Capacity development and profitability of wind turbines

Abstract

The main objectives of the paper are to analyse and describe the driving forces behind the wind power capacity development, with Denmark as the specific case. Is it possible to establish a relation between turbine economy and the capacity expansion that could be used for regulatory purposes in reaching a specific policy-determined target for the deployment of wind power? Such relations are analysed with reference to three types of turbine ownership: Co-operatives, individuals (e.g. a farmer), and utility companies. The paper concludes that concerning individually owned turbines, a strong relationship between wind turbine profitability and the annual capacity development does exist. With regard to investments in co-operatively owned turbines, only a weak relationship was found. Other determining factors, such as those related to the environment, might be more important as inputs to the decision-making process when turbine co-operatives are established. The turbines established by the utilities are not treated in detail here, because this capacity development is determined mainly by the power companies’ agreements with the Government. Finally, the paper concludes that the estimated relationship between profitability and capacity increase for individually owned turbines possibly might be used for regulatory purposes in reaching a specific target for capacity development, if it is done in an appropriate way.