CASE STUDY: Building a Wind powered electrical generating plantBackground Integration of wind generation into a wholesale powersupply portfolio requires a proper balance between the operatingcharacteristics of base load generation, power purchase agreementflexibility and cost of service objectives. Purchasing orgenerating wind power has an associated expense that must beaddressed as the wholesale power supplier meets its obligation tosupply a reliable, affordable and balanced supply of wholesaleelectric energy and related services to its member systems. Theintegration of wind generation into a power supply portfolio can bechallenging and the “all in” costs associated with this resourcemust be objectively considered in order to accurately reflect thecontribution this resource will make to supply portfolio pricing.Results of a Feasibility Study A feasibility study was carried outto see what the costs and consequences would be of building theWind powered electrical generating plant. Basic data on anticipatedcosts and benefits are provided in Table A and B respectively.Table A Year -> 1 2 3 4 5 6 7 8 9 10 Initial capital costs 300600 500 Cost of operations 40 42 50 46 52 61 59 Anticipatedmaintenance 25 42 35 41 27 29 31 Other costs 80 80 65 40 44 24 1516 19 18 TOTAL 380 680 565 105 128 109 102 95 109 108 Table B Year-> 1 2 3 4 5 6 7 8 9 10 Income to Cooperative 45 101 122 135 136175 201 220 Secondary income generation effects 85 119 122 163 201305 412 415 453 487 TOTAL 85 119 167 264 323 440 548 590 654 707 1.What is the undiscounted Benefit/Cost of the project? 2. If thisproject could be financed at a rate of 10%, could it beeconomically justified? Why? 3. What is the Net Present Value ofthis project using a discount rate of 10%? 4. In what year doesthis project break even? Is this timeframe acceptable? Why?