A Report to the President

Wind Power Generation 

 A Facility Energy Cost Savings

By: Rich Phelan

Individual Capstone Project

December 11, 2004

Table of Content

Preface .........................................................................................................................................i

Executive Summary ..................................................................................................................iii

Project Planning .........................................................................................................................v

Financial Analysis .....................................................................................................................vi

Executive Report ........................................................................................................................1

Introduction ................................................................................................................................1

Assumptions ...............................................................................................................................1

Comparison of Renewable Power Generators ...........................................................................2

Data Analysis .............................................................................................................................5

Site Planning ..............................................................................................................................7

Project Organization ..................................................................................................................9

Implementation Plan ................................................................................................................10

Responsibility Chart .................................................................................................................14

Gantt Chart ...............................................................................................................................15

Sensitivity Analysis ..................................................................................................................16

Risk Analysis ...........................................................................................................................17

Financial Analysis ....................................................................................................................18

Permits Required ......................................................................................................................21

Community Acceptance ...........................................................................................................22

Visualization ............................................................................................................................23

Aviary Issues ............................................................................................................................25

APPENDIX ..............................................................................................................................66

References ................................................................................................................................92

Prologue ...................................................................................................................................93

Table of Figures

Figure 1: NREL Energy Cost ........................................................................................................26

Figure 2: MMA Utility Expense ...................................................................................................27

Figure 3: Wind Data Linear Regression .......................................................................................28

Figure 4: MMA Adjusted wind ....................................................................................................29

Figure 5: MMA Monthly Average Wind Speed ...........................................................................30

Figure 6: Electric Power Usage ’99-‘03 .......................................................................................31

Figure 7: MMA Campus (Aerial) .................................................................................................32

Figure 8: MMA Campus Wind Turbine Siting .............................................................................33

Figure 9: Energy Cost Projection ..................................................................................................34

Figure 10: Average Energy Price Projection Graph .....................................................................35

Figure 11: Turbine & Site Info .....................................................................................................36

Figure 12: Turbine Data & Power Curve ......................................................................................37

Figure 13: Wind Turbine Hard and Soft Costs .............................................................................38

Figure 14: Global Warming (GHG) Analysis ...............................................................................39

Figure 15: Internal Finance ...........................................................................................................40

Figure 16: Internal Finance Cash Flow Graph ..............................................................................41

Figure 17: Internal Finance-Energy Cost Increase .......................................................................42

Figure 18: Internal Finance-Cash Flow: Energy Cost Increase ....................................................43

Figure 19: Internal Finance: Sensitivity Analysis ........................................................................44 BB Bay Wind (m/s)MMA Wind (m/s)yx

Figure 20: Internal Finance- Energy Cost increase: Sensitivity Analysis ....................................45

Figure 21: IOU Corp. Finance ......................................................................................................46

Figure 22: IOU Corp. Finance - Cash Flow Graph .......................................................................47

Figure 23: IOU Corp. Finance - Energy Cost Increase .................................................................48

Figure 24: IOU Corp. Finance - Energy Cost Increase - Cash Flow Graph .................................49

Figure 25: IOU Corp. Finance - Sensitivity Analysis ...................................................................50

Figure 26: IOU Corp. Finance - Energy Cost Increase - Sensitivity Analysis .............................51

Figure 27: Private - Project Finance .............................................................................................52

Figure 28: Private - Project Finance - Cash Flow Graph ..............................................................53

Figure 29: Private -Project Finance - Energy Cost Increase .........................................................54

Figure 30: Private - Project Finance - Energy Cost Increase - Cash Flow Graph ........................55

Figure 31: Private - Project Finance - Sensitivity Analysis ..........................................................56

Figure 32: Private - Project Finance - Energy Cost Increase - Sensitivity Analysis ....................57

Figure 33: Risk Analysis-Internal Finance ...................................................................................58

Figure 34: Risk Analysis-IOU Corp. Finance ..............................................................................59

Figure 35: Risk Analysis-Private Project Finance ........................................................................60

Figure 36: MMA One-Line Power Diagram ................................................................................61

Figure 37: IDEF A-0 .....................................................................................................................62

Figure 38: IDEF A0 ......................................................................................................................63

Figure 39: IDEF A1 ......................................................................................................................64

Figure 40: IDEF A3 ......................................................................................................................65

Preface

I selected the following report for several reasons.  The most predominant reason is my real interest in renewable energy sources and their potential to help the global environment.  If you were to stop and really think about the world’s trends (not the isolated trend of the U.S.), you would be quick to realize that the overall sentiment of the global community is that there is a real danger of damaging our environment beyond repair if we do not react immediately.  Of course, this has been a subject of much debate especially among academics and scientists.  My thought is; we can either continue on the current track, isolate ourselves from the “potential” damages we are creating to the global environment, and hope for the best or we can take a proactive stance and do so for the future of the next generations to come.  Renewable energy sources are just one small way for which we can help reverse the decades of pollution we have contributed to the environment.  This technology has existed for many years.  In the earlier years, it was used for convenience and cost savings.  Today, with newer designs and enhanced technology, wind turbine generators can contribute up to 20% of the U.S. energy demands at a cost nearly equivalent to the lowest cost fossil-fueled power source.  With short-term paybacks and longer lasting wind power generators, these costs will go down and become the most effective power source globally.

I picked MMA for my wind turbine site due to my intimate knowledge of the windy conditions on Taylor’s Point.  I can remember my first visit to MMA with my dad (MMA ’54) and my thoughts of the typhoon like wind that was blowing (slight exaggeration) only to realize as a cadet many years later(’77-’81), that the wind just NEVER stops!!!  As this report will show, a wind turbine generator will save MMA a huge amount of money and at the same time greatly reduce the polluting substances (NOx, Sox, CO2…) by reducing the current power generation from traditional power plants.

Before continuing, I would like to acknowledge the assistance I got from a multitude of people.  If anyone reading this feels omitted from this list I apologize in advance as, at this point, my brain is “fried” and my memory is getting short.  Thank you to: Terry Court, Bob O’Brien, Meghan Carter, Jon Sepich, Malcom MacGregor, Paul O’Keefe, Alan Gillis, Stephen Zilonis, and Malcom Brown.  

