The
Springwater Preservation Committee
Springwater Preservation Committee |
|
Home | Meetings | News | Pictures | Wind Power | Stories | Links | About Us | Contact Us |
|
|
|
Economics of Wind – (Basic) By Bob Radell, Springwater, NY The 21st century equivalent of the 1800's gold rush is investing in an industrial wind factory. Here are the basics of how it works.
Assume a typical 1.5 megawatt wind turbine (one tower) installed at an estimated cost of $1.5 million, which operates at an average of 30% of capacity. Assume you invest $150,000 (10% of cost) and finance the balance at 6% for 20 years.
This turbine will produce 3,942,000 kwh per year.
The income produced by this tower is:
1. Federal Production Tax Credit $74,900 * 1.9 cents/kwh 2. State Production Tax Credit 88,700 2.25 cents/kwh (paid by NYSERDA) 3. Sale of Power to Grid 118,300 Rate is about 3 cents/kwh 4. State and Federal Corporate Tax Savings 130,000 __________ TOTAL INCOME $411,900
EXPENSES
1. Pilot Payment $5,000 2. Land Lease Payment 6,000 3. Maintenance (Share for 1 tower) 3,000 4. Debt Service (1,350,000 at 6% for 20 years) 116,100 5. Insurance 1,000 ___________ TOTAL EXPENSE $131,100
Income for Year 1 $411,900 Expenses for Year 1 131,100 ___________ PROFIT $280,800
That’s a Return on Investment of 187%. If equity investment were increased to 20% or $250,000, debt service would be reduced slightly and return on investment would still be in excess of 112%.
Note that Debt Service includes Interest and Principle. Interest and other expenses are also tax deductible, which would actually increase profit.
* Rounded to nearest hundred.
|