Profitability of wind energy: Short-term risk factors and possible improvements

The wind energy industry has grown considerably in recent years. If the current rate of growth of installed capacity of 1500 MW per year continues, by 2006 Spain will achieve the objective established for 2010 in the “Plan de Fomento” [Plan to Promote Renewable Energies] or for 2008 in the more ambitious “Plan de Infraestructuras Eléctricas y Gasísticas” [Plan for Electrical and Gas Installations]. Achieving these important goals, which require significant investment, depends upon the continued stability of salaries and the willingness of banks to provide financing. Therefore, we studied those factors that had the greatest short-term impact on the economic viability of wind energy projects in Spain and we found that the inherent risk within the sector can become a real obstacle in terms of development and short-term financing. Given the possibility of carrying out financial analysis that is more exhaustive than traditionally employed methods, the various models for evaluating investment in risk conditions were studied with the aim of choosing the ideal tool that takes account of the highly fortuitous nature of wind velocity.