Executive Summary

Introduction

This report examines the practical and financial analysis of installing a renewable energy generator at the Massachusetts Maritime Academy (MMA) campus to stabilize and save electrical power costs.  Three options were considered: Hydroelectric, Photovoltaic (PV) cells, and Wind turbine generators.  Of the three, the wind turbine generator was chosen due to its relatively low installed cost per kilowatt-hour (kWh).  The following areas are addressed in this report:

• • Data Analysis
• • Site Planning
• • Project Planning
• • Financial Analysis
• • Permits required
• • Community Acceptance
• • Visualization
• • Aviary Issues. 
• • Environmental Issues

Data Analysis

Detailed data analysis to substantiate a wind turbine consisted of the collection and analysis of wind data from two locations.  Data was collected from the Buzzards Bay Buoy and from an anemometer located on top of the Harrington Building (MMA).  A linear regression was done on these data sets to find a correlation of .85.  Adjusted wind data was then placed into a

computer program that modeled its performance at MMA.  It is important to note that this method is not the traditional method.  Traditionally, a meteorological tower is put up on the actual location.  The same program then performed a detailed financial analysis based on three different financing options.  The financial analysis is discussed in its own section later.

Site Planning

Because the MMA campus is densely built, the possible sites for a wind turbine are limited by the following requirements:

• • Fall-zone setback from structures 
• • Setback from private residences (noise concerns)

Due to these requirements, the size and location of a wind turbine at MMA is limited.  The best turbine for this location is the Vestas 47-660 kW (164’ hub height, 241’ tip height).  The best location is shown at the center of the circle below.

Project Planning

The following figure displays the functional organization for this project.

From the Gantt chart above it can be seen that the project can be completed in less than one year.

Financial Analysis

Three different financing options were considered for the turbine.  The table below shows these options with both a stable energy cost and an increase by 3.75% (as estimated by the DOE).  The table also includes all other necessary financial information.

As can be seen from this analysis, the best financing option would be the tax exempt internal financing (bond).  There will be a positive cash flow immediately, an energy production cost of $.051/kWh ($.031 with price escalation) and a payback of 5.4 years.

Permits Required

The following are permits that are required.  It should be noted that some permits are omitted here due to the assumption that other vendors will be responsible for them (ex.  Over the road wide load permits).

• • FAA 
• • NEPOOL Interconnect System Impact Study Agreement
• • Mass. Environmental Policy Act (MEPA)

The item with the longest duration (not a permit listed above) is the required NStar power generation notification that has a required advance notice of 6 months.

Community Acceptance

This issue is the single most important.  Getting acceptance from the surrounding community will make the entire project quicker, easier and less expensive.  It is impossible to know how the public will react as they could follow the sentiment of the Alliance to Preserve Nantucket Sound or be the complete opposite as are the residents of Hull, MA who have just voted to install an additional 1.8 Mwh wind turbine (they already have a Vestas 47 – 660 kWh wind turbine).  To help win the support of the community the following can be done:

• • Talk the truth and listen to what the opponents have to say.
• o Rebut misconceptions with proven and documented facts.
• • Hold a public informational forum
• o Solicit interested people to come to the forum.  Often the people “for” a project are complacent and do not feel a need to attend these forums.  It is important that the make-up of people at this meeting is not overwhelmingly against the project.  I am not suggesting that the meeting should be “stacked” but that everyone is made aware of the fact that attendance by all parties is very important!
• • Form a “feasibility committee”
• o Invite the loudest opponent and one other to be a member of this committee.
• o Do not make a point of changing their minds.  Make sure these people are involved in all aspects of the feasibility and siting details and ensure that documented information are visible in all associated offices and meeting places.  Talk “off-the-cuff” of public misconceptions and the true facts (ex. this one turbine will reduce GHG emissions by approximately 11,864 tons over 25 years).  Make sure these people become well-informed people.
• • Have the committee visit the Hull I wind turbine.  Try for a moderately breezy day so that all can see the actual operation of the turbine and how quiet it really is!
• • Hold a second informational public meeting with the committee’s finding and the plan going forward.
• • Plan for a second bus trip open to the public (first-come first-serve basis) to the Hull I wind turbine.
• • Use the media whenever possible to promote the wind turbine and its benefits.

Visualization

Another common issue that people have with wind turbines is their size and perceived “ugliness.”  There have been claims that the turbines devaluate residences near the turbine site.  However, in Hull, MA, the property values near the turbine have remained exactly in line with real estate price increases of like houses in their areas of the town (out of the turbine locale).  The fact is, wind turbines have become tourist attractions in Hull, MA.  It is helpful if computer generated images are used to show the public what the wind generator would look like in its locale.  

Aviary Issues

Bird kills have caused serious concern at only one location in the U.S.: Altamont Pass in California.  Compared to bird deaths resulting from other manmade structures, highway traffic, and housecats, bird kills by wind plants are numerically insignificant and are not expected to impact bird populations.  Of course, deaths of endangered species are of greater concern, but again the only location with a suggestion of this problem is Altamont, CA.  And even in that case, experts disagree on the severity of the problem.  

When discussing this issue with Gordon Brown of the Hull Municipal Light Department, I was told that their wind turbine has killed “not even a single seagull.”  

Environmental Issues

Other than the impact to the area directly supporting the wind turbine structure, there are no other adverse environmental impacts.  Wind turbines in fact reduce known pollutants by creating electricity from a clean source.  In fact, it is calculated that this single turbine will save MMA about $138,000 per year in power costs (at today’s price) and will reduce Green House Gases (GHG’s) by approximately 475 tons/year.

Executive Report

Introduction

President, this report is based on my research for reducing operating costs at the Massachusetts Maritime Academy (MMA).  More specifically, the goal of this report is to reduce a large fixed expense at MMA (see Figure 2, page 27)1.  Electricity costs will be increasing at an average of 3.75% in New England as the demand of electricity continues to increase and the price of resources to create electricity escalates accordingly (see Figure 9 page 34).  However, the timing to install this regenerative power source is at its greatest.  We are at war and there is a great perception that a component to this war is over the control of oil supplies in mid-east countries.  Many believe that the less the U.S. relies on foreign oil, the more secure we would be as a nation.  Also, a huge “green” movement has grown from the grass roots of America and has joined other countries for a more united global strength.  With this said, we now have an opportunity to install a regenerative power generator which will generate a large portion of the power required by MMA at a steady cost.  This wind turbine will reduce the amount of fossil fuel burned to supply electricity and at the same time reduce emissions from power plant stacks that are known to damage our environment and promote health risks to people.  The single greatest obstacle to the implementation of this plan is the perception of the residence abutting and within view of the academy.

