With any investment, you pay something now to get something else later. We assume that a dollar in your pocket today is more valuable to you than a dollar tomorrow. The reason why we say that, is that you could invest that dollar somewhere or put it into a bank account and earn interest on it.
To tell the difference between today's and tomorrow's dollars, we therefore use the interest rate. If we do that, 1 dollar a year from now is worth 1/(1+r) to you today. r is the interest rate, for example 5 per cent per year.
Thus 1 dollar a year from now is worth 1/1.05 = 0.9523 dollars today. 1 dollar 2 years from now is worth 1/(1.05*1.05) = 0.9070 and so forth. These present day values are often termed Net Present Value (NPV). NPV depends on the time period and the assumed interest rate.
But what about inflation? To deal with that we shall simply only work with dollars which have the same purchasing power as a dollar does today. Economists call that working with real values, instead of nominal ones.
An investment in a wind turbine gives you a real return, i.e. electricity, and not just a financial (cash) return. This is important, because if you expect some general inflation of prices during the next 20 years, you may expect electricity prices to follow the same trend.
Likewise, we would expect operation and maintenance costs to follow roughly the same price trend as electricity. If we expect all prices to move in parallel (with the same growth rates) over the next 20 years, then we can do our calculations quite simply: We do not need to adjust or calculations for inflation, we simply do all of our calculations in the price level of our base year, i.e. the year of our investment.
In other words, when we work with real values, we work with money which represent a fixed amount of purchasing power.
Since we are studying the real rate of return (profitability) of wind energy, we have to use the real rate of interest, i.e. the interest rate minus the expected rate of inflation. (If both rates are high, say, above 10 per cent, you cannot really subtract the percentages, you should divide like this (1+r)/(1+i) but let's not make this into a course in economics).
Typical real rates of interest for calculation purposes these days are in the vicinity of 5 per cent per annum or so. You may say that in countries like Western Europe you could even go down to 3 per cent. Some people have a very high demand for profitability, so they might wish to use a higher real rate of interest (hurdle rate), say, 7 per cent. Using the bank rate of interest is nonsense, unless you then do nominal calculations, i.e. add price changes everywhere, including to the price of electricity.
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