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Portfolio Effect of Diversified Renewable Energy SourcesPortfolio Effect of Diversified Renewable Energy Sources

Gaining benefits from the Portfolio Effect of diversified Gaining benefits from the Portfolio Effect of diversified Renewable Energy Sources through a detailed uncertainty analysisRenewable Energy Sources through a detailed uncertainty analysis

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Portfolio Effect of Diversified Renewable Energy SourcesPortfolio Effect of Diversified Renewable Energy Sources

Gaining benefits from the Portfolio Effect of diversified Gaining benefits from the Portfolio Effect of diversified Renewable Energy Sources through a detailed uncertainty analysisRenewable Energy Sources through a detailed uncertainty analysis

European Wind Energy Conference 2007European Wind Energy Conference 2007Milano 9th May 2007Milano 9th May 2007

Dr. Patric KleineidamDr. Patric Kleineidam

Matthias HermannMatthias Hermann

Matthias HenkeMatthias Henke

Lahmeyer International - GermanyLahmeyer International - Germany

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Lahmeyer International Consulting Services

Foundation/Head Office: Since 1966 / Bad Vilbel - Germany

Nominal Capital: 7,7 million Euro

Objectives: Technical & Economic planning, consulting services

Fields of Activities: Energy, Hydropower-Water Resources and Transportation

Projects: 140 countries:Europe, Asia, Africa, Middle and Far East,Latin America

Turnover 2005: LI 83 million Euro; LI group 101 million Euro

Staff 2005: LI 567; LI group: 863

Quality Management: According to DIN EN ISO 9001

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Operation andMaintenance

Operation andMaintenanceConstructionConstructionDevelopmentDevelopment

Lahmeyer International Consulting Services

DesignDesign

... transferring knowledge... transferring knowledgefrom the most developed wind energy marketfrom the most developed wind energy market

to the clientto the client

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Projects in 140 Countries – World-wideProjects in 140 Countries – World-wide

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Consultants are Wind Energy Pioneers,Preparing the Market for Investors and Manufactureres

Financing :Financing : International development organisations, like the AfDB,

KfW, GTZ, JBIC …

Clients :Clients : Local governmental organisations

Services :Services : Local capacity building and feasibility studies

Motivation :Motivation : Becoming independent of petrol markets

Examples :Examples : Zafarana (Egypt), Ethiopia, Djibouti

... In Developing Markets

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Consultants are Wind Energy Pioneers,Preparing the Market for Investors and Manufactureres

Financing :Financing : Private Investment is backed by incentives

Clients :Clients : Local emerging developers

Services :Services : Transfer of Know how to local developers, feasibility

studies, negotiations with turbine suppliers, construction supervision

Examples:Examples: Gangwon 98 MW,

biggest private financed wind farm in Asia

... Emerging Markets: < 500 MW

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Consultants are Wind Energy Pioneers,Preparing the Market for Investors and Manufactureres

Clients :Clients : Banks and Investors Banks and Investors

Services :Services : Bringing credibility to projects in Bringing credibility to projects in

Due DiligencesDue Diligences

Construction MonitoringConstruction Monitoring

O & M – MonitoringO & M – Monitoring

Portfolio effectsPortfolio effects

... Established Markets: > 500 MW

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Portfolio Analysis: Introduction

BackgroundBackground Combination of investment assets (e.g. wind farms, PV etc.) Different Uncertainties

Motivation (Why?)Motivation (Why?) Assessment of combined uncertainty

Methodology (How?)Methodology (How?) Yield Energy

Deviation

UncertaintySingle

DeviationSingle

DeviationCorrelation

betweenA and B

CorrelationbetweenA and B

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Portfolio Analysis:Wind Ressource Assessments – Uncertainties

Energy Prediction, dependent on the qualityEnergy Prediction, dependent on the qualityof the wind model, categories of uncertainties:of the wind model, categories of uncertainties:

Meteorological DataMeteorological Data Terrain DescriptionTerrain Description Flow modelingFlow modeling Power CurvesPower Curves Reference TurbinesReference Turbines Long Term CorrelationLong Term Correlation

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Portfolio Analysis: Influence of Correlation

40

50

60

70

80

90

100

110

0,10 0,11 0,12 0,13 0,14 0,15 0,16 0,17 0,18

uncertainty [-]

Ene

rgy

Yie

ld [

MW

h/a]

r = 0,5

r = 0,55

r = 0,6

r = 0,65

r = 0,7

r = 0,75

r = 0,8

Increasingindependency

r = 0.5

r = 0.8

Rb = 0.17

Reduced uncertaintyfor combinationof a and b

Rb = 0.14

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40

50

60

70

80

90

100

110

0,10 0,11 0,12 0,13 0,14 0,15 0,16 0,17 0,18

uncertainty [-]

Ene

rgy

Yie

ld [

MW

h/a]

r = 0,5

r = 0,55

r = 0,6

r = 0,65

r = 0,7

r = 0,75

r = 0,8

Any combination leadsAny combination leadsto an expected energy yieldto an expected energy yield

and a new uncertaintyand a new uncertainty(Portfolio effect)(Portfolio effect)

Portfolio Analysis: Influence of Correlation

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Example:

.

