UK: Repowering will strengthen asset base

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Adam Barber
August 24, 2015
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UK: Repowering will strengthen asset base

Twenty-five years ago, some of the earliest European wind farms were being developed and built.

Soon after, the wind industry starting operating at the first real semblance of scale, with important first projects demonstrating some promising ambition.

Now scroll forwards to the present day.

The industry of 2015 is a far cry from that which was only really starting to be understood in 1990. And as such it is not surprising that, with many of those early projects now starting to hit the end of their consented terms, a crossroads has been reached.

Take for instance, E.On’s Ovenden Moor Wind Farm, in West Yorkshire. When built, this was one of just five projects to benefit from the UK’s Non Fossil Fuel Obligation.

Coming online in 1993, the project performed well and, as a result, in 2012 it made sense for its owners to look at repowering options.

Soon, the park will begin a much-anticipated upgrade programme that will see the existing infrastructure removed and replaced with half as many turbines generating more than twice as much power.

However, while repowering sites presents significant long-term revenue gains, it must be set against the upfront capital spend. In the UK, with the Renewable Obligations Certificates ending and with Contracts for Differences providing no support to the onshore wind market, extending the life of a project has become an increasingly attractive option.

That is precisely why we are starting to see an increasing focus on independent asset managers, like Greensolver, to drive greater efficiencies through the latter years of a project’s life.

Here, by maximising operational availability and by searching for incremental performance gains, while limiting any further capital expenditure, investors can generate greater long-term returns from the asset class.

However, there is arguably a more important net result that has become apparent as developers and investors apply greater focus on those projects that they back – either through repowering or through extending a project out beyond its initial anticipated life. Namely, that this self-selection is having a positive impact on the strength and quality of the remaining asset class.

In other words, in the future only those projects of significant operational and performance merit will warrant additional time and capital expenditure.

Sure, there is no doubt that the political blood-letting currently being experienced in the UK is causing significant long-term market concern. But there is also no denying that in pursuing such deep cuts, the asset base that remains will, in the long-term, be all the stronger for it.

Twenty-five years ago, some of the earliest European wind farms were being developed and built.

Soon after, the wind industry starting operating at the first real semblance of scale, with important first projects demonstrating some promising ambition.

Now scroll forwards to the present day.

The industry of 2015 is a far cry from that which was only really starting to be understood in 1990. And as such it is not surprising that, with many of those early projects now starting to hit the end of their consented terms, a crossroads has been reached.

Take for instance, E.On’s Ovenden Moor Wind Farm, in West Yorkshire. When built, this was one of just five projects to benefit from the UK’s Non Fossil Fuel Obligation.

Coming online in 1993, the project performed well and, as a result, in 2012 it made sense for its owners to look at repowering options.

Soon, the park will begin a much-anticipated upgrade programme that will see the existing infrastructure removed and replaced with half as many turbines generating more than twice as much power.

However, while repowering sites presents significant long-term revenue gains, it must be set against the upfront capital spend. In the UK, with the Renewable Obligations Certificates ending and with Contracts for Differences providing no support to the onshore wind market, extending the life of a project has become an increasingly attractive option.

That is precisely why we are starting to see an increasing focus on independent asset managers, like Greensolver, to drive greater efficiencies through the latter years of a project’s life.

Here, by maximising operational availability and by searching for incremental performance gains, while limiting any further capital expenditure, investors can generate greater long-term returns from the asset class.

However, there is arguably a more important net result that has become apparent as developers and investors apply greater focus on those projects that they back – either through repowering or through extending a project out beyond its initial anticipated life. Namely, that this self-selection is having a positive impact on the strength and quality of the remaining asset class.

In other words, in the future only those projects of significant operational and performance merit will warrant additional time and capital expenditure.

Sure, there is no doubt that the political blood-letting currently being experienced in the UK is causing significant long-term market concern. But there is also no denying that in pursuing such deep cuts, the asset base that remains will, in the long-term, be all the stronger for it.

Twenty-five years ago, some of the earliest European wind farms were being developed and built.

Soon after, the wind industry starting operating at the first real semblance of scale, with important first projects demonstrating some promising ambition.

Now scroll forwards to the present day.

The industry of 2015 is a far cry from that which was only really starting to be understood in 1990. And as such it is not surprising that, with many of those early projects now starting to hit the end of their consented terms, a crossroads has been reached.

Take for instance, E.On’s Ovenden Moor Wind Farm, in West Yorkshire. When built, this was one of just five projects to benefit from the UK’s Non Fossil Fuel Obligation.

Coming online in 1993, the project performed well and, as a result, in 2012 it made sense for its owners to look at repowering options.

Soon, the park will begin a much-anticipated upgrade programme that will see the existing infrastructure removed and replaced with half as many turbines generating more than twice as much power.

However, while repowering sites presents significant long-term revenue gains, it must be set against the upfront capital spend. In the UK, with the Renewable Obligations Certificates ending and with Contracts for Differences providing no support to the onshore wind market, extending the life of a project has become an increasingly attractive option.

