Wind energy in the forest is exciting for financers because it is easy to plan. The requirements from the viewpoint of a bank.
The current critical developments with which politics, the economy, and society deal with—namely the financial and economic crisis—accompany the discussion of a sustainable energy supply. For 2013, the affordability and financial viability of feed-in tariffs is the crucial prerequisite for the realization of wind projects in Germany.
What's clear is that the German government is targeting a 35 percent share of renewables in electricity supply by 2020. By 2030 the figure is expected to grow to 50 percent, with onshore wind energy providing a major part of it. In order to reach these ambitious goals, various options must be pursued. In addition to repowering existing sites (older wind turbines are replaced by new, more efficient equipment), new priority areas for wind power are being designated by authorities in new energy policy. The focus is on forest areas especially, because they make up about a third of the total area in Germany. Their inclusion is essential to achieve the development objectives.
For wind energy, forests were long considered uneconomical due to the turbulence intensity, higher investment volumes compared to open sites and the logistical challenges to economic viability.
In recent years hub heights of 140 meters have become the standard at forest sites, for a total turbine height (to the rotor tip) of 200 meters. Thus, the wind turbines reach air layers that have a laminar wind stream with less turbulence intensity. These wind streams are uniform, adhering to the blade profile and therefore the rotor through an increased suction effect by particularly strong airflow. All of this makes the forest an attractive location for project developers, investors, and banks. If the technology can provide a stable, predictable output in the long term as well as a clear and the government provides a reliable legal and regulatory environment, wind energy can pay for itself almost exclusively in the form of project financing.
The key feature of project financing is linking the fate of a project with the return of the loan. Only the future funds (the cash flows) of the project can be used for payment of operating costs, principal repayments and distributions to the investors. In addition to this cash flow orientation, when evaluating project financing there are stipulations for contractual involvement of various project participants, which should support the success of the project: this is known as risk sharing.
(Joachim Treder, HSH Nordbank ) This post first appeared in the March 2013 edition of Erneuerbare Energien, the German sister magazine of Renewables International. (Craig Morris)
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