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The Development and Improvement of Instructions USING REFURBISHED TURBINES TO PROVIDE AFFORDABLE WIND ENERGY: A CASE-STUDY IN AFRICA Dissertation in partial fulfilment of the requirements for the degree of MASTER OF SCIENCE WITH A MAJOR IN ENERGY TECHNOLOGY WITH FOCUS ON WIND POWER Uppsala University Department of Earth Sciences, Campus Gotland Ivan Montenegro Borbolla December 2015 USING REFURBISHED TURBINES TO PROVIDE AFFORDABLE WIND ENERGY: A CASE-STUDY IN AFRICA Dissertation in partial fulfilment of the requirements for the degree of MASTER OF SCIENCE WITH A MAJOR IN ENERGY TECHNOLOGY WITH FOCUS ON WIND POWER Uppsala University Department of Earth Sciences, Campus Gotland Approved by: Supervisor, Dr. Heracles Polatidis Examiner, Dr. Jen N. Sørensen December 2015 iii ABSTRACT When a wind farm is repowered, decommissioned turbines are discarded. This creates a stock of wind turbines that can be acquired for a fraction of the original cost, and refurbished. Taking advantage of the reduced price and the ruggedness of first generation wind turbines, new markets for sale of wind energy can be explored. This thesis first analyses the repowering background of Germany, Denmark, and other European countries, where transition to repowered or “second generation” wind farms is taking place. Then, a number of feasibility studies are reviewed to create a study framework, which will allow in-depth study of suitable energy markets. Using this framework, the suitability of four countries is analysed in detail: Djibouti, Madagascar, Mozambique, and Tanzania. Two countries are selected to perform a total of 6 site studies: Djibouti and Tanzania. Using WindPro 2.9, six model wind farms are simulated. A financial model is built, based on an NREL study, to analyse the economic viability of wind farms. Using the financial model, the levelized cost of energy is obtained, and used to evaluate the competitiveness of the model wind farms. A sensitivity study is carried out to identify the major influences on the LCOE. Using the cost data, the cost competitiveness of the proposed wind farms is discussed, including competitiveness in the target markets, and a cost comparison with commercial wind farms with new turbines is performed. Five out of six proposed wind farms are competitive in price in the target markets, and all achieve an average installation cost per kW of one third of conventional wind farms, while producing energy in the low range of commercial projects, and even lower for sites with excellent wind resources. iv ACKNOWLEDGEMENTS I would like to express my sincere gratitude towards Dr. Heracles Polatidis, whose support and good advice have contributed in great measure to the completion of this thesis. I would like to extend my deepest gratitude to AGUT EAS GmbH for hosting me during the completion of this thesis. In addition, I would like to thank Uppsala University and all its staff, for providing the opportunity to perform this master studies. It has been a truly unforgettable experience. Gratitude is more than deserved for my family, who has supported me in every possible way throughout this period. To them I owe everything. Finally, I would like to offer my deepest gratitude to my friends, with whom I share my past, present, and, or so I hope, future. With their moral support, warmth, and invigorating talks, they show me every day a piece of heaven in Earth. v NOMENCLATURE AEP Annual energy production AEPo Energy produced during the first year of operation AOE Annual Operating Expenses (OPEX) C&EC Construction and Erection costs C0 Initial investment cost (CAPEX) CAPEX Capital Expenditures CFC Construction finance costs COC Contingency costs Ct Future cash flow of the project at year t d Discount rate (a.k.a. Internal Rate of Return, IRR) ELC Electrical installations purchase costs EP Electricity sale price Inf Inflation rate IRR Internal Rate of Return kW Kilowatts kWh Kilowatt-hours LCOE Levelized Cost of Energy MW Megawatts MWh Megawatt-hours N Operational life of investment OPEX Operational Expenditures vi SDR System Degradation Rate SPP Small Power Producer TRC Transport costs WACC Weighted Average Cost of Capital WTC Wind turbines purchase costs vii Table of Contents 1 CHAPTER 1. INTRODUCTION 1 1.1 Brief Overview 1 1.2 Research question 2 1.3 Structure of the document 2 2 CHAPTER 2. LITERATURE REVIEW 4 2.1 Introduction 4 2.2 Repowering background in Europe 5 2.2.1 Repowering background in Germany 5 2.2.2 Repowering background in Denmark 6 2.2.3 Repowering