Assumptions

The following assumptions are made in the justification of the installation of a wind turbine:

1 Chart and Data provided by Mike Joyce, VP Mass. Maritime Academy, 9/2004

• • Since wind turbines are moved by the wind, there is no way to predict how the wind turbine is exactly going to perform.  Traditional utility power generation plants can predict reliability based on trend analysis of the machinery in the plant however, Mother Nature has control over this aspect of wind power generation.
• • The analysis done in this report is a compilation of data from the Buzzards Bay Buoy (BB Buoy) and wind data taken here at MMA (more detail is explained later).  The only way to better predict the actual wind characteristics would be to place a test anemometer tower on the actual sight.  The historic performance of wind data is widely used in this industry to predict the viability of wind powered generators.  However, as mentioned previously, nothing can assure the same performance.
• • My belief is that the wind characteristics actually represent a conservative representation of what we will actually experience here at MMA.  There fore it is my assumption that the financial analysis explained later is also conservative.
• • The price of electricity will continue to rise as predicted by the DOE at a rate of 3.75%.

Comparison of Renewable Power Generators

There were three different renewable power-generating sources researched for this project.  Each with their benefits and disadvantages.  I will make a brief mention of those not considered here and why.  I will not dwell on these, as I believe that the facts are strong enough justification. 

Photovoltaic cells (PV):  Initially, this was the most attractive of the different power sources.  The main benefit to the PV cells is their design and non-mechanical aspect.  Since there are no moving components to a PV power source, its maintenance and operating costs are low.  The disadvantage is the cost of the PV cells, its low power output and the locale of MMA.  According to the National Renewable Energy Laboratory, the cost of PV cells in 2004 is about 13.7 ¢/KWH (see Figure 1, page 26).  This is much higher than other renewable energy sources.

Regarding the locale, MMA is not exposed to enough sun during the winter months to generate much electricity.  Overall, I would consider this source as a good secondary but not a primary regenerative power source.

Tidal power generation:  This is an option that, in the past, was already investigated for this locale.  The energy potential within the Cape Cod Canal is huge but there are technical issues that would prohibit harvesting tidal flow energy within the canal at this time.

Wind Turbine Generators:  Wind generators are the third and recommended choice.  We all know that these generators are not 100% reliable and are not dispatchable in the conventional sense.  That is, they could not be used as a base load power source.  However, no power plant is 100% reliable.  During a power plant outage, backup is provided by the entire power distribution system.  There is always excessive amounts of power generation capability to make up for power demand (power transmission is often the limiting factor for power availability).  The same exists with wind turbine generators.  Variability caused by the fluctuation of wind power generation should not cause a problem, as its down time will be made up with the more stable utility generators.  Utility power generators may argue that system variability will cause instability and adverse problems to the power grid.  A recent National Renewable Energy Lab (NREL) review of this topic suggests that intermittent generation levels of at least 10% can be accommodated with no adverse system impacts.  Others are saying that 20% is a reality.  Already today, wind generation provides up to 7% of the system load, and has supplied about 5% during peak hours, on the Pacific Gas and Electric system with no adverse effects.  In fact, research shows that intermittent penetration levels above 10% are also entirely feasible, with any technical limits being a function of the specific utility system characteristics.2

As a power consumer, MMA is hostage to the increases in power production costs.  The price for a million British thermal units (MMBTU) of natural gas trading in New York for delivery in November rose 56 cents, or 8.8%, to $6.911 Wednesday as supply jitters rattled investors… U.S. demand for natural gas this winter is expected to rise 4.4% from last year, says a report by an industry trade group, and prices should be higher despite inventories near record levels at the start of the heating season…"If we have a normal winter ... we will probably see prices in the $10-to-$12 range and possibly higher," says Andy Weissman, chairman of Energy Ventures Group, a Washington-based investment firm.3

Betting on low gas prices over the foreseeable future is highly risky, while energy costs from wind plants will be relatively stable over time.  (See Figure 1, page 26)

Gas price volatility is not going away.  Planned power plant construction countrywide is nearly 100% gas fired and the success of these plans is heavily dependent on natural gas production meeting growing demand.  The economics of these plants are based on low gas prices into the future.  Increasingly, the state is putting its electricity eggs in one basket -- natural gas.  In 1980, gas, which is cleaner than coal or  oil, produced less than 1 percent of the state's power.  Its share is now 41 percent and will be 49 percent by 2010.  That makes consumers, many of whom also use natural gas for heating, dangerous vulnerable to price hikes.  4

2 National Renewable Energy Laboratory, The True Cost of Renewables: An Analytic Response to the Coal Industry's Attack on Renewable Energy, Blair G. Swezey and Yih-huei Wan

3 http://www.usatoday.com/money/industries/energy/2004-09-30-natgas_x.htm, 10/13/04

4 Cape Wind, www.capewind.org

SWOT Analysis for the use of Wind Turbine Generators:

• • Strength: Lowest cost renewable power generating energy source, energy source is free, low O&M costs, stabilize utility costs with the increasing cost of electricity and fuels to produce electricity.
• • Weakness: At the mercy of Mother Nature.  If the wind does not blow.  Power is not generated.
• • Opportunity: Huge potential to save financially, greatly reduce emissions from fuel burning power plants.  Possible to add more wind turbines in the shallows of the bay if the first one is successful.  Another opportunity is its use as a teaching aid for the students taking the facilities major.
• • Threats: Greatest obstacle is going to be the surrounding community.  Due to the immensity of wind turbine generators and the bad rap they have got concerning noise and aviary kills there is often great opposition to having these in ones backyard (NIMBY).

