Sequoia Energy

Wind Power in Manitoba APEGM Professional Development Committee Luncheon Meeting May 25th 2005

Outline for Today

Wind Energy Background Technology Power Generation Issues Economics Manitoba Projects and Development
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Sequoia Energy
Manitoba Based Renewable Energy Company
Manitoba based equity investors with extensive finance, energy and manufacturing experience Equity and operational partnership with Windkraft Kontor of Germany
Community Wind project developer throughout Europe Have developed 10 projects previously

Corporate philosophy which strongly establishes local community participation in the development and planning of new energy projects
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Bison Wind Project St Leon Development

Largest individual wind farm development project in Canada First in Manitoba 99 MW project
40,000 home equiv

$187 million Construction Q4 2004

Private equity investment No investment by Prov government or Manitoba Hydro Community focused development
Large economic benefits directed to community and Province
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Wind Energy
Industry Information

INDUSTRY OVERVIEW
Wind power is the worlds fastest growing energy source at over 30% per year 1 The global wind energy potential is roughly 5 times the current global electricity use 1 Global wind energy generating capacity topped 46,000 MW in 2004 2 $8 billion USD market in 2004 growing to $48 billion in 20143

________________________________ 1 Source: CanWEA The Canadian Wind Energy Assoc. 2 Source: AWEA American Wind Energy Association 3 Source: Clean Edge Inc Clean Energy Trends 2005

WORLDWIDE WIND POWER

W orld W ind Generation by Region
Top 15 Wind Energy Markets (installed capacity, in MW's) Germany Spain United States Denmark India Italy Netherlands United Kingdom China Japan Sweden Greece Canada Portugal France Total World - All Countries 2003 Y Total /E 14,609 6,202 6,352 3,115 2,120 891 912 704 566 644 399 398 326 299 240 39,434 2004 Y Total /E 16,500 8,000 6,800 3,121 2,800 1,020 1,077 944 700 740 442 465 441 522 390 46,048 2005 Additions 1,700 1,500 2,390 375 1,000 360 250 600 350 300 70 95 475 748 275 13,700 2005 Y/E Total 18,200 9,500 9,190 3,496 3,800 1,380 1,327 1,544 1,050 1,040 512 560 916 1,270 665 59,748 % of World 30.5% 15.9% 15.4% 5.9% 6.4% 2.3% 2.2% 2.6% 1.8% 1.7% 0.9% 0.9% 1.5% 2.1% 1.1%

Source: W WEA - World W Energy A ind ssociation

Wind as Mainstream Source

Large Networks Denmark Germany Ireland Spain California Percent Wind 19% 4.3% 2% 3% 1%

Wind Energy Momentum in Canada

Quebec RFP for 1,000 MW by 2012 Ontario RPS 1,500 MW by 2010 Alberta 800 MW waiting on transmission capacity Saskatchewan -150 MW by 2005 NB 100 MW by 2010 New projects approved in BC (50 MW), NS (40 MW) and Manitoba (100 MW, 900 more planned )
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GHG Emissions
850 No Reduction Kyoto Target Action Plan 2000 Before Action Plan 2000

Megatonnes [Mt/yr] GHG (CO2

800 750 700 650 600 550 500

19 95 19 97 20 00 20 02 20 05 20 07 20 10

Gap

Equivalent)

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Current Emissions
Canadian fossil generation of electricity emits (2000): 16% of greenhouse gases (climate change) 17.3% of sulfur dioxide (acid rain) 12.8% of nitrogen oxide (smog)

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Emissions
A 100 MW wind energy project can reduce GHG emissions by:
404,000 tonnes compared to coal 287,000 tonnes compared to natural gas
2.5 2 1.5 1 0.5 0 Coal Gas Wind SO2 kg/mWh

CO2 tonnes/mWh

Nox kg/mWh

Comparison based on MB based wind project displacing PCC Coal based electrical production with 33% efficiency and NG plant at 42% efficiency

