Larger-scale turbines increase the electricity more than proportionately to the increase in costs. A 1 megawatt turbine costs $2.6 million, with the remaining equipment costs unchanged, for a total required investment of $4.1 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?

Exercise Question 2

In context to Question 2, be sure to indicate:

The baseline NPV of the large-scale turbine (excluding the load-shift technology ("remaining equipment costs"))

The NPV including the load-shift technology ("remaining equipment costs")

The conversion factor for the large-scale turbine including the load-shift technology

Is the large-scale turbine a viable option? (15 points)

Finally, calculate the breakeven CF for both the Utsira pilot project and the large-scale turbine (the point at which the CF causes total costs to equal total discounted revenue). Compare and contrast the CFs and provide some context for the pros and cons of each option. (10 points)

Thank you!