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Monday, January 09, 2006

Why Ski Resorts Should Install Wind Turbines

Imagine if you had a piece of property that sat in a very high wind area with average wind speeds of 15 miles per hour (at 10 meters) or better blowing every day. Now also imagine that you ran a business on that property that consumer quite a bit of energy and had a not very green reputation to boot. Let's also add that there are significant financial incentives available in your state for renewable energy installations that could help finance over half the cost. Now why wouldn't you want to install a few wind turbines?

Well that's exactly the question that owners and operators of ski resorts around the country ought to be asking themselves.

If you've ever looked closely at a wind resource map (and who would do that, really?! well ... me, sadly), you might have noticed that it looks an awful lot like a topgraphic map, with colorations for high wind areas defining recognizable ridgelines and mountain peaks. Usually, those peaks are very inaccessable and lack any power distribution infrastructure, much less demand center. Additionally, concerns about deforestation and environmental impact might discourage installation of wind turbines.

Well that's not the case for the mountain peaks in and around ski resorts which already have power infrastructure, a high demand and don't have to worry much about environmental footprint (the ski resort's footprint has already done the damage).

On a recent trip to Mt Bachelor, Oregon's finest ski and snowboard resort, I was sitting on a chair lift hunkering down to ward off the chilly wind when I was struck by the idea that there ought to be 10 kW wind turbines at the tops of each lift. This inspired me to run the numbers on such an idea upon returning home. Here's what I came up with:

A Bergey 10 kW Excel-S wind turbine (including inverter and energy management) costs $22,770 at the Alternative Energy Store. The 100 foot tower will set you back another $8,464 and let's assume installation costs about $5,000 per turbine (can anyone out there corroborate this estimate?). That gives you a total cost of just over $36k per turbine (installed - $36,234 to be exact).

Estimating how much power a turbine will produce in a given year is a tough game but Bergey provides a chart with estimates for given wind speeds on their brochure for the Excel turbines. The chart unfortunately only goes up to 14 mph and the average wind speeds (at 10m) at a ski resort would likely be more like 15 mph or better (i.e. a 'class 6' or 'outstanding' wind site). The chart says each turbine would yield 2,130 kWh per month if mounted on a 100' tower so lets bump that up to 2,400 to represent the higher average wind speed. That yields 28,800 kWh per year per turbine.

That's actually relatively close to EERE's U.S. Consumer's Guide to Small Wind Electric Systems which gives the following formula to estimate annual production: Annual Expected Output = 0.01328*(Diameter of Blades in ft)^2*(Wind Speed at Hub Height in mph)^3. The Excel has a diamater of 22 ft and the wind speed at 100' (about 30m) in a class 6 site is about 17 mph so the formula gives us 0.01328*22^2*17^3 = 31,578 kWh per year, not to far off from our estimate of 28,800 kWh.

Let's go with the smaller of the two to err on the conservative side. However, there's a few site-specific adjustments to make. Bergey's estimates are for 1,000 ft elevation and at the kinds of elevations you'd see at ski resorts (lets say about 7,000 ft), the air density is only about 80%. However, the wind is likely more reliable on the side of mountain peak than at a normal site so lets give our figure a 10% increase to represent the higher expected capacity factor (that's probably quite conservative). Our total estimate is then 28,800*.80*1.1 = 25,344 kWh per turbine per year.

To go with the example of Mt. Bachelor Ski Resort, let's assume they install 8 of these turbines at the tops of each of their 8 express lifts. That will set them back $289,872.00 for install costs. Maintanence has been estimated to generally cost about 1 cent per kWh produced but do to more extreme weather conditions at our site, let's assume that cost goes up by a third to 1.3 cents per kWh. Property costs are nill because the ski resort already owns the land.

Let's also assume a slightly shorter lifespan than normal - 25 years (rather than the 30+ normally expected) - do to the site's weather conditions. In that lifespan then, the 8 turbines will produce (25,344 kWh * 8 =) 202,752 kWh per year and thus (202,752*25 years =) 5,068,800 kWh total.

That will set them back $65,894.00 in maintanence costs over the lifetime of the turbines. It will also produce significant revenue:

Each kWh of power they produce on site is one kWh less of retail rated power they don't have to buy. In Oregon, that's about 7 cents a kWh (its higher elsewhere which would make significant difference in the packback scenario here). They would also be eligable for the 1.9 cents per kWh Federal Production Tax Credit for the first 10 years of the project and could likely negotiate to sell the Green Tags that go with the power produced by the project for, let's say, 5 cents per kWh for the first 5 years. Averaged over the life of the project, that's 1.76 cents per kWh in production incentives plus 7 cents in avoided retail costs for a total of 8.76 cents per kWh of revenue or just over $444,000.

Remember, this cost the folks at Mt. Bachelor $289,872.00 in install costs and $65,894.00 in maintanence for a total cost of $355,766.00. The net profit is thus over $88k or a net return on investment of 24.81%. That's not bad for a 25 year investment and clearly profitable in the long run. But 25 years is a pretty long payback period for some businesses to stomach. Luckily for them, there are also considerable incentives avialable for them to take advantage of.