Data Analysis

As mentioned before, the ability to predict wind speed is important to the viability of wind power generation.  To analyze the viability of a wind turbine here at MMA, archived data was acquired from the BB Buoy that goes back 3 years.  The height of the anemometer at this sight is 24.8 meters above sea level.  I have compared this data to wind data that I have taken from an anemometer mounted to the top of the Harrington Building.  This data was collected at different wind conditions and calculated on a 10-minute average (same as the BB Buoy).  Then a linear regression was performed to check its correlation.  The resulting correlation factor of .85 was calculated (see Figure 3, page 28).  Since this factor was considered close, the slope of the wind curve was used this to recalculate the BB Buoy data to MMA.  The results can be seen in Figure 4, pages 29.  This data was then used in a wind-modeling program created by the Minister of Natural Resources in Canada.  This dynamic program is able to model wind data taken from virtually anywhere in the world and analyze its actual performance applied to most any turbine (from major manufacturers).  This program interpolated the data taken and created a new set of data based on the modeled wind at the hub height of the turbine (50 meters).  I will also discuss these items later in the financial analysis section.  Figure 5 on page 30 shows wind data prior to the program adjustment.  From this graph, it can be seen that the three-year average monthly wind speed does not drop below 3.5 m/s, which is the cut-in speed for the wind turbine being proposing (Vestas 47).  From this, we can see that our peak average wind is at about 6 m/s (at 24.8 meters).  Again, these represent numbers before being modeled and corrected for the 50-meter hub height.

All power plants can be characterized by an effective load carrying capability that is a fraction of the rated power output (capacity factor).  This is determined by the wind generators monthly full output capacity to its actual monthly power output.  Using the computer-modeled data, a wind turbine operating at MMA would have a capacity factor of about 17%

The data in Figure 6 on page 31 represents data before modeling.  It shows the calculated savings MMA would have see if they had a wind turbine at MMA (data averaged from the last three years).  Last years monthly electrical costs are used for this analysis.  Here it can be seen that the savings would be between $37,000- $213,000!  Although with the recommended turbine we would not be receiving any income, the savings alone would justify its implementation.

To summarize the analysis, a wind generator at Mass. Maritime Academy (MMA) will reduce the overall power cost, reduce fuel consumption and atmospheric emissions from conventional power plants, provide a training platform to our students in our facilities major, and display our leadership and commitment to advanced technology and the environment.

Site Planning

Because the MMA campus is densely built, the possible sites for a wind turbine are limited by the following requirements:

• 1. Fall-zone setback from structures: Public safety requirements generally stipulate that towers be constructed some distance away from inhabited structures.  Building codes may establish this setback for wind turbines at, for instance, 1.5 times the blade-tip height.  However, MMA is not governed by town building codes therefore, it may be that no specific setback requirement exists a priori.  MMA may determine the appropriate setback.  
• 2. Setback from private residences:  Massachusetts noise regulations limit the noise level produced at property lines.  …. a turbine should be placed at least three times the hub height from private residences to minimize or eliminate the noise impact on the neighbors.5 

5 Renewable Energy Research Laboratories, Sally Wright, PE, May 2004

From Sally Wright’s (of Renewable Energy Research Lab (RERL)) statements above one can quickly determine that the density of MMA is potentially a problem.  It actually becomes the limiting factor of the size of the wind powered generator for which we could install at MMA (unless we wanted to ignore the safety rules imposed upon the general public).  After close scrutiny, the only location on campus that has any true possibility (due to function and aesthetics) would be near the existing power plant.  Site planning has been done using the restrictions stated above.  This can be seen in Figure 7 page 32 and Figure 8 page 33.  The first figure shows the entire MMA campus and the residence abutting the campus.  The second shows a possible wind turbine siting.  The thick red line indicates the three-time hub height offset from the residence and a 30-foot offset from the salt marsh/land border.  The red circle indicates the 1.5 time fall zone as recommended.  The red square in the baseball field is a reference for picture scale (90 square feet).  As can be seen, the only items within the fall zone using this turbine are the power plant and the unmanned sanitary treatment plant.  The power plant at this point is to be decentralized and will be unmanned.

Noise was the second issue mentioned in the report.  Sound regulations have two components; First, any new broadband sound source is limited to raising noise levels no more than 10 dB (A) over the ambient baseline sound level.  The ambient baseline is defined as the sound level that exists 90% of the time, the L90 level.  Second, “pure tones,” defined here as an octave band, may be no greater than 3 dB (A) over the two adjacent octave bands.  All these readings are measured at the property line or at any inhabited buildings located within the property.6  Without actual testing equipment, this cannot be determined however, given the guidelines from RERL of three times the hub height to the nearest residence there is high confidence that MMA will pass this test.

6 Massachusetts Department of Environmental Protection, 310 CMR 7.00, Air Pollution Control

Project Organization

President-MMA: is the project sponsor and the person in-charge for all final decisions regarding to this project.

Consultants: (Massachusetts Department of Capital Asset Management) - A representative from DCAM will act as a consultant to this project.  Even though this project is locally funded and owned by MMA, DCAM has a stake due to its location on State property.  Hence, they have jurisdiction to this project.

Project Manager: (MMA Facilities Manager) is responsible for the planning, monitoring and controlling aspects of this project in alignment with MMA’s goals and objectives.  He is to interface directly with the selected wind turbine vendor, oversee the day-to-day aspects of the project, resolve planning and implementation issues, monitor and report the project’s progress directly to the President.

Project Team:  The team will comprise of key people who are MMA employed department heads.  The function of this project team is to assist the project manager in accurate data collection, analysis of this data, site selection, and development of a Request for Proposal (RFP) and subsequently, the acceptance of a suitable bid for the installation of a wind turbine.  Once a vendor is selected, the project team will act as in an advisory capacity. 

Team Members: One or more faculty; MMA Facilities Chief Engineer; MMA Master Electrician

Wind Turbine Vendor: To be determined

Implementation Plan

There are two important documents utilized here for the planning of this project.  They are the IDEF0 project model and the work breakdown structure (WBS).  The IDEF0 model can be seen in Figure 37 through Figure 40, pages 62 through 65.  The WBS below is used to define the project at each level. 

