As 3.2 GW of support for three strategic projects was announced last September for the UK CfD auction, the results continued the trend of lower than expected prices in European offshore wind auctions.
Much like offshore wind, competitive auctions for onshore wind energy have seen prices drop dramatically in mature markets. Last year, Turkey’s first onshore wind auction produced a winning bid of $34.8/MWh and Denmark announced that new wind and solar will compete for 1 billion Danish kroner (annually) in a technology-neutral tender. However in the UK, the pace of development for onshore wind farms has slowed down due, in part, to reductions in policy support.
Auction prices have continually challenged industry forecasts and as the industry moves closer to grid parity, we need to ensure that long-term project viability is not sacrificed in favour of capacity.
With competitive auctions putting downward pressure on project costs and decreasing support subsidies driving down revenue and profit margins, how will the industry ensure profitability of future projects?
In the design phase, more accurate resource assessment and smarter site selection play an important part, although sites with the most attractive potential have already been earmarked. The choice of technology and increased hub heights and rotor diameters can lead to further increases in energy output, but this must be balanced with the potential increase to CAPEX and challenges in achieving consent.
But the focus cannot be solely on future projects, we also need to look to the assets that are already operational and approaching the end of their subsidy payment periods.
Improving generation performance while reducing OPEX costs through optimisation of the operations and maintenance (O&M) strategy is vital to ensure the future profitability of existing projects. If additional OPEX cost savings and performance gains can be found here, continued investment in onshore wind remains very attractive.
Natural Power’s Advisory and Analytics team has developed a three-step process for reducing the cost of energy (COE) through OPEX cost reduction.
First, by giving asset owner/operators a clear understanding of the performance of their turbines through analysis of SCADA and other available data; secondly, undertaking a comprehensive review of the management of the wind farm site (for owners, OEMs and independent service providers). Finally, and most importantly, the intelligence gained from the performance analysis should be translated in to an effectively managed O&M) plan that will identify faults before they become unmanageable, schedule downtime to minimise disruption and prioritise maintenance for the highest performing assets.
Natural Power recently used this approach on a large UK wind farm. They developed several key performance benchmarks that included reliability, temperature, power curve analysis and advanced performance analytics. Despite the site meeting expected availability and energy production budgets, the results of the analysis identified underperformance at specific component level.
As a result of the ongoing analysis, the maintenance of the most productive turbines was prioritised. Monitoring programs were developed for the quick identification of performance deviations which in turn allowed for the maintenance or repair of faulty components. Over the course of one year under this regime, the wind farm saw a marked increase in generation, resulting in significant revenue gains.
Performance analyses like these can make a significant impact on output without incurring large costs, in fact they can identify where budget should be spent to maximise return.
Operational benchmarking, as an instrument, allows the industry to collaborate more effectively and efficiently to establish industry-wide practices and standards to drive down the cost of energy for both current and future projects.
For an industry notorious for its secrecy, it may take some convincing for owners and operators to share their data for the greater good, although there has been some significant progress being made in the way this data is captured.
Another company enabling this transformation is WEBS (Wind Energy Benchmarking Service) which offers the ‘wind industry benchmark standard’. WEBS – a spin out of the Offshore Renewable Energy Catapult – has developed a web-based platform that offers an independent and anonymised set of onshore wind benchmarks that is gaining traction with a number of utilities and asset owners. Early adopters are already seeing the benefits through understanding what best in class performance looks like and being able to compare their assets against this.
As competition gets fierce, those who miss the value gained through the use benchmarks to improve their energy generation and reduce their OPEX may find themselves left behind.back to news