Wind farms: top 5 of myths & urban legends

A curious consequence of writing a blog about wind farms is that every now and then I’m contacted by someone hating wind energy.

In the majority of the cases, the writer also ask for help to stop or boycott a wind farm somewhere in the word, apparently ignoring the fact that wind turbines help me to bring food on the table every night.

To add insult to injury, in the emails they often ask me support to confirm some pseudoscientific “facts” about wind turbines.

I’ve collected some of them in this post – other are coming from anti-wind energy propaganda websites that I read on the subway when I’m bored to discover new, unexpected effect of windmills.

Some of them are similar to the urban legend of the albino alligator in the sewers of New York.

Feel free to contribute!

5. Wind farms causes bush fires. Well, it’s true that (very, very infrequently) a wind turbine burns somewhere. But to say that they are burning woods and bushes it’s a bit too much.

4. The foundations are poisoning the water. Unless you pump 1 million cubic meters of bentonite to do a piled foundation nothing will happen to the water – a foundation is basically only a big stone.

3. The turbine is scaring the fishes – I’m not fishing as much as before. This is courtesy of a fisherman in Juchitan de Zaragoza (Oaxaca, Mexico). I doubt that a fish 10 meters underwater can really hear a WTG.

2. You need more energy to build a wind farm than the energy produced by the turbines. I’ve seen several (serious, scientific) papers on the subject. The energetic payback is usually only a few months.

And the winner is...

1. Wind farms change the weather locally. I love this one. The theory is that, slowing the wind, wind farms modify somehow the climate in the area – some urban legends say that they warm it, some others that they make it more foggy. Well, at least here in norther Germany where I’m living they are not making it any warmer.

Cryptocurrencies from wind energy

In the first half of 2017 cryptocurrencies (like Bitcoin, Ether, etc.) experimented an incredible growth – considered a bubble by some and as a proof that times are changing by others.

What is interesting (at least to someone working in the renewables like me) is this link between cryptocurrencies and renewables.

Cryptocurrencies are created with a process called “mining”. In a nutshell, computational power is used to maintain the network of computer with the ledger of transactions. Computers, electricity and time to set up the network aren’t free. Therefore the “miners” are rewarded with new cryptocoins that can be converted in other currencies, products or goods.

An artist from Berlin, Julian Oliver, created an installation - a good example of conceptual art - to convert wind energy into electricity to mine cryptocurrencies (PDF here if the link doesn’t work). Appropriately, the name of the installation is “Harvest”.

I have seen several calculations of the energy necessary on a worldwide scale to run Bitcoin and other similar networks. It’s difficult to cross check the numbers but they look quite impressive. In one of this calculation the total power used is more than the energy needed by small countries like Cyprus.

On the short term I don’t foresee people purchasing multi megawatt WTGs to create cryptocurrencies. However, given the amount of power involved in computing, the idea to power datacenter with renewable sources of energies doesn’t look so unrealistic to me in several years from now.

 

Envision business model

Internet is evolving very fast – now it’s possible to find a free and fast connection almost everywhere.

So, during a VERY long bus trip, I was able to get online and keep investigating on one of the fact that puzzle me more in the wind industry: the fact the Chinese WTG manufacturers are not gaining market share outside their home market.

I already wrote a post about this subject. However, today I just found online an interesting paper on this subject:

“Business model innovation for internationalization: the case of the Chinese wind turbine manufacturer Envision”.

Envision is one of the few (if any) exceptions to the rule: in the last months they have been able to win quite a lot of projects abroad, for instance in the Argentinian tenders RenovAR and RenovAR 1.5.

The authors of the paper think that the success of Envision is based on several key differences in their business model. You can obviously read the full document by yourself, but I will try to summarize the main ideas in this post.

A different marketing position. The concept is that they are selling “cheap technological wind turbines” filling a space in the market somewhere in between “cheap unreliable Chinese WTGs” and “expensive high tech European turbines”. I’m aware that I’m over simplifying here and I hope that no one will be offended.

“All-star”, international human resources. The idea here is that they started from the beginning with the very best specialists in each field, skipping (or shortening as much as possible) the initial learning phase.

The authors also states that they are “customer oriented”. I disagree with this point.

All company in the word needs to be customer oriented, otherwise they simply will not survive in a free, competitive market – they can only survive thanks to monopoly, trade barriers, etc. I think that all OEMs struggle to be customer oriented.

The fourth and last difference in the business model, according to the document, is “supply chain”. The idea is that Envision is using a peculiar mix of cheap China based sourcing and Key Partnerships with company such as Siemens, ABB, etc. to source the most critical elements of the turbines.

I also partially disagree with this concept. To the best of my knowledge, quite a lot of OEMs are purchasing a certain amount of components in China, while for other “business critical” component they have similar Key Partnership.

Wind farm testing and commissioning

This is a short (and incomplete) summary of the main test which are usually performed in a wind farm.

Test can be divided in 3 categories: factory tests, site tests and performance tests.

Some test are performed before the start of the construction works, others during construction and commissioning and others when the wind farm is completed and producing power during the defect liability period.