background in Spain 7 2.2.4 Conclusions on the repowering background in Europe 8 2.3 Current cost of installing new wind farms 9 2.4 Structure of a feasibility study 10 2.5 Brief analysis of wind farm feasibility studies 12 2.5.1 Roger Williams University, 2009, “Wind Power Pre-Feasibility Study for the East Bay of Rhode Island, Technical Proposal” 12 2.5.2 Pinard and Maissan, 2008, “Ulukhaktok Wind Energy Pre-Feasibility Study” 14 2.5.3 Waewsak et al, 2009, “A Pre-Feasibility Study of a MW Wind Power Generation in Thailand” 16 2.5.4 AWEA, 2008, “Wind Energy Siting Handbook” 17 2.5.5 NREL, 2013, “Feasibility Study of Economics and Performance of Wind Turbine Generators at the Newport Indiana Chemical Depot Site” 18 2.6 Conclusions on the feasibility studies and guidelines review 20 viii 3 CHAPTER 3. METHODOLOGY 22 3.1 Introduction 22 3.2 Site selection 23 3.3 Site analysis: Wind energy production estimation 25 3.4 Site analysis: Financial model 25 3.4.1 Net Present Value (NPV) 25 3.4.2 Modified Internal Rate of Return (MIRR) 26 3.4.3 Levelized Cost of Energy 26 3.4.4 Future cash flow of the project at year t (Ct) 27 3.4.5 Initial investment cost (C0) 28 3.4.6 Discount rate (d) (also known as Internal Rate of Return) 29 3.4.7 Operational lifetime of the project (N) 29 4 CHAPTER 4. APPLICATION OF THE METHODOLOGY AND RESULTS 31 4.1 Introduction 31 4.2 Brief summary of screening results 31 4.2.1 Republic of Djibouti 32 4.2.2 United Republic of Tanzania 33 4.3 Site studies: Introduction 35 4.4 Djibouti 36 4.4.1 Summary of results 36 4.4.2 Site 1: Ghoubet 37 4.4.3 Site 2: Badawein 39 4.4.4 Site 3: Gediah Alleh 41 4.5 Tanzania 43 4.5.1 Summary of results 43 ix 4.5.2 Site 4: Ilula 44 4.5.3 Site 5: Mtera 46 4.5.4 Site 6: Sokoni 48 4.6 Sensitivity analysis 50 4.6.1 Sensitivity analysis for Djibouti 50 4.6.2 Sensitivity analysis for Tanzania’s sites 54 5 CHAPTER 5. DISCUSSION AND ANALYSIS 57 5.1 Djibouti’s electricity market. 57 5.2 Tanzania’s electricity market 59 5.3 Cost comparison of refurbished turbines and new turbines. 61 6 CHAPTER 6. CONCLUSIONS 65 6.1 Overview of the work performed and main results 65 6.2 Shortcomings of this work and future venues of study 67 6.2.1 Use of the average wind speed as the main indicator of wind resource of a site 67 6.2.2 Use of exceedance values 69 6.2.3 Optimization of wind turbine transport costs 69 7 REFERENCES 72 APPENDIX A: REPUBLIC OF DJIBOUTI 75 APPENDIX B: UNITED REPUBLIC OF TANZANIA 90 APPENDIX C: FINANCIAL MODELS 105 APPENDIX D: WINDPRO REPORTS 129 x LIST OF FIGURES Figure 1-1 Structure of the thesis 3 Figure 2-1 Wind Turbines in Operation in Denmark. Source: (“Register of wind turbines | Energistyrelsen,” 2015) 7 Figure 2-2 Installed wind power capacity in Spain. Source: (Colmenar-Santos et al., 2015) 8 Figure 3-1 Phases of the study 22 Figure 4-1 Sensitivity analysis of the LCOE for Gediah Alleh, Djibouti 50 Figure 4-2 LCOE as a function of the useful life of the wind farm in Gediah Alleh 51 Figure 4-3 LCOE as a function of the capacity factor of the wind farm in Gediah Alleh 52 Figure 4-4: LCOE as a function of the Capacity factor for Djibouti's sites 53 Figure 4-5 Sensitivity analysis of the LCOE for Illula, Tanzania 54 Figure 4-6 LCOE as a function of the useful life of the wind farm in Illula, Tanzania 55 Figure 4-7: LCOE as a function of the Capacity factor for Tanzania’s sites 56 Figure 5-1 LCOE vs Price of Electricity in Djibouti 58 Figure 5-2: LCOE vs Dry and Wet seasons FiT in Tanzania 59 Figure 5-3: Cost comparison between refurbished and new turbines 62 Figure 5-4: Cost of the proposed sites as percentage of the local installation costs of new wind farms in different regions 63 Figure 5-5 LCOE of the proposed sites compared with the reference values in different regions 64 Figure 6-1: Power Curve of the Vestas V47-660 69 Figure 6-2 Wind farm cost distribution, Mtera case, far inland in Tanzania 70 Figure 6-3 Wind farm cost distribution, Sokoni case, close to the destination port 70 Figure A-1 Map of Djibouti (In red outline) and surrounding area. Source: Google Maps, 2015 75 Figure A-2 Average annual wind speed at 80m a.g.l. in Djibouti. Source: (IRENA, 2015b) 77 Figure A-3 Topographical map of Djibouti 78 Figure A-4 Power interconnection lines with Ethiopia. In red: Existing line. In green, projected line. Source: (EUEI PDF, 2014) 79 Figure A-5 Transmission network in Djibouti. In red, projected expansion of the lines. In black, existing installations. Source: (EUEI PDF, 2014) 80 Figure A-6 Djibouti's road map.
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