
  service year)
• Overnight (instantaneous) construction cost were
  backcast using appropriate financing (COU, IOU,
  IPP) with the Council's MICROFIN model.
• Project development cost of 1.3 of total capital
  cost was added to the estimate
• Capacity-correlation
• Slight (12) negative correlation of cost to
  project capacity was observed
• Capacity-weighting was approximated by rounding
  to nearest 100 MW and plotting each 100 MW
  multiples separately.

6
Normalized utility-scale wind project cost
7
Other recent surveys and estimates
CEC Comparative Costs of California Central Station Electricity Generation Technologies Jun 07 1900 "Instant" cost, 2006
EPRI Engineering Economic Evaluation of Renewable Energy Technology Jun 07 2039 100 MW Total plant (overnight) cost, Dec 06
LBL Annual Report on U.S. Windpower Installation, Cost and Performance Trends 2006 May 07 1480 (range 1150 - 2240) Reported costs, 16 U.S. projects, 1326 MW
LBL Annual Report on U.S. Windpower Installation, Cost and Performance Trends 2007 May 08 1710 (range 1240 - 2600) Reported costs, 16 U. S. projects, 7600 MW (1660 in 2006)
USDOE 20 Wind Energy by 2030 May 08 1650 2006, overnight (Black Veatch)
Windpower Monthly Annual power cost comparison Jan 07 1175 (1490 _at_ 1.27) Reported costs, 40 global projects, 3400 MW
Windpower Monthly Annual power cost comparison Jan 08 1300 (1755 _at_ 1.35 range 1439 - 2068) Reported costs, 40 global projects, 3000 MW
8
Comparison to other surveys estimates