Jiminy Peak Energy Project - Assignment Example

Jiminy Peak Energy Project Executive Summary Jiminy peak, a snowboarding and skiing resort found in the Berkshire Mountains of the western parts of Massachusetts is the largest resort of its kind in the states of southern New England. It has grown and expanded to be one of the most skiing destination because it is favored by its good and accessible location. The success of this resort is from a reputable marketing team as well as an investment in the energy sector while utilizing mercinery which were the main findings of the success of Jiminy peak. On the other hand, the exploitation of energy was a key factor to the growth of the resort and thus it was recommended of creating an environmental friendly ecosystem which was further enhanced by usage of wind to generate more energy to pump to the power grid. Introduction Jiminy peak, a snowboarding and skiing resort found in the Berkshire Mountains of the western parts of Massachusetts is the largest resort of its kind in the states of southern New England. Founded in 1948, its offers skiing and snowboarding, outdoor activities such as Mountain bike riding and many more sporting activities. It gained four season resort status in the year 2005 symbolizing its growth. It is strategically placed between some of the biggest cities around, for example, it is just three hours away from Boston and New York City and about an hour’s drive from other major cities such as Springfield, Massachusetts and Albany. Findings Jiminy Peak has grown to become one of the most important ski destinations due to some key factors that play to its favor such as its strategic location between such vast cities, the good managerial decisions being undertaken within this organization leading to its much deserved development. Another factor that makes Jiminy Peak to be a key attraction is the fact that it is very vast, purely because of the developments that have taken place leading to so many activities being incorporated in these 170 acres. The number of snowboarding and ski trails totals to forty five, has three terrain parks six person chairlifts of high speed and nine lifts. Much of the success of this resort is attributed to the marketing teams, who have been able to market the resort and make it accommodate high numbers of sport activity lovers even in the summer. For this purpose, the resort has set up a mountain coaster, the first resort to do so in the whole of the East Coast, they have also managed to put up more summer sport devices such as alpine super slides, gigantic swings and more activities such as bungee jumping, rock climbing, scenic rides, hiking and camping. They have also certain activities for the younger generation ranging from bouncy playgrounds, rope adventures and spider web activities to mini golf. This has seen them record massive numbers like quarter million visitors from winter period alone and one hundred thousand fun enthusiasts from the summer period. With all this much needed machinery that are so vital in the running of Jiminy peak mountain resort the energy consumption has greatly sky rocketed. This is greatly because; the resort has to operate machinery that is very efficient even in snowy conditions especially at the beginning of the winter season where they record the largest number of visitors. This sees the resort consuming more than 7.5 million kilowatt hours of electricity per annum, this consumption rate is very high considering the fact that certain energy conservation efforts were taken, bringing down the energy consumption by 25 percent. Sixty percent of this energy usage happens in the winter season. Jiminy peak energy costs were also susceptible to outside influences such as the period between the years 2003-2006, where they registered a ninety percent rise in energy costs due to the surge in international oil prices recorded in that period. Recommendations After much research undertaken by the SED (sustainable energy developments) team, they have noted that the western parts of the resort experience enough wind especially in the winter season when most of the energy is used up. This area is conducive and has been singled out as the most viable to set up wind turbines. This green energy, generated from the turbines will hence be used to bring down the operational costs within the resort which amounts to sixty percent of all the annual deeds. This feasibility study was authorized by the president of the resort, Mr. Brian Fairbank and with the help of Massachusetts technology collaborative in form of a grant. Also taken into consideration apart from well known issues in a study of this magnitude such as technical and financial problems, the study also took into account the effort needed to ensure that there were no negative impacts on the environment especially on wetlands, endangered species around the area and also the birds. This process was not going to be a walk in the park, because Jiminy peak had planned to set up a single, one megawatt wind turbine and to that effect they had obtained help in form of funding from two organizations. Namely, Renewable energy trust fund had awarded them a five hundred and eighty two thousand ($582,000) grant which had been administered by the Massachusetts