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A Net-Present Value Analysis for a Wind Turbine Purchase at a Small US College

Author

Listed:
  • Nicholas H. Johnson

    (Principia College, Elsah, IL 62028, USA)

  • Barry D. Solomon

    (Department of Social Sciences, Michigan Technological University, Houghton, MI 49931, USA)

Abstract

Wind power is becoming an increasingly attractive method of electric power generation due to concerns with global climate change, increasing uncertainty of future oil supplies, and energy security. While most large-scale wind turbines are part of wind farms, which help states meet state renewable energy standards, several colleges and universities in the United States have purchased wind turbines for financial and educational purposes. This paper gives details of a cost-benefit analysis completed for a small liberal arts college in Illinois, Principia College, which is considering buying a single large-scale turbine. The process set forth here can easily be adapted to any college, university, or school. It is found that the project has a positive net present value for both a 20-year scenario and a 30-year scenario. Assuming the project did not receive any grants, Principia College would need to have an annual real return rate of about 6% on its initial investment to gain the same economic benefits.

Suggested Citation

  • Nicholas H. Johnson & Barry D. Solomon, 2010. "A Net-Present Value Analysis for a Wind Turbine Purchase at a Small US College," Energies, MDPI, vol. 3(5), pages 1-17, May.
    • Handle: RePEc:gam:jeners:v:3:y:2010:i:5:p:943-959:d:8235
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    References listed on IDEAS

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    1. Patrik Söderholm & Ger Klaassen, 2007. "Wind Power in Europe: A Simultaneous Innovation–Diffusion Model," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 36(2), pages 163-190, February.
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    Cited by:

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    2. Osvaldo Rodriguez-Hernandez & Manuel Martinez & Carlos Lopez-Villalobos & Hector Garcia & Rafael Campos-Amezcua, 2019. "Techno-Economic Feasibility Study of Small Wind Turbines in the Valley of Mexico Metropolitan Area," Energies, MDPI, vol. 12(5), pages 1-26, March.
    3. Ijjou Tizgui & Fatima El Guezar & Hassane Bouzahir & Alessandro N. Vargas, 2018. "Estimation and Analysis of Wind Electricity Production Cost in Morocco," International Journal of Energy Economics and Policy, Econjournals, vol. 8(3), pages 58-66.
    4. Joselin Herbert, G.M. & Iniyan, S. & Amutha, D., 2014. "A review of technical issues on the development of wind farms," Renewable and Sustainable Energy Reviews, Elsevier, vol. 32(C), pages 619-641.
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