Defining the WBS:

• • Install Wind Turbine Generator: The total equipment, talents, and services, necessary to make a wind turbine operational including the power output and data acquisition /monitoring of the power output.
• • Form Project Team: The selection, approval, notification, and acceptance of the MMA project team.
• • Identify initial responsibility: The division and definition of each team member’s roles, duties, and interrelationships regarding the project.
• • Define objectives and goals: Clear communication to all members the project’s objectives and goals in relation to MMA’s objectives and goals.
• • Wind Turbine Siting: The appropriate option(s) for the permanent location for the operating wind turbine.
• • Campus Plot Plan: The engineered plan of the MMA campus.  This plan needs to include the residence at the closest proximity of the state property.
• • Determine maximum turbine height: The calculated maximum blade height of the wind turbine based on rules and regulations.
• • Wind Turbine Selection: Defining the narrow options of wind turbines for its installation at MMA.
• • Analyze wind data: The analysis of archived wind data from the Buzzards Bay Buoy over the last three years and recent data archived from the on-campus wind anemometer.  This includes the statistical analysis of the data for accuracy and correlation.
• • Analyze past power requirements: The analysis of archived electrical power usage and its correlation to the necessary power of the campus.
• • Apply RETScreen: Wind computer modeling: Apply information from both items above as inputs to Renewable Energy Trust Canada RETScreen wind turbine modeling software.  This will define the options for turbines on campus.
• • Select a Wind Turbine Vendor: The appropriate offering from the best submittal to install a wind turbine.  This includes the “best” price, the best product, and best construction performance offered.  All components are subject to MA. State laws.
• • All level three components here are related to the “standard” bid process and vendor selection as governed by MA. State laws.
• • Wind Turbine Installation: The start-to-finish phase of placing a wind turbine on the selected site at the MMA campus.
• • Excavation: The complete site preparation for installing the foundation and support equipment for the wind turbine.
• • Foundation: The engineered structure that supports the turbine tower.
• • Tower in place and rotor installed: The installation of the turbine monotube tower and the placement of the turbine nacelle (generator and rotor assembly).
• • Electrically Connect: The installation of all components necessary to electrically “tie” the power of the wind turbine to the main electric power distribution center at MMA.  This includes (but not limited to) all switch gear, islanding protection, transformers, wiring, and equipment for data acquisition/monitoring.
• • Turbine on-line: The operation and power generation of the wind turbine generator.
• • Performance trial of wind turbine power output: The actual live testing of the operation of the wind turbine and its performance (aerodynamically, mechanically and electrically)
• • Performance check of data acquisition: The testing of the computers responsible for acquiring data and monitoring the operation of the wind turbine.  This includes the testing of the data transmission to remote computers via LAN connection.
• • Wind Turbine acceptance: The approval and acceptance of the installation and operation of the wind turbine.  This is the closing step of the project and is the start date of the warranty period.

Responsibility Chart

The chart above defines who is responsible for the different aspects of the project.  This is important to communicate to all involved in the project to understand their role regarding to the project.

Gantt Chart

The Gantt chart above outlines the timeline for this project.  Given proper planning, monitoring and control of this project, MMA should have a turbine on-site and operating in less than one year!

An important aspect with this project is the communication path between MMA’s facilities manager and the wind turbine vendor’s project manager.  A reporting system is also needed to keep the president of MMA apprised of the project progress.  The chart below displays the report chain necessary to keep this project on-track and under budget.

Sensitivity Analysis

Both sensitivity analysis and a risk analysis were performed to determine potential financial risks to this project.  

Components in the sensitivity analysis that could threaten this project are see Figure 19 and Figure 20, pages 44 and 45; Figure 25 and Figure 26, pages 50 and 51; Figure 31 and Figure 32, pages 56 and 57.

• • avoided cost of energy ($/kWh) vs. renewable energy (RE) delivered in millions of watt-hours (MWh)
• • avoided cost of energy ($/kWh) vs. initial cost of the turbine installation
• • avoided cost of energy ($/kWh) vs. annual operating cost
• • debt ratio (%) vs. debt interest rate
• • debt term (yrs) vs. debt interest rate
• • RE production credit ($/kWh) vs. RE delivered

The sensitivity analysis is done based on its effect on the project’s ROI with a minimum expected ROI of 15%.  A sensitivity range of 30% is set to maximize the effect of each parameter’s change.  From each of these charts, careful observation will allow you to see how the ROI is affected under each varying condition.

Risk Analysis

For the risk analysis, see Figure 33 through Figure 35, pages 58-60.  Here an extreme of 20% was used for the risk analysis for all of the parameters below (except for the debt ratio in Figure 33 since the range cannot exceed 100%).  Parameters for the risk analysis were:  

• • Avoided cost of energy
• • RE delivered
• • Initial costs
• • Annual costs
• • Debt ratio
• • Debt interest rate
• • Debt term
• • RE production credit

In the figure’s first chart, you can see the order in which each will be affected by changing the parameter’s value (% range).  The last two charts show the distribution of the frequency of the ROIs and the range based on a high confidence level of 95%.  Based on this analysis, we can see the range of the expected returns including the maximum, minimum and median.  As can be expected, the tax-exempt financing arrangement yields the best return with the lowest risk.

Financial Analysis

As mentioned previously, the modeling program created by Natural Resources Canada was used to model the wind at MMA and apply it to the performance of the Vestas 47 wind turbine.  This program also performed the financial analysis for this turbine at the MMA campus.  In doing the analysis, three different capital-financing methods traditionally used to finance the construction of wind turbines are used.  1) Tax exempt internal finance  2) Investor Operated Utility (IOU) corporate finance 3) Private project finance.  Each of these have been applied to the actual financial operation of MMA.  That is, MMA is a Massachusetts State owned entity therefore it does not pay any federal or state income tax nor does MMA pay any property taxes.  For the capital cost of the wind turbine, 2003 pricing was used ($487,500).  A soft cost-variable cost figure was used to represent a ‘typical’ installation, which includes a foundation, transformer, grid hookup, installation, transportation, roadwork, and remote monitoring equipment.  The dollar figure is derived as a percentage of the capital cost of the wind turbine (33.3%).  This amounts to $162,500.  An additional $18,800 is added to the calculations to account for operation and maintenance (O&M) costs.  An inflation rate of 2.7% is used in these calculations (slightly higher than actual).  The turbine is assumed to have a life of 25 years.

