Avoided demand charges and behind-the-meter wind: Insights from an application at the University of Minnesota

One common ownership structure for community-scale wind development in the USA is a behind-the-meter installation. In addition to allowing the displacement of retail energy, such installations may also affect peak demand, which is frequently an important component of electricity tariffs (via 'capacity' or 'demand' charges). This paper uses Monte Carlo simulation techniques on original wind and load data for the University of Minnesota at Morris in order to estimate the savings associated with lower peak demand, as a result of the installation of a 1.65-MW turbine in 2005. Results represent the first (to our knowledge) quantitative effort to estimate this aspect of the economics of wind power projects, and they suggest these previously ignored savings comprise nearly 10% of this project's gross projected revenue stream, even though the local utility's demand charge in this case is only 63% of the industry average.