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GHG Emissions

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Technology

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The Energy of Wind

A wind turbine converts the force of the wind into a torque acting on the rotor blades The amount of energy depends on the density of the air, the rotor area, and the wind speed A cylindrical slice of air 1 metre thick is shown moving through the 2,300 m2 rotor of a typical 1,000 kilowatt wind turbine. With a 54 metre rotor diameter each cylinder actually weighs 2.8 tonnes, and transfers momentum to the blades.
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Useable Wind Energy

If we tried to extract all the energy from the wind, the air would move away with the speed zero, i.e. the air could not leave the turbine.
would not extract any energy at all

In the other extreme case, the wind could pass though our tube above without being hindered at all.
no energy would be extracted

We can assume that there must be something between these two extremes. There is a surprisingly simple answer to this: An ideal wind turbine would slow down the wind by 16/27 (59%) of its original speed.
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Technology Wind Power Basics

Betz Law The maximum power that can be captured from the wind is 59% of the kinetic power in the wind Today's turbines capture > 50% of the total available power in the wind High pressure, cold air has more energy
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Importance of Wind Speeds

Wind power increases with the cube of wind speed
10% greater wind speed = 30% more electricity 2X greater wind speed = 8X more electricity!

Must find good winds and a little bit goes a long way
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Wind Speed Factors

The wind variation for a typical site is usually described using the Weibull distribution.
This example site has a mean wind speed of 7 metres per second, and the shape of the curve is determined by a so called shape parameter of 2.

The graph shows a probability density distribution. The 6.6 m/s is the median of the distribution.
Half the time it will be blowing less than 6.6 metres per second, the other half it will be blowing faster than 6.6 metres per second 50%

Median speed 6.6

The distribution of wind speeds is skewed, i.e. it is not symmetrical.

very high wind speeds, have a low probability. Wind speeds of 5.5 metres per second, are the most common ones

50%

Shape parameter k,indicates how peaked the wind distribution is around a value. A high k value suggests the wind is more tightly distributed around a value (more consistent)

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Energy Production
For each of the Weibull parameters (wind profiles) we have different annual energy output. Output may vary up to 50 per cent depending on the shape parameter at a low average wind speed of 4.5 m/s, Vary > 30 per cent at a high average wind speed of 10 m/s Tend to have a choice between
a relatively stable power output (close to the design limit of the generator) with a high capacity factor or a high energy output (which will fluctuate) with a low capacity factor. 20

Relative Energy Efficiency

The power coefficient tells you how efficiently a turbine converts the energy in the wind to electricity. Divide the electrical power output by the wind energy input to measure how technically efficient a wind turbine is. The graph shows a power coefficient curve for a typical Danish wind turbine.
The efficiency varies very much with the wind speed. The mechanical efficiency of the example turbine is largest (44 per cent) at a wind speed around 9 m/s.

This is a deliberate choice by the engineers who design the turbine.

At low wind speeds efficiency is not so important, because there is not much energy to harvest. At high wind speeds the turbine must waste any excess energy above what the generator was designed for.

Ideal is to match peak turbine efficiency in the region of wind speeds where most of the energy is to be found
This is a critical premise to project design and requires significant assessment of turbine parameters It is not an aim in itself to have a high technical efficiency of a wind turbine. What matters, really, is the cost of pulling kilowatt hours out of the winds

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Power Output
The graph shows a power curve for a typical Danish 600 kW wind turbine.
Cut in Speed Rise in power output to peak Cut out Speed

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Useable Energy
The bulk of wind energy will be found at wind speeds above the mean (average) wind speed at the site
Energy output varies with cube of velocity

The Cut In Wind Speed

Usually, wind turbines are designed to start running at wind speeds somewhere around 3 to 5 metres per second.

The Cut Out Wind Speed

The wind turbine will be programmed to stop at high wind speeds above, say 25 metres per second, in order to avoid damaging the turbine.

