Concepts and Definitions

Concepts and Definitions

A

ASSET ROTATION

Strategy aimed at crystallising the value of a project by selling a minority stake in an asset and reinvesting the proceeds in another asset, targeting greater growth.

AVAILABILITY

The percentage of time a wind turbine is technically available to capture the wind resource and convert it to electricity.

B

BLADES

The large “arms” of wind turbines that extend from the hub of a generator. Most turbines have either two or three blades. Wind blowing over the blades causes the blades to “lift” and rotate.

BOP

Balance of plant. All the supporting components and auxiliary equipment of the wind farm other than the generating unit.

C

CAGR

Compound annual growth rate

CAPEX

Capital Expenditure. Funds used by a company to acquire or upgrade physical assets such as property, industrial buildings or equipment (ex: construction of wind farms).

CO2

Carbon dioxide. A heavy colourless gas that does not support combustion, dissolves in water to form carbonic acid, is formed
especially in animal respiration and in the decay or combustion of animal and vegetable matter, is absorbed from the air by plants in photosynthesis, and is used in the carbonation of beverages.

CASH-FLOW

Amount of cash generated and used by a company in a given period. Cash flow can be used as an indication of a company’s financial strength.

COD

Commercial Operating Date. Date at which the project starts officially operating, after the testing and commissioning period.

COP 21

Conference of parties, UN Climate Change Conference held in Paris.

CORE OPEX

Includes costs of supplies and services and with personnel, costs that are controllable by the company.

CURTAILMENT

The forced shut-down of some or all of the wind turbine generators within a wind farm to mitigate issues associated with turbine loading export to the grid, or certain planning conditions. Curtailment is controlled by the regional transmission operator.

D

DIVIDEND PAY-OUT RATIO

Measures the percentage of a company’s net income that is given to shareholders in the form dividends. (Total Annual Dividends per Share / Earnings per Share).

DIVIDEND POLICY

Set of guidelines a company uses to decide how much of its earnings it will pay out to shareholders.

E

EBITDA

An accounting measure calculated using a company’s net earnings, before interest expenses, taxes, depreciation and amortization are subtracted, as a proxy for a company’s current operating profitability.

EPS

Earnings per share. The portion of a company’s profit allocated to each outstanding share of common stock.

EQUITY CONSOLIDATION

Accounting process of treating equity investments, in associate companies. Equity account is usually applied where the entity holds 20-50% of voting stock.

F

FEED IN TARIFFS

Remuneration framework that guarantees that a company will receive a set price from their utility, applied to all of the electricity they generate and provide to the grid.

FINANCIAL INVESTMENT

An asset in which to put money into with the expectation of obtaining gains or an appreciation in to a larger sum of money.

FOREX

The market in which currencies are traded.

FULL SCOPE

Scheme of maintenance in which a third party supplier is directly responsible for the full maintenance of the project. The project pays a fixed fee and assumes low risk.

G

GC

Green certificate. Tradable commodity proving that certain electricity is generated using renewable energy sources.

GHG

Greenhouse gases. Gases that trap the heat of the sun in the Earth’s atmosphere, producing the greenhouse effect; the two major greenhouse gases are water vapour and carbon dioxide; lesser greenhouse gases include methane, ozone, chlorofluorocarbons, and nitrogen oxides.

GROSS PROFIT

An accounting measure calculated using a company’s revenue minus its cost of goods sold. Gross profit is a company’s residual profit for selling a product or service and deducting the cost associated with its production and sale.

GW

Unit of electric power equal to 1,000 MW.

GWH

Equal to 1,000 MW used continuously for one hour.

H

HEDGING

Risk management strategy used in limiting or offsetting probability of loss from fluctuations in the prices of commodities, currencies, or securities.

I

INSTALLED CAPACITY

Capacity installed and ready to produce energy.

ITC

Investment tax credit. Tax incentive in the US which differ from the Production Tax Credit in the sense that the Tax Equity Investor receives a one shot tax credit that covers a percentage of the investment.

L

LCOE

Levelized cost of electricity. Provides a common way to compare the cost of energy across technologies. LCOE takes into account the installed system price and associated costs such as financing, land, insurance, transmission, operation and maintenance, and depreciation. The LCOE is a true apples-to-apples comparison of electricity costs and is the most common measure used by electric utilities or purchasers of power to evaluate the financial viability and attractiveness of a wind energy project.

M

M3

Modular maintenance model. Maintenance scheme which is halfway between the self-perform and a full scope maintenance, with some activities being performed in-house.

MW

Unit of electric power equal to 106 watts.

MWH

Equal to 106 watts of electricity used continuously for one hour.

N

NET CAPACITY FACTOR (NCF)

The ratio of a plant’s actual output over a period of time, to its potential output if it were possible for it to operate at full nameplate capacity continuously over the same period of time. Also known as Load Factor.

NET DEBT

A metric that shows a company’s overall debt situation calculated using company’s total debt less cash on hand.

NET INVESTMENT

Equals (Capex + Financial investments – Financial divestments).

O

O&M

Operations and maintenance. All the activities necessary to run the windfarm in a reliable, safe and economical way including for instance maintenance, repair, monitoring and operation.

P

PPA

Power purchase agreement. A legal contract between an electricity generator (provider) and a power purchaser (host).The power purchaser buys energy, and sometimes also capacity and/or ancillary services, from the electricity generator.

PTC

Production tax credit. The result of the Energy Policy Act of 1992, a commercial tax credit in the US that applies to wholesale electrical generators of wind energy facilities based upon the amount of energy generated in a year.

R

RENEWABLE ENERGY

Energy that is derived from resources that are regenerative or that cannot be depleted including wind energy, solar, biomass, geothermal, and moving water. Also known as alternative energy.

REC

Renewable energy credit. Represents the property rights to the environmental, social, and other nonpower qualities of renewable electricity generation. A REC can be sold separately from the electricity associated with a renewable energy generation source.

RES

Renewable energy sources.

RCF

Retained cash-flow. The amount available to pay dividends to shareholders and/or to fund new investments and includes EBITDA after paying interests and tax equity investor’s costs and after paying distributions to equity partners and taxes.

ROIC CASH

Return on Invested Capital (based on Cash Flows). Represents a measure of the profitability and value creation of a project or company.

RPS

Renewable Portfolio Standard. Regulation in the US that places an obligation in certain states on electricity supply companies to source a specific percentage of their energy from renewable sources.

S

SELF-PERFORM

Maintenance scheme in which all the maintenance works are done inhouse which means that the project assumes the whole risk.

SF6

Sulfur hexafluoride. Colorless, odorless, non-flammable and potent greenhouse gas which is used in the electrical industry especially in gas insulated switchgear power installations.

SOLAR PV

Solar photovoltaic. Plant that generates electricity by means of  solar power through photovoltaics, consisting on an arrangement of several components, including solar panels to absorb and convert sunlight into electricity, a solar inverter, cables and other electrical accessories.

T

TSR

Total Shareholder Return. Measures the return that the stock provides to the shareholder, including dividends paid and the stock price appreciation.

W

WATT (W)

The rate of energy transfer equivalent to one ampere under an electrical pressure of one volt. One watt equals 1/746 horsepower, or one joule per second. It is the product of voltage and current (amperage). Watts are the yardstick for measuring power.

WIND ENERGY

Power generated by converting the mechanical energy of the wind into electrical energy through the use of a wind generator.

WIND FARM

Used in reference to the land, wind turbine generators, electrical equipment, and transmission lines for the purpose of generating wind energy and alternative energy.

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