Sustainability at CSB/SJU

Feasibility

Greener Energy: The Case for Wind Power at SJU and CSB

According to Greg Jaunich, Northern Alternative Energy, Inc., Minneapolis, MN and Jay Gislason from Micon Wind Turbines (US) Inc., Marshall, MN, the best wind turbine to use at SJU or CSB would be the Micon 600 kW turbine using 6 m/s (13.2 mph) average wind speed at a 60 meter (197 feet) height. This turbine is consistent with an average yearly wind speed of approximately 14 mph at the two campuses. Ron Nierenberg, NAE's consulting meteorologist estimates that the annual electricity production for this turbine would be 1,265,000 kWh (a conservative estimate), which is consistent with a class two wind speed regime. The table on the next page shows the project costs (from NAE's pro-forma data) for the Micon wind turbine.

Cost of the wind project:

Use of Funds	Cost
Total Site Acquisition	$ 1,515
Turnkey Project Costs	$660,051
Total Transaction Costs	$ 30,000
Total Project Costs	$690,051

It should be noted that Micon, a Danish company, is well established in the wind energy industry. In 1992, Micon was the first wind turbine manufacturer to receive ISO 9001 certification. ISO 9000 is a set of standards governing the requirements for documentation of a quality program. These standards are set by the International Organization of Standardization for companies doing business in the European Community. ISO 9000 consists of five documents including ISO 9001. ISO 9001 is a standard that focuses on 20 aspects of a quality program for companies that design, produce, install, and service products ( Krajewski and Ritzman, 1996).

Greg Jaunich of Northern Alternative Energy, Inc. in Minneapolis has provided additional financial information for the Micon 600 kW wind turbine for potential use at SJU. The cost per kW is $1150, the O&M costs ranges from 1.2 cents per Kwh in year 1 to 3 cents per Kwh in year 30, and the energy tax credit ranges from 1.5 cents in year 1 to 1.9 cents in year 10 (the energy tax credit ends in year 10). Jaunich reports that the Micon wind turbine has a 30 year operational life. Finally, according to NAE, SJU would have to pay a levelized contract rate of $58,962 per year with the incentive plan (for 30 years) for the Micon 600 kW wind tower with 1,265,000 kWh of nominal energy production per year. This translates into 4.661 cents per kWh for the contract levelized price.

Lower NSP prices Because of Deregulation?

Greg Jaunich indicates that NSP is a lower cost utility and that they would be very unlikely to lower or raise their electricity rates in the near future. It is expected that after this rate freeze, electricity prices could rise. Essentially this puts a floor on NSP prices which thereby reduces the risk of investing in wind power.

Owning Turbines versus Buying Turbine-Generated Electricity

CSB and SJU have the option of owning the wind turbine or having outside investors own it. The above financial information applies in the event that the colleges purchase the wind turbine. However, CSB and SJU could sell their power purchase agreement to outside investors who would buy the wind turbine and sell the electricity to CSB and SJU for a contracted, fixed amount per kWh. This would give both schools the advantage of the educational benefits without the capital cost.

Final Bottom Line?

Electricity from the Micon 600 Wind turbine, which is projected to generate 1,265,000 kWh per year would cost $58,962 per year (at 4.661 cents per kWh). Alternatively, purchasing the same amount of electricity from NSP would cost $54,395 (at 4.3 cents per kWh). This amounts to an additional $4,567 per year or $1.20 more per student (assuming a combined CSB/SJU enrollment of 3800). Even when using lower electricity costs, such as SJU enjoys (between 3.7 to 4.0 cents per kWh), the difference in costs ranges between $8,362 and $12,157 ($2.20 to 3.20 per student) given today's numbers and prices. The educational benefit, potential revenues from tourism, and the publicity benefit would need to be seen as worth the extra cost. Additionally, this cost differential would disappear in the event that NSP would raise their rates. Finally, the promotion of environmental stewardship as well as the integration of wind power into the curriculum of CSB/SJU would provide an excellent comparative advantage to the two schools in today's competitive higher education market.