Wind and Solar Renewable Energy

Wind and Solar Renewable Energy

Sept , 2011Sept , 2011David WrightDavid WrightDuke EnergyDuke Energy

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What We Will Cover Basics of Utility Electricity History of Wind Energy Science of Wind Energy Types of Wind Turbines Wind Farm Construction Renewable Wind Operations Other Types of Renewable EnergyoSolar, Biomass, Hydroelectric & Geothermal

Renewable Energy - Property Valuation Issues

The ‘Drivers’ of an AC GeneratorSteamWaterHot GasWind

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The Grid Two Types, Transmission and Distribution

Transmission System Operates at ‘higher’ voltages Covers larger geographic areas Crosses state lines Owned and operated by various entities, Utilities, Federal Government, etc.

Distribution System Operates at ‘lower’ voltages Covers smaller geographic areas Brings power ‘to the people’ Owned and operated by your local utility, CLF&P

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The Grid

http://www.oncor.com/images/content/grid.jpg

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History of Wind Energy, NASA NASA’s wind turbine program was a partnership between NASA, DOE, and NSF Began in 1973 and continued on until around 1988 Worked with the Bureau of Reclamation on the WTS-4 at Medicine Bow, WY

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NASA Turbine Program

WTS-4 4MW Hamilton StandardMod 1

Mod 5b

Mod 0a

Mod 2

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History of Wind Energy, California Wind Rush California tax incentives and improvements in technology led to a boom in

construction starting in the early 1980’s

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History of Wind Energy, Modern Wind Turbines 3 blade, upwind, HAWT, of massive proportions. Multi MW capacity Constructed both on land, and offshore

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Science - Wind Shear

Speed shear (left) and directional shear (right). From the National Weather Service at http://www.srh.weather.gov/srh/jetstream/mesoscale/windshear.htm

The change in the wind’s speed, or direction, due to the effects of the earth’s surface

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Science - Roughness Classes 0.0 = Water Surface 0.5 = Smooth surface, concrete runway, mowed grass 1.0 = Open agricultural areas, very scattered buildings, softly rounded hills 1.5 = Agricultural land with some houses, some sheltering hedgerows, dist 1250 meters 2.0 = Agricultural land with some houses, more sheltering hedgerows, dist 500 meters 2.5 = Agricultural land with many houses, many sheltering hedgerows, dist 250 meters 3.0 = Villages, small towns, many hedgerows, forests, and rough or uneven terrain 3.5 = Large cities with tall buildings 4.0 = Very large cities with tall buildings and skyscrapers

Disruption of wind flow by upstream objects. From (Nelson 2004), his Figure 9.2

Science – Continued Growth The rotor swept area and height of

tower continues to increase

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Science – Continued Growth Increase in swept area and height of tower

improve production

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Science - Wind Density

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Types of Wind Turbines Many variations exist in the evolution of wind turbines for

producing electricity Number of blades, 1, 2, 3, 4 etc. Upwind vs. Downwind Vertical axis, (VAWT) vs. Horizontal axis, (HAWT) Synchronous vs. Asynchronous generators Tower height and materials Terrestrial and Off-shore

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1 Bladed Turbines Not very common Required a counterweight to operate Higher rotational speed Noise and visual intrusion

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2 Bladed Turbines Saves the cost and weight of one rotor blade Require higher rotational speed than 3 bladed The hub and rotor need to be hinged

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3 Bladed Turbines The most common design based on years of testing and research Gives good ‘balance’ between cost and energy output Upwind turbine design on tubular towers most prevalent

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Vertical Axis Wind Turbines Several designs; most commonly referred to as the Darrieus, Savonius,

and Giromill type The only commercially manufactured VAWT, was of the Darrieus design,

by a company called Flo Wind

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Wind Farm ConstructionWind Farm Construction

12 sites constructed to dateStandard design template

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How a Wind Turbine Works Most large modern wind turbines work in the same way They are 3 blade, upwind, HAWT, with an asynchronous generator The slow moving rotor is connected to a shaft, which is connected to the

gearbox, and then another shaft is connected to the generator The nacelle is rotated into the wind by an automatic yaw control The rotor speed is governed by ‘pitching’ the blades

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How a Wind Farm WorksMultiple wind turbines are connected electrically to the grid

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Wind Farm ConstructionWind Farm Construction

Environmental Concerns

Integration with wildlife

Integration with livestock

Effect on water and erosion

Effect on grass and trees

Leading Causes to Total Avian DeathsLeading Causes to Total Avian Deaths

24*Based on a review of literature and known mortality data conducted in December 2010 (January 2011-Tetra Tech, Inc.)

