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The Road to Profitability through Technology Development. - A wind power business assessment at E.ON Vind.

Heverius, Gustaf and Younis, Mohammed (2012) MIO920
Production Management
Abstract
Issue of study For the past ten years there has been a remarkable growth in the wind power industry. During 2003 - 2010 the production capacity increased by 456 % in Sweden, corresponding to total capacity of 2019 MW. An additional 754 MW was installed in 2011, and there is a planned capacity installation of 950 MW for 2012. This will, according to a prognosis from Svensk Vindenergi, generate a power production of 7.7 TWh in 2012 and 11 TWh in 2013. Furthermore, if the expansion continues at this rate, wind power will correspond to about 10 % of the total power production in Sweden by 2015.
Despite the rapid growth wind power projects are still dependent on government subsidies, i.e. green certificates. However, as the business continues... (More)
Issue of study For the past ten years there has been a remarkable growth in the wind power industry. During 2003 - 2010 the production capacity increased by 456 % in Sweden, corresponding to total capacity of 2019 MW. An additional 754 MW was installed in 2011, and there is a planned capacity installation of 950 MW for 2012. This will, according to a prognosis from Svensk Vindenergi, generate a power production of 7.7 TWh in 2012 and 11 TWh in 2013. Furthermore, if the expansion continues at this rate, wind power will correspond to about 10 % of the total power production in Sweden by 2015.
Despite the rapid growth wind power projects are still dependent on government subsidies, i.e. green certificates. However, as the business continues to grow so do the technological advancements, thus providing new and more efficient wind turbine designs. Both incrementalas well as novel solutions have been developed over the years. In order to find new dominant designs they need to be evaluated both from a technical and a business point of view.
Purpose The purpose of this study is to investigate the possibility for technology development to further strengthen the Swedish wind power business case, and ultimately examine the potential for eliminating the need for government subsidies.
Objectives The objectives of this thesis are the following:
Scan for trends in technology development and choose areas according to the scope and delimitations of the study.
Evaluate the chosen technical areas – both financial and non-financial aspects.
Depending on the outcome in the previous evaluation discuss the implications for the case company.
Methodology A case study with an analytical approach has been performed for the development of the evaluation method, which consists of both qualitative and financial measurements. The qualitative aspect is covered by a method for technology concept selection, which assesses technologies based on several criteria. These criteria have been developed through literature studies and interviews with concerned stakeholders in the wind power industry. The financial aspect is covered by a capital budgeting model, intended to assess the cost of the wind power case including all costs over its lifetime, capital expenditure, operations and maintenance, and cost of capital.
Conclusion A potential for single technology advancements to sustain the business case’s independence from green certificates has been identified. The technological development is mainly focused on increasing turbine size, i.e. generator output and rotor diameter. However, other incremental implementations have shown potential of business case improvements as well. (Less)
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author
Heverius, Gustaf and Younis, Mohammed
supervisor
organization
course
MIO920
year
type
M1 - University Diploma
subject
keywords
Green certificates, technology development, onshore wind power, wind turbine generator (WTGs), business case evaluation
other publication id
12/5419
language
English
id
3055167
date added to LUP
2012-09-21 12:48:23
date last changed
2012-09-21 12:48:23
@misc{3055167,
  abstract     = {Issue of study For the past ten years there has been a remarkable growth in the wind power industry. During 2003 - 2010 the production capacity increased by 456 % in Sweden, corresponding to total capacity of 2019 MW. An additional 754 MW was installed in 2011, and there is a planned capacity installation of 950 MW for 2012. This will, according to a prognosis from Svensk Vindenergi, generate a power production of 7.7 TWh in 2012 and 11 TWh in 2013. Furthermore, if the expansion continues at this rate, wind power will correspond to about 10 % of the total power production in Sweden by 2015.
Despite the rapid growth wind power projects are still dependent on government subsidies, i.e. green certificates. However, as the business continues to grow so do the technological advancements, thus providing new and more efficient wind turbine designs. Both incrementalas well as novel solutions have been developed over the years. In order to find new dominant designs they need to be evaluated both from a technical and a business point of view.
Purpose The purpose of this study is to investigate the possibility for technology development to further strengthen the Swedish wind power business case, and ultimately examine the potential for eliminating the need for government subsidies.
Objectives The objectives of this thesis are the following:
Scan for trends in technology development and choose areas according to the scope and delimitations of the study.
Evaluate the chosen technical areas – both financial and non-financial aspects.
Depending on the outcome in the previous evaluation discuss the implications for the case company.
Methodology A case study with an analytical approach has been performed for the development of the evaluation method, which consists of both qualitative and financial measurements. The qualitative aspect is covered by a method for technology concept selection, which assesses technologies based on several criteria. These criteria have been developed through literature studies and interviews with concerned stakeholders in the wind power industry. The financial aspect is covered by a capital budgeting model, intended to assess the cost of the wind power case including all costs over its lifetime, capital expenditure, operations and maintenance, and cost of capital.
Conclusion A potential for single technology advancements to sustain the business case’s independence from green certificates has been identified. The technological development is mainly focused on increasing turbine size, i.e. generator output and rotor diameter. However, other incremental implementations have shown potential of business case improvements as well.},
  author       = {Heverius, Gustaf and Younis, Mohammed},
  keyword      = {Green certificates,technology development,onshore wind power,wind turbine generator (WTGs),business case evaluation},
  language     = {eng},
  note         = {Student Paper},
  title        = {The Road to Profitability through Technology Development. - A wind power business assessment at E.ON Vind.},
  year         = {2012},
}