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Wind Variance

In areas with a very uneven terrain surface, and behind obstacles such as buildings there is turbulence, Turbulence decreases the possibility of using the energy in the wind effectively for a wind turbine. It also imposes more wear on the wind turbine. Projects are designed with towers made tall enough to avoid turbulence from the wind close to ground level
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Wind Shear
Wind speeds are affected by the friction against the surface of the earth The more pronounced the roughness the more the wind will be slowed down.
Forests and large cities slow the wind down considerably Water surfaces are even smoothest

Wind shear also be important when designing wind projects.

Need to reduce tip variance Require blades to be above main turbulent region
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Turbulence
Wind turbines in parks are usually spaced at least three rotor diameters from one another Critical to space so as to avoid too much turbulence around the turbines downstream. In the prevailing wind direction turbines are usually spaced even farther apart (5 plus rotor diameters) 26

Project Siting
A common way of siting wind turbines is to place them on hills or ridges overlooking the surrounding landscape and oriented to the prevailing wind direction
On hills wind speeds are higher than in the surrounding area due to the fact that the wind becomes compressed on the windy side of the hill, and once the air reaches the ridge it can expand again into the low pressure area on the lee side of the hill.

If the hill is steep or has an uneven surface, one may get significant amounts of turbulence, which may negate the advantage of higher wind speeds.

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Park Effect Each wind turbine will slow down the wind behind it as it pulls energy out of the wind Ideally space turbines as far apart as possible in the prevailing wind direction.
Land use and connecting wind turbines to the electrical grid would require them closer together.

Project Siting

Turbines are usually spaced:

5 and 9 rotor diameters apart in the prevailing wind direction, 3 and 5 diameters apart perpendicular to prevailing winds.

Energy Loss from the Park Effect

Developers calculate the energy loss due to wind turbines shading one another. Typically, the energy loss will be somewhere around 2-5 per cent.

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General Site Criteria

Wind Conditions
Looking at nature itself is usually an excellent guide to finding a suitable wind turbine site and about the prevailing wind direction Meteorology data, calculated over 30 years is best, but this data are rarely collected directly at a target site. Using Meteorology Data
Precision measurement of wind speeds, is not nearly as important for weather forecasting Wind speeds are heavily influenced by the surface roughness of the surrounding area, of nearby obstacles In most cases using meteorology data directly will underestimate the true wind energy potential

Topography
Objective would be to have as wide and open area as possible in the prevailing wind direction, few obstacles and as low a roughness as possible in that same direction. Ideal is to find a rounded hill to place the turbines.

Grid Connection

The generators in large, wind turbines generally produce electricity at 690 volts. A transformer located next to the turbine, or inside the turbine tower, converts the electricity to higher voltage (usually 10-30 kilovolts). Then need to run lines to collector substations after which it is stepped up to system voltage (to 230KV). Critical to have capacity Both the feasibility of building foundations of the turbines, and road construction to reach the site 29 with heavy trucks must be taken into account with any wind turbine project.

Soil Conditions

Project Design Factors

The ideal wind turbine design is not dictated by technology alone, but by a combination of technology and economics: A small generator, (i.e. a generator with low rated power output in kW) requires less force to turn than a large one.
If you fit a large wind turbine rotor with a small generator it will be producing electricity during more hours of the year, but it will capture only a small part of the energy content of the wind at high wind speeds.