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Remote Operations “Eye in the sky” 24/7 coverage 2 employee / shift Approx. 600 turbines / employee 6 states, 12 sites Third party contracts Wind and solar ops New expanded center

Asset Management Land lease payment NERC compliance PPA contract management Parts management Financing activities

Renewable Wind OperationsRenewable Wind Operations

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Condition-based monitoring Industry leader in this area Allows for small uptower repairs One “find” pays for the system Estimated 2010 O&M expense reduction $1.4MM

Renewable Wind OperationsRenewable Wind Operations

Other Forms of Renewable Energy Renewable Energy is defined as “Energy which comes from natural

resources such as wind, sunlight, rain, tides, and geothermal heat, which are naturally replenished”.

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Other Forms of Renewable Energy Solar Energy

Solar Photovoltaic Solar Thermal

Biomass Energy Direct Combustion Anaerobic Digestion Biofuels

Hydroelectric Energy Run of River Tidal Wave

Geothermal Energy Direct-use geothermal Hydrothermal geo-energy

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Growth Moving Forward

In 2010, Duke Energy started with 3 solar energy plants.

By the end of 2012 Duke will own approximately 20 sites Nation Wide. As time goes on, Duke Energy plans to continue to grow and expand

their solar business investing more interest in clean renewable energy sources.

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1,900 MW

2012

Solar Energy

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Photovoltaic Panels

Ground Mount Fixed

Ground Mount with Tilt Drivers

Roof Top Panels

Solar Photovoltaic

Solar Photovoltaic

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Solar Photovoltaic Solar cell – A semiconductor device which generates direct current (DC)

electricity when exposed to sunlight. Also known as a photovoltaic cell. Each cell generates approximately 0.5 volt. Solar cells can be wired in series or in parallel to produce higher voltage and current. Made from crystalline silicon or thin film amorphous silicon

Solar Panel – A collection of solar cells, wired in series and/or in parallel, and enclosed in a protective housing.

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Power inverters These panels will create DC current that will be sent to

a power inverter to make ituseable, AC current.

Standardizing Panels continue to get smaller

while improving power output Duke Plans to wait for technology

to settle into it’s most efficient product before standardizing.

Solar Photovoltaic

Solar Photovoltaic

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Solar Thermal

Direct heating of air, water, solids,

Heat transfer for power generation

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2 Basic Designs

Biomass Energy Biomass – A renewable energy source from organic matter such as plants,

animal wastes, and algae Biomass gives off energy in one of several ways

Thermal Conversion – Combustion Chemical Conversion – ‘Black Liquor’ Biochemical Conversion – Fermentation and Anaerobic Digestion.

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Anaerobic Digestion Anaerobic digestion – A series of processes in which microorganisms

break down biodegradable material in the absence of oxygen, used for industrial or domestic purposes to manage waste and/or to release energy.

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Hydroelectric

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Run of River Hydroelectric Wave Energy Tidal Energy

Geothermal Energy

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2 Main uses of geothermal energy Direct-use geothermal – Primarily heat pumps, storage. For space heating. Hydrothermal geo-energy – Use of stored heat in magma to heat water/steam to

produce electricity.

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Valuation Issues - Government Incentives

• Production Tax Credits• This is a per KW production tax credit.• How should production tax credits be treated for property

tax valuation purposes?• Credits are available for 10 years and do have value to a

qualifying buyer, but the benefit is diminishes each year the facility is in service.

• Does this diminishing value warrant an economic obsolescence adjustment during the first ten years, or an accelerated depreciation?

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• Cash Grants• The grant is a one time receipt of cash and has no value

to a potential buyer other than a reduction in the cost of assets to arrive at FMV.

• The grant is recorded as a reduction in PP&E.• For property tax purposes this reduction in capital cost

has raised some questions.• WY & TX have agreed to the concept of reductions in

capital cost.

Valuation Issues - Government Incentives

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Valuation issues - Utilization Factors

• The utilization of a Wind or Solar facility is limited, and therefore we must take into account “Utilization Factors” when valuing these assets.

• Typically studies are performed prior to building a facility that will give expected utilization factors. We can then compare these to actual utilization in order to determine if an adjustment is warranted for any given year.

• Also, industry averages of utilization can be used to set a standard for comparison to actuals.

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Summary of Valuation Adjustments• Renewable Energy and Property Tax Valuation

• With new forms of renewable energy and government incentives we have to realized the importance of potential valuation adjustments.

• Renewable energy is not always economically viable, but necessary to meet carbon reduction requirements.

• It’s important to look at cost and income approaches, taking into account government incentives, in order to determine if there’s a case for economic obsolescence adjustments.

• And finally taking into account utilization factors.

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Thank You For Your Time

If you have any questions or concerns feel free to contact me. David Wright – 704-382-6125