Factory tests

These tests, usually called FAT (Factory Acceptance Tests) are performed during the manufacturing of the WTGs and the other main equipment of the wind farm (such as the substation main transformer).

On the WTGs side, the most usual one are:

  • Test on towers (dimensional inspection, coating, non-destructive reports, etc.)
  • Electrical components (generator, transformer, converter system, etc.)
  • Mechanical components (gear box, yaw and pitch systems, etc.)

For the BoP, you will test at the very least the main transformer and possibly the MV cables.

Site acceptance tests

Site  acceptance tests can be divided in test on commissioning and test on completion.

The “commissioning” of a wind turbine is a setoff activities performed to confirm that the wind turbine has been correctly installed and it’s ready for energy production. You normally need to have  the grid connection to do the commissioning – this means that the wind farm substation (or the connection to the grid) should be ready.

A very long list of items is checked at this point. Some of the key ones are run test with the WTG connected and producing power, verification of protection systems, test of power measurements, plus many mechanical tests.

Basically, you want the turbine to work and produce many hours in a row (200, 300 or more) without faults. It can lead to delays if not enough wind is available to perform the test.

There is also a separate commissioning for the main  transformer, the substation (protection systems, power measure equipment, MV switchgear) and the cables.

Test on completions are usually for the full wind farm.

The whole system has to work without failures for many hours generating power. Among other things you want to confirm that the main transformer can evacuate correctly all the power without overheating, abnormal losses, etc..

SCADA system is assessed as well.

Performance test

This group include test like availability, power curve and acoustic noise level.

“Availability” of the whole wind farm is assessed.

Availability means that the wind farm (and each and every wind turbine) is operating for a relevant percentage of time (95%, 97% or even more depending on the contract).

Power curve is the relation between the wind and the output of the wind turbine. It is critical that the WTG produce as much as expected – otherwise the basic assumptions behind the business model of the project will be wrong.

Wind turbines manufacturers business model

Today I’ve been asked by a reader about the business model of wind turbines manufacturers (also called OEM, Original Equipment Manufacturer).

As I think it’s interesting question, I decided to write a post about it.

In a nutshell, wind turbine manufacturers are selling a product.

This product is assembled pretty much like a car – thousands of components are purchased from a myriad of subcontractor.

In general OEMs are competing to offer a lower cost of energy (cheaper turbine, or turbines producing more energy). However, they can also choose to fight for a specific market niche (for instance, turbines making less noise that are apt for installation in urban areas).

Usually turbines (WTGs) are offered in one of these formats:

Supply only: only the WTG is sold, directly at the factory (Ex Works), at the wind farm area (delivery on site) or somewhere in between. The customer must provide the infrastructure (roads, MV reticulation, substation, etc.) and the cranes for erection.

Supply and installation: the WTG is sold “ready to produce”, installed, erected and commissioned. Customer must provide the infrastructure (“balance of plant”) following the manufacturer specifications.

EPC / Turnkey: the customer is paying for a full package all inclusive. This solution is obviously much more expensive but with less risk and hassle for the purchaser.

The contract itself is usually quite detailed about terms, conditions, roles and responsibility of the parties – for instance, customer must provide all necessary permits, access to site, grid must be available for commissioning, etc.

Payment terms are another topic open to discussion - usually a relevant down payment is asked (somewhere around 20%) and after that other standard milestones for payments are the delivery of WTGs at site, the commissioning of the turbine, etc. As in every business, the seller tries not to be “cash flow negative”.

Another relevant part of the business model is the O&M (operation and maintenance). Basically, it’s a multiyear contract between the turbine manufacturer and the customer where the manufacturer takes care of the maintenance of the equipment. This includes standard, periodic works (such as change of the oil of the gearbox) but also emergency interventions. The level of service provided can vary – usually several types of O&M contracts are proposed to the customer, and there is flexibility to change the scope.

The huge benefit of these contracts is that they provide the turbine manufacturer with a steady, predictable cash flow.

Finally, some wind turbines manufacturers are also developers. That is, a subsidiary of the manufacturer develops a wind farm (do the engineering, apply for the permits, etc.) and then the project is sold at some stage of its life.

Going Glocal: how to create local content

Wind farm local content

It is not unusual for public tenders in the renewable energy industry to request for a certain percentage on “local content requirements” (LCR).

This  requirements exist (and are usually very demanding) in the majority of countries in South America (Brazil, Uruguay, Argentina) and in several other emerging countries (Morocco, Russia, etc.).

The required percentage can be something reasonable (20%-30%) all the way up to an “almost impossible to reach” 65% set by the Russian government.

Laws and regulations on local content can include a minimum required value, a bid score bonus for offers with an high local content or both.

What are bidders doing to increase local content?

For a wind turbines manufacturer, an easy start could be to source locally as much balance of plant as possible. This strategy make sense if commodities like steel, concrete, earthworks, cabling, etc. are considered in the definition of the local content.

Some more stringent requirements can include in the definition of local content only the wind turbine (in an effort to develop specialized factories in the country) or only “good and services that can be produced locally”, making the life of the procurement guys much more complicated.