That is precisely why we are starting to see an increasing focus on independent asset managers, like Greensolver, to drive greater efficiencies through the latter years of a project’s life.

Here, by maximising operational availability and by searching for incremental performance gains, while limiting any further capital expenditure, investors can generate greater long-term returns from the asset class.

However, there is arguably a more important net result that has become apparent as developers and investors apply greater focus on those projects that they back – either through repowering or through extending a project out beyond its initial anticipated life. Namely, that this self-selection is having a positive impact on the strength and quality of the remaining asset class.

In other words, in the future only those projects of significant operational and performance merit will warrant additional time and capital expenditure.

Sure, there is no doubt that the political blood-letting currently being experienced in the UK is causing significant long-term market concern. But there is also no denying that in pursuing such deep cuts, the asset base that remains will, in the long-term, be all the stronger for it.

Twenty-five years ago, some of the earliest European wind farms were being developed and built.

Soon after, the wind industry starting operating at the first real semblance of scale, with important first projects demonstrating some promising ambition.

Now scroll forwards to the present day.

The industry of 2015 is a far cry from that which was only really starting to be understood in 1990. And as such it is not surprising that, with many of those early projects now starting to hit the end of their consented terms, a crossroads has been reached.

Take for instance, E.On’s Ovenden Moor Wind Farm, in West Yorkshire. When built, this was one of just five projects to benefit from the UK’s Non Fossil Fuel Obligation.

Coming online in 1993, the project performed well and, as a result, in 2012 it made sense for its owners to look at repowering options.

Soon, the park will begin a much-anticipated upgrade programme that will see the existing infrastructure removed and replaced with half as many turbines generating more than twice as much power.

However, while repowering sites presents significant long-term revenue gains, it must be set against the upfront capital spend. In the UK, with the Renewable Obligations Certificates ending and with Contracts for Differences providing no support to the onshore wind market, extending the life of a project has become an increasingly attractive option.

That is precisely why we are starting to see an increasing focus on independent asset managers, like Greensolver, to drive greater efficiencies through the latter years of a project’s life.

Here, by maximising operational availability and by searching for incremental performance gains, while limiting any further capital expenditure, investors can generate greater long-term returns from the asset class.

However, there is arguably a more important net result that has become apparent as developers and investors apply greater focus on those projects that they back – either through repowering or through extending a project out beyond its initial anticipated life. Namely, that this self-selection is having a positive impact on the strength and quality of the remaining asset class.

In other words, in the future only those projects of significant operational and performance merit will warrant additional time and capital expenditure.

Sure, there is no doubt that the political blood-letting currently being experienced in the UK is causing significant long-term market concern. But there is also no denying that in pursuing such deep cuts, the asset base that remains will, in the long-term, be all the stronger for it.

Twenty-five years ago, some of the earliest European wind farms were being developed and built.

Soon after, the wind industry starting operating at the first real semblance of scale, with important first projects demonstrating some promising ambition.

Now scroll forwards to the present day.

The industry of 2015 is a far cry from that which was only really starting to be understood in 1990. And as such it is not surprising that, with many of those early projects now starting to hit the end of their consented terms, a crossroads has been reached.

Take for instance, E.On’s Ovenden Moor Wind Farm, in West Yorkshire. When built, this was one of just five projects to benefit from the UK’s Non Fossil Fuel Obligation.

Coming online in 1993, the project performed well and, as a result, in 2012 it made sense for its owners to look at repowering options.

Soon, the park will begin a much-anticipated upgrade programme that will see the existing infrastructure removed and replaced with half as many turbines generating more than twice as much power.

However, while repowering sites presents significant long-term revenue gains, it must be set against the upfront capital spend. In the UK, with the Renewable Obligations Certificates ending and with Contracts for Differences providing no support to the onshore wind market, extending the life of a project has become an increasingly attractive option.

That is precisely why we are starting to see an increasing focus on independent asset managers, like Greensolver, to drive greater efficiencies through the latter years of a project’s life.

Here, by maximising operational availability and by searching for incremental performance gains, while limiting any further capital expenditure, investors can generate greater long-term returns from the asset class.

However, there is arguably a more important net result that has become apparent as developers and investors apply greater focus on those projects that they back – either through repowering or through extending a project out beyond its initial anticipated life. Namely, that this self-selection is having a positive impact on the strength and quality of the remaining asset class.

In other words, in the future only those projects of significant operational and performance merit will warrant additional time and capital expenditure.

Sure, there is no doubt that the political blood-letting currently being experienced in the UK is causing significant long-term market concern. But there is also no denying that in pursuing such deep cuts, the asset base that remains will, in the long-term, be all the stronger for it.

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Not a member yet?

Become a member of the 6,500-strong A Word About Wind community today, and gain access to our premium content, exclusive lead generation and investment opportunities.