Other considerations for the financial analysis are incentives and grants.  Unfortunately, MMA will not be eligible for any of three incentives given to renewable energy power producers.  The first is the Production Tax Credit (PTC) that is not available to non-profit organizations (since they are non-tax paying entities).  The second is the Renewable Energy Production Incentive.  Although only non-profit organizations are eligible for this incentive ($.018/kWh) it is only available for electricity sold (not consumed).  Since all of the power generated from the wind turbine generator selected for MMA will be used on campus, MMA will not receive these benefits.  The third is the Green House Gas (GHG) reduction credit.  Again, although MMA will greatly reduce GHG production (from the reduction of power needed to be produced from utility power generators) MMA will not receive these benefits.

An incentive that MMA could take advantage of is the sale of its “Green” certificates.  These “Green certs” are tradable certificates for power that is generated by renewable energy generators.  The current rate for these certs varies from $.03 to $.08 per kWh.  Companies buying these certs usually enter into a contract for both price and time (in years).  For the analysis done, a five-year period at $.05/kWh is used.

Another incentive that may be available to MMA is the Massachusetts Technology Collaborative (MTC) grant for renewable energy research and implementation, which could be up to an amount of $150,000.  This incentive has not been added to the financial calculations since there are no guarantees that this grant will be available.

A third component to this analysis is the cost of electricity.  Obviously, if the price of electricity increases, it is easier to financially justify a wind turbine.  On the other hand, if the trend indicates a drop in electricity prices, and utility price were your only concern, it would be harder to justify.  For the analysis presented here, it is assumed that the overall price of electricity will increase at a rate of 3.75% until the year 2025.  This figure is derived from figures extracted from the Department of Energies electricity price predictions (see Figure 9 & Figure 10, page 34 & page 35).

The following are a summary of the results from the different financing methods including a zero increase in energy cost escalation and an increase of 3.75% (as estimated by the DOE):

As one can see from the table above, the annual savings from avoided energy cost will be approximately $138,248.  In each financing option, there is a simple payback of 5.4 years.  It is also obvious that the best financing will be the internal financing and is the recommended method for MMA’s purpose.

Permits Required

The following are permits that would be required for the complete construction and operation of the wind turbine.  (See Appendix for all forms).

• • Massachusetts Environmental Policy Act (MEPA) - Environmental Notification Form (ENF): This form must be filed if more than 25 acres of land will be altered or other thresholds met.  Although we more-than-likely are not required to file this form, a thorough review of this form is recommended.
• • MEPA – Newspaper Notification Form:  This will not be needed unless the MEPA-ENF form is filed.
• • Town of Bourne:  Along with the forms under this and the following section (DEP-NOI), there will be a necessary notification with neighbors within 100’ of the property line, a posting in the local paper, and a public hearing.
• o Pre-Filing Site Inspection:  This is required by the state for the DEP form.  It does not apply to the Town of Bourne’s policies.
• o Request for Determination: The same as above, this form will determine which section under the DEP regulations the request will be applied to.
• • Department of Environmental Protection – Notice of Intent.  This form needs to be filed with the Town of Bourne Conservation Commission who will act as the regulatory body for the State of Massachusetts.  Even though MMA is a state entity, this will still have to be filed.  The Town of Bourne will determine the action to be taken based solely on State and Federal regulations.  The town of Bourne cannot impose local laws.
• • FAA Notice of Proposed Construction or Alteration – Form 7460-1: This form is submitted for all structures at least 200’ above ground level, or within a few miles of an airport (the distance depending on the type of airport).  All wind turbines with tip-heights over 200’ will need lighting.  We will need to file this form due to MMA’s proximity to Otis Air Force Base and the height of the turbine (to blade tip).
• • ISO-NE (Independent System Operator- New England) – Application for NEPOOL Interconnect System Impact Study Agreement:  This impact study is required because it ensures the safe and reliable incorporation of the proposed new generation into the New England power system.
• • Although not a permit, by contract, NStar requires 6 months prior notification before the generator can be put on-line.  More than likely, this will be the single longest component to getting the generator operational.

Community Acceptance

This is probably the single most important component to this project.  Not because MMA needs the support of the Buzzards Bay community to build this wind turbine but to allow the public time to fully understand the positive impact that this turbine will have on their community, their lives and the lives of generations to come.  This is more than “selling” the product.  It is a way of enjoying the standard comforts of life without further damaging the environment and things living.  Of course, this is easier said than done.  I have talked with Mark Rodgers, Communications Director for Cape Wind Associates and Malcolm Brown of Hull’s Municipal Light Commission.  They both agree on actions that need to be taken in order to properly communicate and address the wind turbine issues.  Some things that can be done are:

• • Talk the truth and listen to what the opponents have to say.
• o Rebut misconceptions with proven and documented facts.
• • Hold a public informational forum
• o Solicit interested people to come to the forum.  Often the people “for” a project are complacent and do not feel a need to attend these forums.  It is important that the make-up of people at this meeting is not overwhelmingly against the project.  I am not suggesting that the meeting should be “stacked” but that everyone is made aware of the fact that attendance by all parties is very important!
• • Form a “feasibility committee”
• o Invite the loudest opponent and one other to be a member of this committee.
• o Do not make a point of changing their minds.  Make sure these people are involved in all aspects of the feasibility and siting details and ensure that documented information are visible in all associated offices and meeting places.  Talk “off-the-cuff” of public misconceptions and the true facts (ex. this one turbine will reduce GHG emissions by approximately 11,864 tons over 25 years).  Make sure these people become well-informed people.
• • Have the committee visit the Hull I wind turbine.  Try for a moderately breezy day so that all can see the actual operation of the turbine and how quiet it really is!
• • Hold a second informational public meeting with the committee’s finding and the plan going forward.
• • Plan for a second bus trip open to the public (first-come first-serve basis) to the Hull I wind turbine.
• • Use the media whenever possible to promote the wind turbine and its benefits.

One of the most important components to this is getting the opponent to join a “committee.”  As a member of this “team,” the two opponents will get a feeling of empowerment and a part of the decision-making.  This is crucially important along with making the documented facts available.

