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Capital cost of wind farms on the rise
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Capital cost of wind development has significantly increased over the past five years, said a panel of independent wind developers.
The cost of transporting a large-scale turbine is about 20 percent of the cost of the equipment and land costs, and royalties to land owners are increasing as well, said Jan Paulin, president and chief executive officer of Padoma Wind Power, LLC at the 2007 Wind Power Finance and Investment Summit in San Diego. Land cost has increased about 60 to 70 percent in the last two years.
The two major reasons behind the cost increase are fuel costs, especially high petroleum prices, and the perceived supply shortage of turbines also drives cost of the turbine and its transportation up.
Another growing capital cost is in risk management because of the lack of strong warrantees. For a $3 million turbine, the average warrantee is for $20,000.
Wind per kilowatt hours is cost competitive to fossil fuels, but the high capital cost, along with substandard warranties, make it difficult, for independent developers especially, to fund a project from start to finish. The capital cost has caused many consolidations of smaller developers into larger companies.
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