An Economic Analysis of a Proposed Bgsu-Firelands Wind Turbine

This paper examines the costs and benefits of a proposed wind turbine on the BGSU-Firelands campus.It does so from two perspectives: One is from BGSU-Fireland's narrow perspective, which accounts for Federal matching funds and the idiosyncratic way that Firelands is charged for electricity; and the second is from society's perspective, which includes the valuation of the reduction in external costs and uses a market price for generated electricity.The analysis concludes that from either standpoint the project is not justifiable: When taking the narrow perspective, the project is estimated to have a net present value of negative 285 thousand dollars.When taking the social perspective, the project looks even worse, having a net present value of negative 636 thousand dollars.Thus, this analysis does not recommend that the project be undertaken.The overall result is largely insensitive to reasonable changes in assumptions regarding the model of wind turbine, average wind speed, the rate of change in electricity price, the discount rate, salvage values, and a number of other parameters.