Economics

The energy market is extremely price driven, although there is an increasing pressure to generate energy in a more sustainable and environmentally friendly way. In some respect, this has been derived from the publics increasing concern for the environment, however, obligatory legislation and the offer of financial incentives; such as the Renewable Obligation; are likely to be the real drivers behind any changes.

Ultimately, for any transition towards alternative, more sustainable forms of energy generation; such as utilising the wind resource with a hydrogen buffering mechanism; the alternative must be both: cost competitive with other forms of energy generation, as well as financially attractive to the energy generation companies.

Therefore, one of the crucial aspects of the project was to assess if it is economically viable, and if it is not, what it would take to achieve this.

To ascertain the projects viability, a full economic analysis has been conducted: reviewing the total predicted project revenue and expenditure over the 25 year project lifetime.

In addition, the analysis focused on an investigation into:

· Current prices of the required technology and components,

· The pricing structure utilised by the national grid (to provide an indication of electricity prices and likely revenue generation) &

· Additional income from the sale of Renewable Obligation Certificates (ROC’s).

A sensitivity analysis was also conducted to investigate the effect of:

· Variable interest rates,

· Increasing the price that the electricity generated could be sold for in the future,

· Extending the lifespan of the components (to omit replacement costs) &

· Future price targets for components.