A large generator, on the other hand, will be very efficient at high wind speeds, but unable to turn at low wind speeds. Distribution of wind speeds and the energy content of the wind at different wind speeds are considered to determine the ideal combination of the size of the rotor and the size of the generator at different sites. Tower Heights generally increase a wind turbine's energy production but relative value depends both on the roughness class, and the cost of electricity.
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Wind Generator

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Technology Drivers
Swept areas (bigger blades) Tower Heights (faster winds) Economies of scale Improved siting

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Technology
Cost Reductions
40 35 30 25 20 15 10 5
Radius of rotor (metres)

1800 kW 1300 kW 750 kW 500 kW 500 kW 250 kW

50 kW
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Technology
Cost Reductions Tower Sizes

40M

50M

65M

80M
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Taller towers capture faster winds

Technology: Cost Reductions

Cost driver for larger blades, is stronger light weight blade materials Cost driver for taller towers is, improved tower and foundation designs
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Technology
Fixed speed Variable speed With or without gearbox
Fixed pitch Variable pitch

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How big is a 1,65 MW wind turbine?

This picture shows a NEGM MN82/1,65MW wind turbine superimposed on a Boeing 747 JUMBO JET

80 59.6

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Wind Power Generation

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Wind Power Generation

Average wind speed important Variation in wind speed also important Turbine siting crucial Matching designs to conditions is crucial
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Potential in Manitoba

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Wind & Hydro

Water inflows and load Variation (Qubec) 28000 4800 24000 Water inflows (L) Load (R) 20000 4000 16000 3600 12000 3200 8000 4400

4000

2800

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2400

= Natural battery

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Wind & Hydro

Energy Production There is more wind energy produced in the winter in Manitoba
There is a higher wind speed in the winter Wind flow has 8% more energy at -20 than at +20

Loads Wind can be closer to urban centers

Reduce line losses as it is closer to demand and export

Highest electrical demands are in winter

when the wind energy production is highest water levels the lowest
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Correlation between Supply & Demand

Gasp/Qubec

14 12
% of annual total

10 8 6 4 2 0 Jan Feb Mar Apr May Jun July Aug Sept Oct Nov Dec
Months Source: GP CO Inc. Demand Supply

Wind Power Issues

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Wind Energy Issues

Variable production Wind is not constant
But its producing 75%90% of the time

The wind does not stop everywhere at the same time Wind is a distributed generation product

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Issues

Is it a noise or a sound?

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Wind Turbine: Sound

Should be located up to 350M away from residences Sound is swoosh, swoosh not mechanical Can carry on a conversation at the base of the tower Sound is greatest when windy, when ambient noise is greatest too.
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Wind Turbine
Birds Average turbine bird death 2.2 birds per year Less than communications or transmission tower Less than buildings Less than house cats Less than cars Tubular versus lattice towers new towers lack perches Positive wildlife impact from reduced emissions
48 Source: www.nationalwind.org

Wind Turbine Land Use

Wind farms are spaced over a large area but use little land
Wind farms use 2% of the land for foundations and roads
99% of the land used is for roads

98% of land available for other uses Compatible with pasture, crop, bike path, recreation, industry Multiple uses/productivity
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Issues?
Wind Turbines can aggravate global warming by altering wind currents D Keith U of C suggests that if 2 terawatts of the energy needs are supplied by wind, there will be an impact to global wind and climate patterns. Reality or Myth? What about any tall object?
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The Drag of it All

Building 100 M high 20 M wide Rectangular Cd = 1.3

Simplified Paero = Cd x x V3/2 x A

For the Building example the power of drag would be approx.

544,000 watts Approx 544 KW Approx 4,770 MW-hr per yr

Wind Average 7 m/s =1.22 kg/m2

Is this a hypothetical climate damaging item? 100,000 such buildings create the energy drag equivalent to 25% of the electrical power generated in the world Should we now use low rise?
Flatten all the buildings / mountains / etc
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Issues?
Reality this study was taken out of context and misquoted by many:
Keith study was based on 2 Terawatts of production or equal to the current world wide electrical production
This is not a practical reality for any technology 100% of the global electrical production would mean approximately 2,350,000 2 MW wind turbines (35% capacity) would be installed (about $10 trillion invested)

