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3.3. Cash and Energy Flow Account Results
The cash and energy flow model lets us consider the business system as a financial planner would,
but from both its dynamic financial model and energy model views. We use a discounted cash flow
analysis to analyze monetary flows and for the energy flow model we use a somewhat simplified
version of the linear model presented in Table 3. Figures 9 and 10 show the annual and cumulative
revenues, respectively, for breakeven operation of the wind energy business. For the LCAE level
almost no cash flow is shown since the revenue required is only to pay for the 90.9/kWh of fuels
estimated for the capital costs of one kW of generating capacity, the cost of purchasing the LCAE
estimated fuels to manufacture, install and operate the technology of the turbine.
The larger business costs for capital, installation and operating costs at SEA0, 1, 2 and 3 (all shown
as the same line in Figure 9 and 10) start very negative for borrowing the capital costs, and turn
positive the next year. The net energy flows (Figure 10) also start very negative as the larger costs are
accounted for in SEA0, 1, 2 and 3 but due to the assumptions made shows a payback period of only
about 1.5 years. The corresponding monetary payback period is almost 12 years. The differing
assumptions used for the SEA4.0, 4.1 and 4.2 don’t include the initial or operating costs and vary over
time. A variety of good questions for how to represent the real energy and cash flows are raised.
By assuming a Production Tax Credit (PTC) subsidy the financial modeling suggests that the
revenue gift is also an energy gain for the system, and an implied reduction in the energy needed to
produce energy. It shows how standard financial assumptions need to be carefully examined, as
physical processes don’t change with accounting tricks. The effect is shown in Figures 9 and 10 as a
dashed line reducing the annual cash flow for the first 10 years. The PTC assumption effectively
reduces the investment payback period from nearly 12 years to almost 6 years. Of course, the PTC
does not increase wind turbine output, but people not thinking about what they are measuring might
confuse the tax credit as an energy grant, and show it as boosting the energy delivered to society.
Figure 9. Revenue for discounted costs and breakeven pricing: (a) Annual After Tax Cash
Flow with NPV = 0, (b) Total Cumulative Cash Flow with NPV = 0. Both assume a 6%
discount rate and show the initial effect of high first year of capital costs.