For a small wind system determining the payback of a project plays a large factor in determining if owning your own system makes sense for you. In order to do this you will need several pieces of information:
- a reasonable estimate of the wind resource at your site
- the height of the tower
- the turbine model’s power curve (can be obtained from the manufacturer)
- the installed cost of the system
- annual costs that include maintenance, added insurance, fees paid to the utility, etc.
- the cost of energy at your site as well as historical electricity consumption on a monthly basis, if available.
- information from your utility about system size limits, net metering structure and rate for compensation for energy sold back to the utility
- interest rate on loan for equipment purchased
- information about grants and incentives available to you
Typically, for a small wind system, energy produced is used to offset a portion or all of the electricity at a site. Excess generation is then “stored” on the grid for times when the generator is not producing. At the end of the billing period the net excess generated or consumed is used to determine how much you owe the utility or the utility owes you. The rate and rules for compensation differ from state to state. To find out the rules for net metering in your state visit the Database of State Incentives for Renewables and Efficiency.
Once you determine how energy is compensated, the estimated production on a monthly basis and the installed and ongoing costs of the turbine, the payback period can be determined by dividing the sum of the costs by the net energy produced times the rate compensated for energy.
# years = (sum of installed costs and ongoing costs)/
[(energy produced) x (rate compensated for energy)]
This will yield the number of years it will take to pay off the machine. This calculation is called a simple payback because it does not take into account net present value, inflation, and escalation of energy costs over time. In most cases this method will be more conservative than a more involved analysis.
There are tools to help potential wind turbine owners determine the economic viability of their project. For Minnesotans, Windustry has developed a small wind calculator that compares 3 well-regarded turbines of different sizes, includes assumptions about pricing as of 2012, and incorporates Minnesota’s net metering law.