In Oregon, for example, an Oregon Office of Energy Public Benefits Fund provides grants equal to 19% of project costs, a Bonneville Environmental Fund grant is available to cover another 33% of the costs and a state Business Energy Tax Credit covers 35% of (probably the remaining) costs. A federal grant is available as well that can cover up to 25% of the costs but I'm going to assume it doesn't stack with the state grants (not necessarily true, but I'm erring on the safe side). Low interest guaranteed loans are available too and no need to worry about paying higher property taxes do to the wind installation either - there's a property tax exemption for renewable energy (and energy efficiency) installations in Oregon. Not all states offer as many incentives as Oregon, but many do - see the Database of State Incentives for Renewable Energy (DSIRE) for a full state-by-state list of all available incentives.

All in all, with the Public Benefits Fund grant, the BEF grant and the state business tax exemption, the costs of our Mt. Bachelor example could be defrayed by almost $200,000 ($199,431.94 to be exact) or over half of the total system costs (including maintanence)!

When you add the incentives to the picture, the investment suddenly becomes very lucrative - you're total profit becomes $303,692.00 off of an out of pocket investment of only $156,334.00 for a net return on investment of 194.26%! That's a pretty staggering return on investment and I don't see why any sane business person wouldn't jump at that chance. The payback period for this investment is only 7.9 years.

Plus, the 'green-washing' PR benefits for ski resorts of installing wind turbines would add another large but incalculable benefit for the company. Ski resorts don't exactly have the best 'green' reputation and have done a lot in recent years to try to clean up that image (a large banner hangs over the stairway to the dining room at the local Willamette Pass ski area that reads; "Sustainable Slopes Initiative", and highlights their recycling program or some such, for example) and installing wind turbines fits right into this picture.

In fact, Jiminy Peak Ski Resort in Massachusettes seems to have recently gotten the same idea. They're taking it one step farther and actually installing a 320 ft tall 1 MW turbine at their ski area, according to a Renewable Energy Access post back in November.

Wind power scales up nicely and their larger scale investment has an even better payoff. The REA post says the turbine will set the ski resort back $2 million, forcing them to take out a $1.5 million loan. However, the turbine is expected to produce 2.5 million kilowatt hours per year, or almost a third of their power.

At that rate, Jiminy execs expect the turbine to pay off the loans and initial investment in 7 years, providing nothing but profit for the remainder of its 30 or so years after that.

At the Oregon-style power rates we talked about above (i.e. 8.76 cents per kWh including green tags and the PTC), 2.5 million kWh per year for 30 years would yield total revenue of $6.57 million on an investment of $2 million for a total return on investment of $4.57 million or 228.5%! Even better than the small scale wind scheme outlined above.

In summary, with avialable incentives and consistently high wind speeds, ski resorts have every reason to invest in installing wind power on their property. The investment could yield a return of 200% or more over 25-30 years, a very strong long-term investment opportunity. I hope to see more ski resort operators getting with the picture and joining Jiminy in installing small or large-scale wind turbines soon.


Jesse Jenkins said...

I forgot to mention it, but obviously this would require a net metering set-up so that power produced during the night and outside of ski season can be credited towards the ski resort's energy bill.

Also, I'm sure someone will bring up a question about whether or not turbines will operate in the cold and snowy weather of a ski resort. I'm not certain the answer to that question (any engineers wanna give it a shot), but I do know that turbines succesfully operate in the winters of Wyoming, Montana, Minnesota and other similarly harsh places as well as at Antarctic research bases, so I don't think it should be a problem (at least one that doesn't have a workable solution).

The most noticable effect of the weather would likely be higher maintanence costs and a slightly shorter lifespan for the turbines, both of which I factored in to the example above.

Engineer-Poet said...

Good envelope-back analysis.  Let's hope that this gets other folks to sharpen their pencils and then start calling engineering firms, filling out forms and writing checks.

Anonymous said...

This would be fantastic - I think that with the constant winds present at most ski resorts, that snow would not accumulate on the windmills - although during wet snow storms ice could be a problem. However ski resorts are already used to addressing these types of problems with their chairlifts. I have long thought of trying to develop a green ski area here in Southern California. Mt Baldy in particular is the mountain that I think would be perfectly suited for this type of green ski business. Another way of greening skiing could be by thinning forests for ski trails instead of "cutting" trails. This helps to eliminate fuels that have grown in our forests from fire suppression, prevent erosion and promote a healthier environment for larger trees. What about solar as well? Especially here in Southern California ski huts, base lodges should take advantage of solar power. Very interesting topic - my email is I work for the City of West Hollywood in Environmental Services and I'm also an avid skier/snowboarder. Thanks for posting this interesting info.


Anonymous said...

It's already been done, just not in America.

Jesse Jenkins said...

Thanks for the picture Mathew. Where was it taken? That's great to see an example in action. Any idea what the capacity of that one is? Looks like it's in the 100s of kW range, bigger than the 10 kW turbines I mentioned in my post. A usual with wind, bigger is probably better...

Anonymous said...

Great article and nice analysis! Just a couple of thoughts...

First, picking up a single 100Kw turbine is probably much more efficient than 8 smaller turbines. In fact, it is always more efficient to go with the fewest number of turbines, with the highest output rating (until you hit the largest, megawatt scale turbines).

The other thing you want to take into account with using mountaintops is the turbulence issue. While wind up there is stonger, it's it also changing direction frequently due to the turbulence caused by the mountaintop itself. You will get a lower percentage of production time , and more wear and tear on the blades in this environment.

Still a great idea, and worthy of pursuit!

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Anonymous said...

This should be done at all best ski resorts!