Case study #3: Small Wind Turbine for a Farm

Case Study #3: Small Wind Turbine for a Farm

A farmer thinks that he is paying too much for electricity ($0.12/kWh) and wants to save money by putting up his

own small wind turbine. The farm is located along a ridge northwest of Lynchburg where the farmer thinks that the wind resource is very good. Based on the resource map below, he thinks that at 50 m the average wind speed is 15 mph.

The farmer would install a 10 kW Bergey Excel turbine on a 30.5 m tower. He would do the installation and the maintenance himself. The turbine, tower, and other components would cost around $35,000. The farmer thinks that since he will do maintenance himself, maintenance will cost only around $350 per year, mainly for parts.

He expects that the turbine will provide electricity for 25 years, and that electricity costs and parts costs  will increase by around 2.5% annually. He would not need to take out a loan for this project.

Questions:

1)      Would this be a profitable investment?

2)      What if the farmer is being overly optimistic in his expectation of the wind speed and it is actually 14 mph on average?

3)      What if the farmer has underestimated the cost of the turbine and ongoing maintenance by around 40%?

4)      Include a 25% federal tax credit as an incentive (= 25% of initial costs)