Visualization

Another common issue that people have with wind turbines is their size and perceived “ugliness.”  Wind turbines have in fact grown is size (both in height and blade diameter) but their style has become more visual appealing with sleek blades and a single tubular tower to support the wind turbine.  Today’s turbine does not need stay wires or lattice towers.  There have been claims that the turbines devaluate residences near the site.  However, in Hull, MA. The property values near the turbine have stay exactly in line with real estate price increases of like houses in their areas of the town (out of the turbine locale).7  The fact is, wind turbines have become tourist attractions in both Hull, MA and the Horns, Netherlands.  It is helpful if computer generated images are used to show the public what the wind generator would look like in its locale.  

Aviary Issues

7 Information from Malcolm Brown during an interview, 8/2004.

Bird kills have caused serious concern at only one location in the U.S.: Altamont Pass in California.  This is one of the first areas in the country to see significant wind development.  Over the past decade, the wind community has learned a great deal about siting wind plants in ways that avoid locations that might pose problems for birds.  Modern wind installations are simply not raising avian concerns.  One to two bird kills per turbine per year is at the high end of the range observed in U.S. wind installations.  The majority of deaths are common species.  Compared to bird deaths resulting from other manmade structures, highway traffic, and housecats, bird kills by wind plants are numerically insignificant and are not expected to impact bird populations.  Of course, deaths of endangered species are of greater concern, but again the only location with a suggestion of this problem is Altamont.  And even in that case, experts disagree on the severity of the problem.  

When discussing this issue with Malcolm Brown of the Hull Municipal Light Department, I was told that their wind turbine has killed “not even a single seagull.”

Blair G. Swezey and Yih-huei Wan

National Renewable Energy Laboratory

Figure 1: NREL Energy Cost

Figure 2: MMA Utility Expense

Correlation=0.851616111

Figure 3: Wind Data Linear Regression

Figure 4: MMA Adjusted wind

Figure 5: MMA Monthly Average Wind Speed

Figure 6: Electric Power Usage ’99-‘03

Figure 7: MMA Campus (Aerial)

Figure 8: MMA Campus Wind Turbine Siting

,    

Figure 9: Energy Cost Projection

History: Energy Information Administration, Annual Energy Review 2002, DOE/EIA-0384(2002) (Washington, DC, October 2003).  

Figure 10: Average Energy Price Projection Graph

Figure 11: Turbine & Site Info

Figure 12: Turbine Data & Power Curve

Figure 13: Wind Turbine Hard and Soft Costs

Figure 14: Global Warming (GHG) Analysis

Figure 15: Internal Finance

Figure 16: Internal Finance Cash Flow Graph

Figure 17: Internal Finance-Energy Cost Increase

Figure 18: Internal Finance-Cash Flow: Energy Cost Increase

Figure 19: Internal Finance: Sensitivity Analysis

Figure 20: Internal Finance- Energy Cost increase: Sensitivity Analysis

Figure 21: IOU Corp. Finance

Figure 22: IOU Corp. Finance - Cash Flow Graph

Figure 23: IOU Corp. Finance - Energy Cost Increase

Figure 24: IOU Corp. Finance - Energy Cost Increase - Cash Flow Graph

Figure 25: IOU Corp. Finance - Sensitivity Analysis

Figure 26: IOU Corp. Finance - Energy Cost Increase - Sensitivity Analysis

Figure 27: Private - Project Finance

Figure 28: Private - Project Finance - Cash Flow Graph

Figure 29: Private -Project Finance - Energy Cost Increase

Figure 30: Private - Project Finance - Energy Cost Increase - Cash Flow Graph

Figure 31: Private - Project Finance - Sensitivity Analysis

Figure 32: Private - Project Finance - Energy Cost Increase - Sensitivity Analysis

Figure 33: Risk Analysis-Internal Finance

Figure 34: Risk Analysis-IOU Corp. Finance

Figure 35: Risk Analysis-Private Project Finance

Figure 36: MMA One-Line Power Diagram

Figure 37: IDEF A-0

Figure 38: IDEF A0

Figure 39: IDEF A1

Figure 40: IDEF A3

APPENDIX

Form 1: FAA

    Form 2: NEPOOL Interconnect

Application for

NEPOOL Interconnection System Impact Study Agreement

(where Through-or-Out service is not being requested)

PROJECT INFORMATION

Proposed Project Name:  

Apprx Size Type        

& Loc. 

Expected Service Date:  

CUSTOMER INFORMATION 

Company Name:  

Company Address: PO Box No.:  

 Street Address:  

 City, State  ZIP:  

Company Representative - Name:  

 Title:  

Phone:  FAX:   email:   

By signature below, the applicant agrees that the information contained in this application may be posted on the ISO Web Site under "Listing of Interconnections in Progress" and OASIS . 

Authorized Signature:   Date:  

The following items must be provided as part of a new and completed application:

• (a) Administration fee per Study Application Fee Schedule posted on the ISO New England Web site ;  
• (b) Site Control Affidavit; 
• (c) and Project Mapping (2 copies) with the project location identified of the quality produced by the U.S. Geological Survey. 

Failure to provide the above items and all the information required on the application could result in delaying the processing of your application. For a more detailed explanation of the application process, please view the  "Procedure for The Establishment of NEPOOL Interconnection " at ISO New England web site @ wwwiso-ne.com.   

FAX or Mail To: ISO New England, Inc. 1 Sullivan Road

 FAX: 413 - 540-4203 Holyoke, MA  01040-2841

 Attention: Kevin Mankouski                                                         Phone:413 535-4133

ISO New England, Inc. Use  

                   Site Cntrl Deficient               Date Received _______               Admin Fee Deficient    Date Received  ________                               

                   Project Mapping Deficient   Date Received ________      

                    Application#:                                              Recv'd By :_________          Date deemed Complete  :___________                                             

Form 3: Massachusetts Environment Policy Act (MEPA)

MEPA Newspaper Notice

References

American Wind Industry Association, http://www.awea.org/default.htm, 2004

Blair G. Swezey and Yih-huei Wan, "The True Cost of Renewables: An Analytic Response to the Coal Industry's Attack on Renewable Energy", National Renewable Energy Laboratory

Cape Wind, www.capewind.org

Danish Wind Industry Association, http://www.windpower.org, 2004

U.S. Department of Energy, http://www.eia.doe.gov/oiaf/aeo/index.html, 2004

Malcolm Brown Hull Municipal Light Department, interview 8/2004.

