Windenergie 2 - Economics

17 December 2025, Po Wen Cheng

Questions at the beginning were from the winter quiz which mainly had questions from previous lectures

Basic Concepts

LCOE - Levelized Cost of Energy (Equation on slide 4)

• Discount Rate: interest rate used in discounted cash flow analysis to determine the present value of future cash flows
• Net Present Value: difference between the present value of cash inflows and the present value of cash outflows over a period of time
• Internal Rate of Return: used to estimate the profitability of potential investments

LCOE and the Market Value of Wind

• In general, the market value of wind energy decreases as the contribution of the wind energy to the total energy supply increases
• The decrease of LCOE is mainly driven by higher energy production (same money for more higher capacity factor, low specific lower), lower capital cost, lower O&M cost

Impact of Wind Energy on Spot Market Price

More and more the wind farm operators are required to market the electricity directly instead of receving a fixed tariff.

• Corporate PPA (Power Purchase Agreement) is currently being used to reduce the long-term risk of price fluctuation by fixing the sell price over a longer period of time.
• The increasing penetration of renewable will lead to larger fluctuation of spot market price with the merit-order-effect