After the balance of plant, the next logical step would be to produce steel or concrete towers locally.

Towers and towers manufacturing facilities are usually something with a low technological content, easy and uncomplicated (I hope my colleagues in the Tower Department will not hate me for this).

They do however represent a significant share of the cost of the project.

On top of that, they can usually be manufactured by existing company doing similar products (like steel chimneys).

With both BoP and towers you can easily land somewhere between 30% and 40% of the total cost of the project.

It can be complicate to do more locally.

Another trick I’ve seen is to open a “nacelle assembly plant” in the country. More expensive, but it can give a huge boost if you can declare the full nacelle as “local”.

The following step, much more risky, is to manufacture blades locally.

This strategy usually require a much bigger investment, and it’s justified only in case of VERY big tenders (like the case of Siemens in Morocco). Only large, solid pipelines can absorb the cost.

Type of towers – stiff, soft or soft soft?

In the last month I spent a lot of time discussing about “soft soft” towers.

But what does it exactly means?

Steel tower for wind turbine are classified as stiff, soft, or soft soft based on the relative natural  frequencies of tower, rotor and blades.

You obviously want to avoid that your tower is excited by dynamic loads and start resonant oscillations.

The primary sources of dynamic loads on the tower are the rotational speed of the rotor (usually indicated with P) and the blade passing in front of the tower. The blade passing speed will obviously be 3P. I think that it’s worth mentioning that rotational frequency loads will arise only when the blades are unbalanced.

We call “stiff” (or “stiff stiff”) a tower whose fundamental  natural frequency is higher than that of the blade passing frequency. This is a very good thing (the tower is unaffected by  the rotor) but a bigger mass is needed – therefore the cost can be very high. Additionally, a stiff tower tends to radiate less sound.

“soft” is a tower whose fundamental frequency is lower than the blade passing frequency, but above rotor frequency.

“soft soft” is a tower whose natural frequency is below BOTH rotor frequency and blade passing frequency.

“stiff stiff” design is not usual.

Currently, towers in  the market are either “soft stiff” or “soft soft”.

Soft towers are usually lighter (= cheaper) but require more dynamic analysis.

Sell a service, not a product: the Indian way to wind energy

Top 10 country 2016 wind power installed capacity

India is becoming a very big market for wind energy.

After the decline of many European markets (Spain in primis) India is now fighting with Germany to be the third bigger nation in terms of yearly installed megawatts (somewhere around 3600 MW).

You can see the other in the graphic above, that I've stolen from the GWEC (Global Wind Energy Council) report 2016.

What is interesting (at least for me) it’s the “double role” of some companies.

As it happens in China, where energy utilities are also wind turbines manufacturers (like Guodian with United Power) also in India there is an “hybrid situation” where companies like Suzlon are also wind farms developers and providers of construction services.

As the developing of a wind farm is notoriously a mess (lot of contracts to be negotiated, lot of financial and technical risk, and in general lot of uncertainty – above all in “new” markets) Suzlon in India is selling the “full package turnkey solution”, including development risk, to his customers.

This is a model that has been used much more unfrequently by other competitors such as Vestas and Siemens/Gamesa.

Basically, the concept is to start from the very beginning: from wind analysis to land acquisition, all the way up in the chain (PPA, BoP, wind turbine supply, service, etc.).

This approach is particularly attractive for people with money, but without specific competence in the wind business.

In a nutshell, you have single counterpart who is selling a service (or maybe, more appropriately, proposing an investment).

This could be one of the factors that allowed them to get a very big market share in their home market.

In the word of the wind turbine manufacturer this is an end-to-end solution:

The major sections of the delivery process where Suzlon can add value are Micrositing, Grid Connection, HV/Substation creation, Electrical (Reticulation), Laying Roads and Foundations and Project Scheduling. (…) In India, Suzlon's end-to-end solutions start at wind mapping and land sourcing and extend right across the entire value chain.

Top 5 owners of wind turbines

Ever asked yourself who is buying wind turbines?

There are quite a lot of customers profiles – from tiny companies (or even a couple of farmers joining their strengths and lands in a renewable energy project) to professional developers, factories interested in using the energy produced all the way up in the ladder to the “maxi-macro-utilities”.

Predictably, utilities are the bigger purchaser (and in some cases, producer) of wind turbines.

If you are familiar with the business you will not be surprised by the country appearing more often in the list – they have been in the top 3 market quite a lot of years.

 

This is the list of the 5 bigger players:

 

#5: Datang (China, 10 GW). One of the 5 macro utilities providing energy to the Chinese market.

#4: NextEra Energy Resources (USA, 12 GW). Their logo is really ugly, but they own almost 90 wind farms in the States.

#3: Huaneng (China, 12 GW). Another of the famous Chinese utilities.

#2: Iberdrola (Spain, 14 GW). As they own 20% of Gamesa, it’s not a surprise that they work mainly with their WTGs.

And the winner is…

#1: Guodian (China, 21 GW). The state owned company use their own wind turbines (United Power), in the 2.5 MW range.