Health Link, "Wind Pros and Cons, Myths and Misconceptions,” http://www.healthlink.org, 2004

Hull Municipal Light Department, http://www.hullwind.net, 2004

ISO New England, http://www.iso-ne.com/, 2004

Massachusetts Department of Environmental Protection, 310 CMR 7.00, Air Pollution Control

Massachusetts Technology Collaborative, http://www.mtpc.org, 2004

Mike Joyce, VP, Mass. Maritime Academy, 9/2004

Minister of Natural Resources-Canada, "RETscreen,” http://www.retscreen.net/, 2004

NOAA, National Data Buoy Center, http://www.ndbc.noaa.gov/station_page.php?station=BUZM3, 2004

Nstar, http://www.nstaronline.com/, 2004

Renewable Energy Research Laboratories, http://www.ceere.org/rerl, 2004

Sally Wright, Renewable Energy Research Laboratories, PE, May 2004

USA Today, http://www.usatoday.com/money/industries/energy/2004-09-30-natgas_x.htm, 10/13/04

Windustry- Wind Farmers Network, http://www.windustry.com, 2004

Prologue

First, I would like to express my opinion in the value of this course of study.  I firmly believe that I have personally gained an incredible amount of knowledge and a new insight to the facilities management profession.  I would also add a huge Bravo Zulu to the entire faculty, staff and administration for the tremendous job they did in running this program for the first time!

In writing this report, I found that each course became very valuable, some more directly involved in this project than others did.  The following will explain this is more detail:

• • Organizational Behavior (OB): This course was extremely valuable in assessing how to deal with people and the NIMBY issue regarding putting up the wind turbine close to private residence.  When talking to town officials in Hull, the way they tackled this issue was almost right out of the OB textbook.  This is also how I adopted it for my project.
• • Managing Information Technology Resources (IT):  Throughout the entire courses of study (including this project) I found the use of Excel (Pivot Charts, Filtering…) extremely valuable.  I also used Visio quite often for its flow chart, and time line features.  Although I have not used Access for the courses of study, I have used it in other applications at work.
• • Financial Analysis for Facilities Managers (FA):  This was one of the classes I enjoyed the most.  This is probably more contributed to my own interested and understanding (or lack there of) of the financial world.  Before this class, I really had no understanding of the financial world (even though I thought I had).  This course helped me to better understand how to read a financial statement and understand companies’ operation.  This became a very important component to this project when looking at the different financial options and how each option affected the financial outcome and viability of the project.
• • Legal and Regulatory Environment for Facility Managers:  Although I did not obviously use this within my project, it was very valuable in allowing me to understand the law and rights of neighbors adjacent to my project.  Since it would be extremely difficult for any of them to legally fight or prove this wind turbine an environmental hazard (since the opposite is true), I did not include anything in this report.  However, there are two issues that were considered (one briefly mentioned in the report) due to topics covered in this course.  The first is the noise issue (cannot exceed 10 db) and the second was the shading from the turbine blade (shadow flicker).  The second was not mentioned due to the direction the sun travels from the proposed site and the wind turbine’s distance from the residents.
• • Applied Probability and Statistics:  Although I did not take this course here, this subject was used in different courses (Operations Management and Project Management) and this project.  Its largest component within this project was the comparative analysis of the wind data downloaded from the Buzzards Bay Buoy and the wind data taken from the anemometer on the Harrington Building roof.  A linear regression was done on this data to find it correlation.  Once the correlation was found to be strong (.85), I was able to go forward and apply the wind data to a program to model a wind turbine’s performance here at MMA.
• • Operations Management (OM):  Although this course dealt mostly with manufacturing, one of the greatest concepts drilled into us by the teacher was that to be successful in OM you need change your process so that it is done quicker, better and at a lower cost.  For this project, I applied these concepts to my want to save costs in the operations of the facilities.  In other words, how can a facilities manager lower the operating cost of the facilities while providing better service, reducing cost and do both of these things quickly!  The installation of a wind turbine generator became an obvious option and was substantiated by its cost savings and quick financial payback.
• • Business Strategies (BS): This course took OM to another level of understanding a business and its operation.  This course was applied to my project by my looking at MMA as a business and understanding the impact of the utility costs to the operation of this institution and at the same time looking to see if there were other costs that could be reduced or another services added to increase revenues.  Again, tying this back to OM, a fast solution is needed.  While there are other things that could be done to increase revenues and decrease costs, this project reflects a quick and reasonable option for cost savings.  Another concept common to both courses was the use of the SWOT analysis.  This was used to select the type of renewable power generating equipment.
• • Human Resource Management (HR):  This is another course that was not used directly in my project but would definitely have a huge part of this project when contracted and implemented.  This course was great in expanding my knowledge in the laws and regulations necessary in every aspect of hiring, employing, maintaining, and terminating employees and contractors.  When a RFP goes out to install this turbine, the bids received (from contacting companies) would need to be reviewed not only for cost and performance but also for the way they conduct business in relation to their hiring practices and how their employees are managed.
• • Facilities Project Management (PM):  This course as a finale became very valuable in understanding project planning, monitoring and controlling.  From this course, I was able to develop an IDEF0 project model, Work Breakdown Structure, Responsibility Chart, Gannt Chart and other important project management planning components necessary to run and understand the project manager’s role in overseeing a project.
• • Capstone Projects:  This aspect of the course was probably the most difficult and also the most time consuming.  The benefits from this included learning how to coordinate and complete projects using current technology.  I believe we all found that there are in fact advantages and disadvantages to each different mode of communication.  We found that email was an ok mode for relaying non-urgent communication.  If we needed to really get our communication straight or have a “group think” the best distance communication was through conference calling.  And of course, the overall best, was our meetings every Friday before class.  Aside from the communication, this was very valuable for the group aspect.  Having to work in groups and all of the dynamics that happen within the group was extremely important and “real life!”