Question 2.

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A wind farm generating 800 GWh per year has a total capital cost of 270 million. Assume both items of data are to three significant figures. The capital is to be repaid over a period of 20 years at an interest rate of 10%. Table 1 Annual repayment per 1 000 of capital Repayment period (years) Interest rate 6% 8% 10% 12% 98.95 $112.98 127.82 143.39 92.36 106.70 121.93 137.94 87.18 101.85 117.46 133.88 83.05 98.03 114.01 130.81 79.68 94.98 111.30 128.46 a. Using Table 1 above, calculate the annual capital repayments required for this wind farm. Give your answer in millions. (2 marks) b. The annual operating and maintenance costs amount to 4% of the annual capital repayments Calculate the total annual cost and hence the unit cost of the output from this wind farm in pence per kWh. (3 marks) c. Calculate the reduced unit costs in pence per kWh) that would result from each of the following three changes. Assume in each case that all other factors remain the same, and that operating and maintenance costs are always equal to 4% of capital repayments: . a 20% reduction in the capital cost a 20% increase in the repayment period a 20% reduction in the interest rate. . Briefly compare the results