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Offshore Wind Turbine T1, Paludans Flak I/S

PaludansT1.png
Fig. 1. The partnership Paludans Flak I/S owns wind
turbine T1 (framed, Bonus/Siemens 2.3 MW). Picture
by Sweco, who did the environmental assessment.



The first of ten offshore wind turbines south of Samso, counting from land, is entirely owned by Samso citizens. One share corresponds to 1/7765 of the cost of the whole wind turbine, but a partner can own several shares. The price of one share was 3~150 DKK (420 EUR) in 2002. The expected lifetime of the turbine is 20 years. According to the numbers in the sales material a small investor can earn up to 8.2% interest after tax.

Contents

Introduction


The partnership Paludans Flak I/S owns the first wind turbine (T1) from land in the wind park south of Samsø. The distance from land is 3.5 kilometres and the depth of the sea is 10 - 13 metres. When a wing tip is in the top position, it is 102 metres above sea level.

The tower of the wind turbine is mounted on a foundation, which is a monopile hammered into the sea bed. The monopile is a tube, 45 metres long, with 30 metres below the sea bed. A transition piece connects tower and foundation. The transition piece provides a landing for vessels as well as ice reinforcement, and it is constructed to make the tower absolutely vertical should the foundation be leaning a little bit.

The turbine starts to rotate at wind speed 3 metres per second. At 15 metres per second it reaches its rated electrical power, which is 2.3 megawatt. At higher wind speeds the power is the same, and at 25 metres per second the wind turbine stops rotating. This is the cut-out wind speed, where the security system will pitch the blades, turning them into the wind.

The nominal energy production of the wind turbine is 7765 megawatt-hours per year. The actual production can vary up or down depending on wind and failures, mechanical or electrical.

Ownership


The company Samso Havvind A/S (Samso Sea Wind Ltd) signed a contract with a turn-key development company to construct and commission the wind park. Samso Havvind A/S takes care of the operation and maintenance.

A wind turbine guild legally organized as a general partnership (da: interessentskab) owns wind turbine T1. All partners are fully liable for losses, an ownership model used in almost all wind turbine partnerships in Denmark (apart from partnerships, many turbines are owned by a single owner or by an electricity company). Consequently, every partner is liable with all personal savings, and creditors can decide which partner(s) they prefer to pursue. The guild is not allowed to have debts, and the wind turbine is insured.

A single share corresponds to an energy production of 1 megawatt-hour. There are thus 7765 shares in total.

The partnership distributes the income from selling electricity, after deduction of expenses, untaxed to the partners. Each partner pays tax on the surplus using personal tax rates.

Operation and Maintenance


Samso Havvind is responsible for the operation and maintenance of the whole wind park, but the cost is split between the turbines, so the guild pays its equal share. For example, if one turbine stops and a repair team has to go out with a boat to repair it, then the cost will be shared between all wind turbines according to an agreement.

The authorities require that the guild allocates savings to a reserve fund for decommissioning and scrapping of the construction at the end of its lifetime.

The total cost for the guild of operation, maintenance, and savings is a little over 600 000 DKK (80 000 EUR) per year. There are additional annual costs for the management and administration of the business.

Pre-Calculation Based on Sales Material


According to the sales material (Paludans Flak 2002) the total investment for the whole turbine is almost 25 million DKK (3.3 million EUR). The annual income depends on the selling price of the electricity. The first ten years the government guarantees a feed-in tariff at 0.43 DKK/kWh (0.057 EUR/kWh).

FigPaludansM0a.png
Fig. 2. Simple (without interest) balance. It is based
on the sales material (Paludans Flak 2002). It is an
optimistic scenario with an electricity selling price at
0.43 DKK/kWh (0.057 EUR/kWh) every year until
the end.
FigPaludansM0b.png
Fig. 3. Pessimistic scenario. The electricity selling price
is now 0.28 DKK/kWh (0.037 EUR/kWh) after year 10
(all other equal).


Figure 2 shows the pre-tax project balance over the estimated lifetime of 20 years. All numbers are in year 0 prices. The balance shows there is a simple (not counting interest) payback period of 10 years.

The diagram is based on an optimistic estimate of the selling price after year 10 at 0.43 DKK/kWh (0.057 EUR/kWh).

Calculations show that the internal rate of return (IRR) is 9.1%. This means that in principle there will be a profit if the investment can be financed by a loan at an interest rate lower than the IRR.

The surplus at the end of the investment period is nearly 30 million DKK (4 million EUR).

It is an uncertain investment in the sense that the selling price of the electricity is not known at the time of investment. Also, if some of the equipment breaks the repair costs are higher for an offshore turbine than for an onshore turbine. Furthermore, the lifetime could be shorter than the estimated 20 years, because there are not yet enough experiences with offshore turbine lifetimes.

The electricity selling price is guaranteed by the government, but only for the first ten years (0.43 DKK/kWh or 0.057 EUR/kWh). Thereafter the electricity price is the spotprice on the Nordpool electricity exchange plus a governmental add-on.

The sales material presents a pessimistic scenario based on a low selling price (0.28 DKK/kWh or 0.037 EUR/kWh after the 10th year). Figure 3 shows the effect on the project balance. After year 10 the growth is clearly less, and the final surplus in that case drops to a little under 18 million DKK (2.4 million EUR). The internal rate of return drops to 7% (was 9.1%).

The Shareholder's Economy


The economy is a little different seen from the shareholder's viewpoint, since it is affected by tax. On the other hand there are also governmental incentives and subsidies, for example the previously mentioned fixed selling price of the electricity for the first ten years, which is usually higher than the market price (but not always).

