Hello, my name is Tom Cronin, and in this session on the Economics of wind energy we're going to be taking a look at the cost of wind farms. That is, what it might cost to actually build and operate a wind farm. So the learning objectives for this session are that you should be able to name the four phases of a typical wind farm timeline. We're going to go through that in a minute and we're going to divide them up into these four phases. Then you should be able to list five of the major components of the cost of the wind farm and we're going to take a look at those too and break them down a little bit. And then, lastly, we're also going to describe the economic profile of a wind farm project, that is a little bit different from what you might expect from a conventional generating plant. So here, let's look at the timeline of a wind farm. I'll split them up into these four phases, there's the development phase, an implementation phase, an operation phase, and at last, here, a decommissioning phase. The development phase is really all about finding the site and finding the right site. You need to take a close look at the characteristics of the site to make sure that it is suitable for your project. Not least of course, the wind results. You'll need to be doing a little bit of the wind farm design, and the reason why this little arrow is here is that this is a bit of a back and forth iterative process until you get to the final design. Permissions and licenses you will very much need to obtain the correct permits and licenses, and this can take quite some time. And so, it's interesting to notice down here on the bottom, the timeline here. This phase here can take five maybe up to ten years. And here, you're using your own money, and you're really not sure, until you get the final permission, as to whether the wind farm is going to go ahead or not. This presents a bit of an uncertainty for the financing here. So you have to work hard to make sure that the people who are investing in your wind farm know what the uncertainties are. Then finally, I have the public engagement. This is a process that needs to continue throughout this development phase and indeed throughout the lifetime of the project. And it's best to try and involve the public as early as you can in order to understand what their point of view is. The second phase, then, is the implementation phase. This is where we need to buy the equipment and we need to actually construct the wind farm. As you might imagine, this is where most of the capital of the whole project is used. This is the capital intensive part. It's relatively short, when well-planned, the construction of a wind farm can go very quickly. The third phase then is the operational phase, and this, hopefully, is the longest phase of your wind farm project. These days, we're designing wind farms for between 20 and 25 years. The daily operation of the wind farm is that, you need to make sure that it is operating as intended, and in order to be able to do that there needs to be regular maintenance of both the wind turbines themselves and all the other ancillary equipment that there is in the wind farm too. And here, we actually have a connection with the final phase, which is the decommissioning phase, because the point at which we decommission will actually very much depend on how well the turbines have been maintained throughout their operational life. And when we come to it, we actually have two choices. We can either remove the whole lot of the wind turbines and the foundations and the substation and return the ground to its original use. Or what is more common these days is to actually repower. This means you still take the old turbines down, but you replace them with much newer and more efficient turbines. And then we have yet another wind farm project that carries on. So let's look at the individual components of the costs that go into making and operating the wind farm. Firstly in this development phase, we're going to have to pay out for actually making assessments of the sites. We also need to do a wind resource campaign. And we're going to have to get these permissions and licenses, and we are most probably going to need some expert advice from outside. It very much depends on the size of your company, whether you can do this in-house or whether you have to hire in. We need to do designs and we need to do the legal framework. And the last here, I've put down here, which is a very important part of any of the development phase of a wind farm, and that is the environmental study. Then we move on to the implementation and operation itself. The implementation is where we actually construct the wind farm and we need to buy and put in the turbines, we need to make the foundations, substations, and cabling, and at last, of course, we need to actually make the grid connection in order to be able to sell our electricity on into the grid. When that's done we enter the operational phase. And the day-to-day operation will need some management. You will need to pay some staff there. The maintenance, as I talked about earlier, whether you do that in-house as your own company or whether you contract that in, that very much depends on what sort of a developer or owner that you are. And also you will need some administrative costs and maybe some land rental fees and that sort of thing too. Finally, we come to the decommissioning phase. And this is really where you either decide you're going to repower, in which case you come to a new project, Or you take everything away and you return the site to its original purpose. How much might these phases cost? Let's just take a look at the development and implementation. For a 50 Megawatt onshore wind farm, we're looking at somewhere around about 65 million Euros. These are, of course, very approximate figures. For the operation, for a 2 Megawatt machine, which is a very common size these days, we're looking at about 40,000 Euro per machine, per year. And finally, for the decommissioning. We might be looking at around about 3 million Euro for the whole wind farm. Finally, then, we should just take a look at the profile of a wind farm, the economic profile, which is a little bit different from conventional generating stations. And I've got here a quote from the Danish Energy Agency which says that: "Wind turbines are expensive generating installation investments." Hence the production costs are highly dependent on the installation costs and their financing. And this brings us to another component of the cost. And that is the cost of capital. This is what it will cost you to borrow money to be able to build and operate the wind farm. It's unlikely that most companies these days have that sort of money what's required in their own pockets, so you will need to go out and borrow the money. And that's why we have this cost in here. So in summary, we've looked at the phases of a wind farm: the timeline, the development, construction, operation, and decommissioning phases. We've looked at some of the cost components of the wind farm. How much it might cost for planning and construction. The maintenance of the wind farm and finally the decommissioning and, of course, the capital cost of the wind farm. And then we now know that wind energy projects are very capital intensive compared to conventional generating plants.