How much does it cost a wind turbine?

Onshore wind turbines - price per MW (Millions Euro)

The easy answer to this question is “Today it costs less then yesterday. And probably tomorrow it will cost less than today”.

Today (April 2019) the average price is around 700.000€ per MW – that is, expect to pay around 3 ML€ for a 4 MW wind turbine. That’s a huge reduction when you consider that some years ago the easy to remember formula was 1MW = 1ML€

If you are working in the wind industry you are probably aware of the huge pressure on wind turbine prices, driven by several factors and resulting in turbines cheaper than ever.

It is interesting to observe that, in the current market condition where wind turbines are very cheap, the majority of the main wind turbine manufacturers are reporting very solid order intake figures. However, net profit is still elusive and EBIT margin are very low.

For instance, Vestas reported 9.5% for 2018 while Siemens/Gamesa 7.6% (pre PPA and I&R costs) for the same period, with a guiding range for 2019 between 7% and 8.5%.

It looks like manufacturers are having more luck in the maintenance side of the business: margins there are significantly better.

One of the consequences of this situation is that several players are leaving the market (Senvion declared bankruptcy some weeks ago) and the consolidation of the sector continue: there are rumours about a possible purchase of Suzlon (heavily indebted) by Vestas, while Enercon absorbed the Dutch manufacturer Lagerwey some time ago.

In case you are wondering about the origin of the figures in this post I’ve taken the numbers for this post from the official annual statements of Siemens/Gamesa and Vestas and not from my friends working there 😉

Wood towers for wind turbines

I always believed that wood towers for wind turbines were a solution possible only in small, domestic WTGs (somewhere around 10 kW to maybe maximum 100 kW). There are several example available, for instance this product of InnoVentum.

Well, I was wrong: I see that some years ago (2012) a Vensys 77 1,5 MW turbine has been installed on a 100 meters tower. That is quite a number: a 77 meters rotor is considered small for today standard, however it fully qualify as a “utility scale” solution.

This full scale prototype followed a 25 meters test tower built by the same companies some years before.

Developed by 2 German companies (TimberTower & TiComTec) it has been built near Hannover. The foundation is standard (concrete) and the connection between the tower and the foundation is made trough 4 meters long steel rods.

With a somehow unusual octagonal cross section the tower diameter is comparable to a standard concrete or steel solution. I see however that other geometries are possible (hexagonal or dodecagonal).

The life span of this solution looks similar to the steel alternative (20 years). Unfortunately I haven’t been able to find information regarding the cost. For the sake of clarity it is not 100% wood – few steel elements are used inside the tower.

 

Wind farm project management: PRICE2 vs PMP

In another post I have discussed my experience with the PMP certification and its (somehow weak) relationship with wind farm project management.

In a nutshell, several processes and concepts are not directly applicable given the peculiarity of our industry. Said that, I believe that the PMP has a value, because it explain in detail a lot of tools and ideas that are used daily – for instance dependency types in Gantt charts, how to handle risk management or the “stakeholder management” concept.

Some days ago I have made another PM certification, the British de facto standard PRINCE2. The main reason for that has been my curiosity to see another point of view on a very broad topic such as project management.

Both certifications are trying to live together and differentiate themselves:

  • PMP define itself as a “standard” and comes with a mountain of processes and techniques.
  • PRINCE2 define itself as a “methodology”, coming with models and templates but very few techniques.

My personal impression is that the role of the Project Manager in PRICE2 is less relevant compared to the PMP idea of the same role – basically he has some decision margins, but he’s somehow squeezed between the Project Board making the big decisions and the teams doing the actual job. As soon as one of the tolerance levels is exceeded, he need to escalate the problem to the Project Board (that in the wind industry, if it exist, is usually called “Steering Committee” or something similar).

This image is strikingly different from the one that my mentor Luis Miguel gave me when he told me that, in the infancy of the wind industry, the PM was basically “the God of construction site”. Possibly the image is a bit strong but it makes the concept crystal clear.

Said that I also had the feeling that PRINCE2 was much easier to follow in the definition of the workflow, with less processes (seven) clearly linked between them and few key concepts (“Themes” and “Principles”). Understanding the relationship between the 49 processes of PMP is not that easy: I had to print them in a huge A0 and spend a lot of time staring at it to make a sense of them.

An interesting argument that I want to mention against PRINCE2 is that it is “unfalsifiable”, in the scientific sense defined by Karl Popper. This basically means that PRINCE2 has to be tailored (that is, adapted) to the specific project to work properly. If something goes wrong, you cannot proof that the problem is PRINCE2 (because possibly the tailoring you have made was wrong).

In conclusion I would recommend both certification to people interested in knowing more about project management, even if some tools, techniques and processes are not used in wind farms construction.

Concrete tower assembly in Chile

 

An interesting video on the use of concrete towers in Chile. Among the benefits of this solution the creation of local jobs (several hundred for factory) and the increase of local content (the amount of goods and services provided locally, an important parameter in some tenders).

Concrete towers are especially cost effective when the hub height is over 100 meters. Additionally they are less prone to price variation - steel prices, at least in Europe, dropped in 2016 to rebound in 2018.

Finally transport cost are usually lower, at least if the factory is located near the wind farm as it is usual.