technology collaborative and a 1.8 million dollar loan from a local area bank. But, even with the backing of these three organizations none of the wind turbine manufacturers would respond to requests and proposals sent out by the resort due to the fact that none dealt with orders of less than ten units. But to the aid of Jiminy peak, General electric energy provided them with a single unit, and being the smallest model it had a capacity of 1.5 megawatts. These presented a trickier situation because they had only budgeted for a 1 megawatt unit. Jiminy peak had to go back to the negotiating table with the local bank in the hope that the loan would be increased from 1.8 million dollars to 3.3 million dollars. The 0.5 megawatt increase in capacity also presented a new problem for the resort because they could not afford to buy more capacity than they actually needed, generation of this electricity had to be equal with usage because storage is not an option. The 3.3 million dollar cost would get the return on investment in a period not exceeding four years. With the $3.3 million dollar investment from the local bank plus the grant from the renewable energy trust fund, this totals the whole cost of the project to $3.9 million. The bank loan is provided at an interest rate of 7.3 percent leaving a difference of about 18000 dollars. The project follows the MACRS which is a double declining balance depreciation schedule for five years adding the half year depreciation in the first and last recovery years. The resort’s income tax has been rated at 40 percent. This will benefit the resort because it has more than enough income due to the factors that are highlighted earlier from the available deductions and credits. The turbines life cycle goes for 25 years and the projected incomes are as follows, extended operations profits, after tax amounting to $100,000, RECs amounting to $166,667, this levels will continue throughout the cycle. This increase in capacity was later ruled out as a potential problem because the 1.5 megawatt turbine would only generate one third of the resort’s annual energy needs. Also, the winds in this area hit their peak in winter periods, where much electricity was needed sue to increased capacity and to facilitate snow making. The electricity that would be produced in excess was to be connected to the national power grid to be sold and this would bring in more income to the resort. Another very lucrative financial area in this project was selling of renewable energy credits or RECs as they are commonly referred to as. These renewable energy credits show that the buyer was in possession of renewable energy which made them acquire a ready market. A marketing institution of RECs in Pennsylvania acquired the deal with the resort of three years, amounting to a total cost of five hundred thousand dollars. This deal came to about $166,667 per annum. The table below shows the reduction of electricity used from the main power grid Consumption without conservation efforts 9,404,289 Consumption reduced from conservation -2,342,668 Energy consumed a year later 7,061,621 Energy generated to the resort from jiminy -2,300,000 Energy to be consumed from the national power grid 4,761,621 The three year deal agreed upon by the resort and the RECs marketing institution of Pennsylvania raised concerns with the local bank because the agreed loan deal between themselves and the resort went for 10 years and with this issue looming the Massachusetts technical collaborative came to the resorts aid signing another contract which guaranteed that the remaining seven year credits would be purchased by them. This made the loan to become viable and the wind generating project came to life and was to be known as Zephyr. These turbines generate electricity in speeds of 6-55 miles per hour but its peak production period is mainly in the winter. The RECs Zephyr to the Jiminy peak resort and also to the surrounding environment as a whole. The project generates about $160,000 yearly, this alone from the sale of excess electricity which is connected to the power grid, about $46,000 per annum in production tax credits for the first ten years. The resort and the engineering that chose the site to set up this project also show a great deal of caring for the beauty of the terrain and the environment with the way the turbines are set up with the backdrop facing the mountain side and not the blue sky. Wind energy as we know is green energy, a renewable source of energy and because of that the project has been able to cut down the emissions of dangerous green house effect causing gases such as carbon dioxide which has been reduced by 7.1 million pounds, carbon dioxide is heavily linked to global warming. Other gases include, sulfur dioxide which negatively affects the environment by causing acid rain which destroys vegetations and soil quality, affecting also buildings. It has been cut by 33,000 pounds. Nitrogen oxide which directly affects humans by causing asthma will be cut by 10,000 pounds. This project is playing a major role in cleaning up the environment and is envy to many. Works Cited Jiminypeak.com,. New England Resort | Jiminy Peak Mountain Resort | New England Family Ski Resorts In Massachusetts. N. p., 2014. Web. 27 May. 2011 Read More