Economic Analysis of Small-Scale Wind Power Projects

Economic Analysis of Small-Scale Wind Power Projects

Analyzing the economics of a small-scale wind power project begins with a comprehensive calculation of all costs. This includes not only the purchase price of core equipment such as wind turbines, towers, controllers, and batteries, but also one-time investments in installation, infrastructure, electrical connection, and potential grid connections or system modifications. Typically, the equipment itself accounts for about 60-70% of the total expenditure. A clear and complete initial investment list is fundamental to all analyses.

The main benefit of the project comes from savings in electricity costs. Based on locally measured or reliably assessed average annual wind speeds, the system's annual power generation can be estimated. Multiplying this generation by your current electricity price will give you the annual savings in electricity costs. If policy allows, revenue from selling excess electricity to the grid should also be included. In remote areas with unstable grids or power shortages, the security provided by the project, while difficult to quantify precisely in monetary terms, is still a significant benefit.

The key to a comprehensive evaluation is calculating the payback period and considering long-term factors. Dividing the total initial investment by the annual net revenue (savings in electricity costs minus a small amount of maintenance costs) will give you an approximate payback period. For residential wind power projects, this cycle typically ranges from 5 to 12 years, depending on the quality of local wind resources and electricity prices. When calculating, it's essential to consider the annual routine maintenance costs of approximately 1%-3% for the equipment, as well as the cost of replacing the batteries after 5-8 years. Although the initial investment is high, a high-quality wind power system can typically generate significantly more returns than its total cost over its approximately 20-year lifespan, achieving long-term low-carbon and economic benefits.