Degree Year

2008

Document Type

Thesis

Degree Name

Bachelor of Arts

Department

Economics

Advisor(s)

Jordan Suter

Committee Member(s)

Barbara Craig
Hirschel Kasper
David Cleeton
Shreemoy Mishra
John Scofield

Keywords

Wind turbine, Oberlin (Ohio), Oberlin College, Reduce, Carbon footprint, Carbon offsets, Wind power, Electricity, United States

Abstract

As concern over global climate change and fears of rising energy costs permeate our collective and individual decision making, more and more private institutions are seeking out innovative and feasible solutions to meet these issues. Many colleges and universities throughout the United States have been among the first private and public institutions to dedicate themselves to positions of climate neutrality and have begun to incorporate the ethics of conservation and commitment to environmental sustainability into their primary objectives. To date nearly five hundred institutions of higher education have signed the American College and Universities Climate Change Commitment, pledging to take immediate and prolonged action to reduce their foot print of carbon dioxide and other greenhouse gas emissions. Undoubtedly many of these schools will be able to implement extensive and inexpensive improvements in the efficiency of current facilities and practices in order to meet their objectives. However for those that have committed to complete climate neutrality, such as Oberlin College, additional measures extending beyond the traditional endeavors of an educational institution may also become necessary. One such option that has received attention from the Oberlin community is the construction of a utility scale wind turbine.

Although there are many other alternatives that the College may investigate, the choice to be considered here is between investing in a wind turbine or purchasing carbon offsets commercially. Naturally the college faces tradeoffs as it allocates its budget between turbines, offsets, and its myriad other operational activities, so a cost benefit analysis is particularly useful in comparing the advantages and disadvantages of investment in various turbine models. This paper addresses several primary objectives. First, the analysis conducted here will update previous research on the topic of the viability of wind power in Oberlin by incorporating spot market electricity prices into the calculations of net benefits and by utilizing a more conservative model of the cost schedule. This paper will also address many of the economic issues inherent in the college's desire to minimize expenditures while decreasing its footprint assuming that it will choose the option with the least cost per unit of emissions offset. Using a standard cost benefit analysis, and exploring the sensitivity of the results to a range of parameters, the results show that a wind turbine in Oberlin will under extremely conservative conditions reduce the carbon emissions footprint at a cost comparable to many commercially available carbon offsets, and that as these conditions are relaxed positive net present values emerge.

The rest of the paper will be organized as follows. The next section reviews relevant literature and focuses the motivation of this study. Section 3 is a statistical summary of the electricity price and wind speed data is presented. Following that a description of the procedures used in calculating generation, revenue, cost, and net present value figures is outlined. In section 4 the results are presented in the subsequent section, and discussion of their sensitivity to various parameters as well as various interpretations follow.

Included in

Economics Commons

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