1. Should Hydro as an aluminum producer invest in wind power in light of the Utsira pilot project? Why or why not?
2. Should value-maximizing managers more generally invest in wind power? Why or why not?
3. Larger-scale turbines increase the electricity more than proportionately to the increase in costs. A 1 megawatt turbine costs $2.5 million, with the remaining equipment costs unchanged, for a total required investment of $4 million to power approximately 760 households. Electricity revenue over 15 years rises to $7.2 million in discounted present value. What conversion factor allows cost recovery of this larger-scale turbine?
4. If the net present value of the Utsira project is negative, yet Hydro goes ahead and funds the investment anyway, what ethical obligations does Hydro have to its shareholders?
5. On what basis could shareholder value possibly rise if Hydro invests in wind power? Would more or less disclosure to financial analysts improve the chances of this outcome?
6. In 2009, 41 percent of all energy consumption in the United States comes from electric power generation. Coal provides the preponderant fuel (51 percent), with nuclear power (21 percent) and natural gas (17 percent) providing most of the rest. Renewable energy provides only 9 percent. Recently, T. Boone Pickens proposed converting the trucking fleet in the United States to liquefied natural gas (LNG) and using wind power to replace the missing LNG in electric power production. What issues do you see that must be resolved before the Pickens plan could be adopted?


Wind farms and massive solar collector arrays are spreading across the globe. Wind produces enough electricity today in the United States to completely power 2 million homes. Wind and solar energy together provide less than 1 percent of the electric power worldwide, but already much more in some locations—for example, 19 percent in Denmark and 15 percent in Germany. Hydro, a Norwegian aluminum company, has established wind turbine pilot projects where entire communities are electricity self-sufficient. At 80 meters of elevation, class 3 wind energy (steady 22 kph breeze) is available almost everywhere on the planet, implying wind power potential worldwide of 72 million megawatts. Harvesting just the best 5 percent of this wind energy (3.6 million megawatts) would make it possible to retire several thousand coal-fired power plants, 617 of which operate in the United States today.19 Britain’s 2008 Renewable Energy Strategy calls for renewable energy to account for 47 percent of total electricity output by 2020, 19 percent from offshore and 13 percent from onshore wind power.