Applied to the addressed HAWT, cash flow CFt reflects the initial
investment (t ¼ 0) necessary for plant building and the following
cash flows, which result from annual revenue2 from electricity sale
reduced by relevant running costs for the appropriate period t
(t ¼ 1,..,20). The number of observation periods accords to typical
lifetime of HAWT, which is assumed to be 20 years [22]. Time and
risk preference are included in form of the so-called opportunity
cost of capital, which is solely described by cost of equity rcoe and
thus suppose a fully equity-financed investment for simplification.
Several parameters have to be estimated to allow a valuation of
profitability. Fig. 1 shows the structure of the overall model. First of
all, AEP has to be estimated with respect to wind conditions as well
as design properties of the HAWT, which are influencing the power
drain from wind energy. The second step is the determination of
the required economical parameters, where values for initial and
running costs, revenues and their development in the following