Totel Power:Energy Prediction:Total Uncertainty:

40 MW100 GWh/a

15% vs. 12%

60

70

80

90

100

110

120

130

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

15%

12%

Uncertainty

Probability of Exceedance

Ene

rgy

Yie

ld [G

Wh/

a]

81 GWh

85 GWh

92 GWh

90 GWh

P75 P90

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Exemplary Experiences of LIin Wind Portfolio Assessment

Capacity CountryCapacity Country

400 MW Germany400 MW Germany

500 MW Portugal500 MW Portugal

120 MW Greece120 MW Greece

350 MW Germany350 MW Germany

Portfolio Effect on P90-Energy Level: between 3% and 8%Portfolio Effect on P90-Energy Level: between 3% and 8%higher energy yield, depending on characteristics of higher energy yield, depending on characteristics of portfolioportfolio

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Diversified Portfolio Analysis

Adaptation of MethodologyAdaptation of Methodology Uncertainty Analysis per entityUncertainty Analysis per entity

and technologyand technology

TW= 8.19 €ct/kWh

Rated power: 2 MW TurbineStart of operation: 2007Full load hours: 2,000

SmallHydro

low Correlation

TPV= 49.21 €ct/kWh

TSH= 6.65 €ct/kWh

low Correlation

Rated power: 2 MW TurbineStart of operation: 2007

Rated power: 10 kWStart of operation: 2007Roof top mounted

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Example: Portfolio Effects for Diversified Assets

Portfolio 1: Adding Hydro to WindPortfolio 1: Adding Hydro to Wind Portfolio 2: Adding PV to WindPortfolio 2: Adding PV to Wind Range of expected influences on uncertaintyRange of expected influences on uncertainty

Rel

ativ

e E

nerg

y Y

ield

Relative Uncertainty

Yield Energy

Rel

ativ

e C

ash

Yie

ld

Relative Uncertainty

Yield Cash

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Including M&R Cost Effectsin Uncertainty Analysis

Motivation: M&R costs are uncertainMotivation: M&R costs are uncertain Methodology:Methodology:

Net Income Net Income

Results: Influences on uncertainties of Net IncomeResults: Influences on uncertainties of Net Income

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LI Maintenance and Repair Cost ModelOnshore Wind Energy Turbines

Influence Factors:Influence Factors: Turbine TypeTurbine Type Number of TurbinesNumber of Turbines Capacity per TurbineCapacity per Turbine Energy Yield FarmEnergy Yield Farm Years of OperationYears of Operation Rotor DiameterRotor Diameter CMS CMS Turbulence IntensityTurbulence Intensity Farm EfficiencyFarm Efficiency Substation Substation Internal RoadsInternal Roads CountryCountry Farm Specifics (e.g. from Site Visit)Farm Specifics (e.g. from Site Visit)

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Example: Maintenance and Repair Costsfor a 40 MW Wind Farm, 2500 full-load hours

.

0

2

4

6

8

10

12

14

16

2005 2010 2015 2020 2025 2030

Year

[€/M

Wh

/a]

M&R Probability 50%

M&R Probability 75%

M&R Probability 90%

2007 Euros

Technical lifetime: 20 years

WarrantyPeriode.g 2 a

2007 Euros

About 40%-70% of initial investments needed for M&R during lifetime (20 years).About 40%-70% of initial investments needed for M&R during lifetime (20 years).

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Example: Maintenance and Repair Costsfor a 40 MW Wind Farm

.

10%

11%

12%

13%

14%

15%

16%

17%

18%

0 5 10 15 20

Year

Net

In

com

e U

nce

rtai

nty

[-]

Assuming no uncertainty for M&R costs

Dependency of M&R costs and

Income, here:0.4 ≤ r ≤ 0.6

Dependency of M&R costs and

Income, here:0.4 ≤ r ≤ 0.6

● Further Influences based on a portfolio● To be included in Cash Flow Model

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Conclusions Diversified Portfolio Analysis

Wind farm portfolios assessed on energy level,Wind farm portfolios assessed on energy level,benefit possible on P90-levelbenefit possible on P90-level

Detailed uncertainty and dependency analysis requiredDetailed uncertainty and dependency analysis required

For diversified portfolio analysis shift to cash-level:For diversified portfolio analysis shift to cash-level:Strong influence of Tariff on Cash Income uncertainty ofStrong influence of Tariff on Cash Income uncertainty ofa diversified portfolioa diversified portfolio

On the cash level including of M&R costs is possibleOn the cash level including of M&R costs is possibleUncertainty level can change during lifetime Uncertainty level can change during lifetime

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Portfolio Effect of Diversified Renewable Energy SourcesPortfolio Effect of Diversified Renewable Energy Sources

Thank you very much for your AttentionThank you very much for your Attention

www.lahmeyer.dewww.lahmeyer.de

Visit us at booth A017Visit us at booth A017