The cost of one share is fixed and well known, because it is an equal share of the total initial investment. Uncertainty enters with regard to the revenues and expenses. Since the selling price after year ten is unknown, the sales material makes three scenarios (low, medium, high selling price). The expenses are more or less known the first five years of operation, but thereafter the price of the service contract will likely increase as well the insurance premium. The sales material, however, assumes fixed annual expenses of 83 DKK/share (11.1 EUR/share), see the specifications below.

FigPaludansM1_1.png
Fig. 4. Buying 1 share. There is a standard tax
allowance, therefore no tax, and the IRR is 9.1%
(assumptions: electricity selling price 0.43 DKK/kWh
or 0.057 EUR/kWh after year 10).
FigPaludansM1_30.png
Fig. 5. Buying 30 shares. The standard tax allowance
has less impact, and the IRR is now 3.8%.
FigPaludansM1_30b.png
Fig. 6. Worst case scenario. Buying 30 shares, and
selling price 0.26 DKK/kWh (0.035 EUR/kWh). The
IRR is 1.5%.



Figure 4 shows the result of buying a single share under the same conditions as previously (optimistic scenario). Buying a single share is below the tax allowance, and the picture is similar to the balance for the whole turbine (Fig. 2), only scaled, because all expenses and income are shared equally between all shares.

The tax is determined by the so-called schematic rule (da: skematisk regel) after which deductible expenses are assumed to be a fixed amount of 40% of the turnover. The tax is paid on the remainder.

More shares than seven will release a tax payment every year, which will diminish the internal rate of return. Figure 5 shows the result of buying 30 shares, which is a scenario in the sales material. In this case the tax will deteriorate the investment, and the after-tax internal rate of return drops to 3.8% and the payback period is prolonged to 14 years.

The worst case scenario in Figure 6 assumes further that the selling price of electricity is low (0.28 DKK/kWh or 0.035 EUR/kWh). In that case the payback period is 17 years and the internal rate of return 1.5%.

Finally, with a medium selling price (0.36 DKK/kWh or 0.048 EUR/kWh) and up to 7 shares, the simple payback period is 10 years and the internal rate of return 8.2% (after tax).


Specifications

Energy
Power rating 2.3 MW
Nominal energy production 7765 MWh/year (= index 100)
Nominal capacity factor 39% of full capacity
Production to date (31 Dec 2017) 120 474 MWh (all production data are from Energistyrelsen)
Average production (until 31 Dec 2017) 8032 MWh/year (index 103)
Production 2003 6065 MWh (index 78)
Production 2004 8213 MWh (index 106)
Production 2005 7582 MWh (index 98)
Production 2006 7374 MWh (index 95)
Production 2007 8339 MWh (index 107)
Production 2008 7925 MWh (index 102)
Production 2009 8180 MWh (index 105)
Production 2010 7856 MWh (index 101)
Production 2011 8926 MWh (index 115)
Production 2012 8727 MWh (index 112)
Production 2013 7521 MWh (index 97)
Production 2014 8243 MWh (index 106)
Production 2015 8943 MWh (index 115)
Production 2016 7554 MWh (index 97)
Production 2017 9027 MWh (index 116)
Environment
Producer Bonus Energy (now Siemens)
Dimensions Hub height 61.2 m, rotor diameter 84.6 m, height from sea level to wing tip 103.5 m.
Foundation Monopile, steel, diameter 4.5 m, length 45 m, 300 tonnes, hammered into the sea bed.
Savings SO2 22.6 tons, NOx 22.3 tons, CO2 6630 tons, particles 429 tons.
Economy (2002 prices)
Owner citizens through the Paludans Flak I/S general partnership
Start-up date 8 Feb 2003
Nominal lifetime 20 years
Number of shares 7765 shares
Turn-key construction costs 22 135 200 DKK (2 951 413 EUR)
Project development 1 180 500 DKK (157 400 EUR)
Project office 193 300 DKK (25 773 EUR)
Reserve for unforeseen expenses 950 750 DKK (126 767 EUR)
Total construction costs 24 459 750 DKK (3 261 300 EUR)
Price per share construction costs / shares = 3150 DKK (420 EUR)
Original feed-in tariff 0.43 DKK/kWh (0.05733 EUR/kWh)
Selling price for electricity per share 430 DKK (57.33 EUR)
Operation and maintenance per share 83 DKK (11.07 EUR)
Net income per share before tax 347 DKK (46.27 EUR)
Insurance 1 000 000 DKK/year (133 333 EUR/year)
Administration 400 000 DKK/year (53 333 EUR/year)
Power operations manager 150 000 DKK/year (20 000 EUR/year)
Management 75 000 DKK/year (10 000 EUR/year)
Audit 50 000 DKK/year (6 667 EUR/year)
External consulting 100 000 DKK/year (13 333 EUR/year)
Miscellaneous including purchase of IT 100 000 DKK/year (13 333 EUR/year)
Operations cost less servicing 1 875 000 DKK/year (250 000 EUR/year)
Share allocated to this turbine is 10% 187 500 DKK/year (25 000 EUR/year)
Turn-key Contractor Deme
Foundation Bladt

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  5. %EnergistyrelsenStamdata% T1 has turbine ID 570715000000062926
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  7. %PaludansFlakOnAMap%
  8. %PaludansFlakProduction%
  9. %SamsoHavvind%
  10. %SiemensWind%
  11. %Sweco%
  12. %Vindinfo%
  13. %WindEnergyTheFacts%




Created by system. Last Modification: Friday 11 September 2020 21:42:43 CEST by jj.