Keith conclusion:
if you put enough wind turbines all over the planet it will change the climate (by changing the circulation patterns around the globe) but the effects may not necessarily be harmful. Further concluded that polar regions would be colder and equatorial regions warmer, which might counteract CO2 related warming
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ISSUES ?
Wind farms are not concentrated and use 2% of the land for foundations and roads Not any more harmful to birds or other wildlife than other common situations Sound produced not out of place to environment No air pollution or hazardous residues
.45-0.78 tonnes per MW-hr reduction in CO2 compared to Nat. Gas .79-1.1 tonnes per MW-hr reduction in CO2 compared to Coal Minimal water consumption and no contamination

Minimal wind pattern impact within the expected level of concentration

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Wind Power Economics

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Cost of the Energy Produced

Historical Costs
US/kWh
30 25 20 15 10 5 0 1980 1985 1990 1995 2000 2005 2010

Projections

Year
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WIND ECONOMICS
Deployment Time Increases Profitability
9-18 months compared with 5 10 years for traditional generation Saves costly system overbuilds, stranded debt Capacity expands with demand, rather than pre-build for long term forecast, that can be difficult to foresee

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WIND ECONOMICS
Part of a Overall Energy Strategy
Wind complimentary to water based storage
When wind is blowing, store the water behind the dam When calm, run water through turbine

Canada is > 60% water power

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Performance vs cost
When including environmental costs . (price in USD per KW-hr) Coal: Nuclear: Natural gas: 0.09 0.06 0.05

Wind:

0.04-0.06

(The EU Commission /Windpower Monthly - January 2002)

The beauty of wind is that the energy input costs do not change!
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Wind Energy Economics

Economic Wind Power Production costs are currently in the range of 6.0 to 8.5 cents per KW-hr New hydro electric projects in MB1 will have power costs of 6.6 to 7.6 cents per KW-hr (2002 $) Complimentary energy economics
(1Wuskwatim Hearings April 2004)
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Cost of the energy produced

Approximate Installed cost: 1.75 million $CDN per installed MW (plus tax)

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Economic Development
Wind is a rural economic opportunity Larger return per acre than crops Property tax assessment in rural areas Rural diversification Local jobs in construction, services, O&M
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St. Leon
Project Outline

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Economic Benefits St. Leon

$187 million investment and $108 million in operating costs
$149 million was estimated to be spent in MB

$26 million in local taxes and land fees $31 million in MB Provincial Taxes $109 million in net Federal Taxes $43 million in inter-provincial taxes

$209 MILLION in DIRECT TAXES PAID over life of project

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Economic Benefits St. Leon Project

Export Sales for MB Hydro
without risk of plant ownership without risk of fixed fees or investment ability to react to critical need for power demand in Ont and USA

NO Taxpayer / Government Risk

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Community & Landowner Considerations

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Community Considerations
Wind Projects are really a Community development opportunity Individuals can lead it but communities make it happen
The benefits to the community are bigger than those to an individual landowner

There needs to be realistic expectations of what this development can achieve

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Community Considerations
Is it possible to develop wind projects in this area
Is there enough wind? How do you/they know? Can the electricity be transmitted into the grid?
Talk to the Dept of Energy, EDI Group

What is the overall area being considered for development?

Is the land use speculative?

What is the general plan?

Size of project, timing, ownership structures
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Community Considerations
How does this affect the Community?
Will it improve the tax base? Will there be new jobs? Will local services be used? Can the community support the activity? Do you want this development in your community?
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What Wind Will NOT Do

Cure all the local revenue problems
Taxes cannot be disproportional to other areas / markets, capital moves quickly.

Provide extraordinary returns to any one party

Projects are driven by capital markets, 10-12% return, this is not a commodity play like oil

Create large amount of long term jobs

Wind plants do not need large staff to manage the operations (5-15 people)
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Sequoia Energy Community Based Renewable Energy Plan

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Sequoia Energy for further info contact:

Ron Diduch (204) 797-7388 rdiduch@mts.net