US gets set for wave of repowering

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Ilaria Valtimora
December 11, 2017
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US gets set for wave of repowering

Turbines have evolved from tiny 50kW machines to 9.5MW giants over the last four decades. This massive change opens up new opportunities for wind farm owners to repower projects – in other words, replace older turbines with bigger newer ones.

Conventional wisdom is that turbines have an average lifespan of 25 years, and the UK’s Engineering & Physical Sciences Research Council has found that mechanical degradation can lead to a 1.6% decline in output each year. As turbines continue to age, they need extra care from wind farm owners to be kept safe and profitable.

Repowering is not yet a huge part of the market. The Global Wind Energy Council estimates 81% of the world’s installed capacity of 487GW has been built in the last decade, with just 7% of projects built between 15 and 20 years ago. Even so, this 7% represents projects of 34GW, and we are set to see owners of these projects taking decisions on whether to repower in the next 5-10 years.

In recent years, it looked as though companies in Germany were set to be repowering leaders given the age of the oldest German wind farms. However, it now looks like the United States could be at the front of a repowering revolution and this, as so much in the US wind industry, is driven by the wind production tax credit.

The PTC is currently under threat from planned tax reforms (see today's news section). Even so, under current rules, wind farm owners have until the end of 2019 to repower old schemes and qualify for an additional ten years of PTC support.

This is a big reason behind NextEra Energy’s plan to invest up to $3bn to upgrade and replace aging turbines at operating wind farms in the US by 2020.

And Warren Buffett’s MidAmerican Energy is also planning a $1bn programme to repower about 706 older turbines in Iowa, totalling almost 1GW and representing around a quarter of its total wind capacity in the state. It has picked General Electric to carry out the work and it has estimated that the repowering programme would increase the turbines’ generation capacity of up to 28%.

And across the US we see big potential for repowering. This week we read the ‘2017 IHS Markit Wind O&M Benchmarking in North America’ report by research company IHS Market. The report has analysed nearly 20,000 turbines, installed across 300 wind farms and totalling up to 30GW in North America.

IHS Markit forecasts that operations and maintenance costs for the wind sector are set to exceed $40bn cumulatively from 2015 to 2025. This follows its estimate that the average age of operational wind turbines in North America is set to rise from 5.5 years in 2015 to 7 years in 2020, and to 14 years in 2030, with O&M costs in the first ten years of a turbine’s lifetime averaging between $42,000 and $48,000 per MW.

The PTC may be giving firms an argument to repower now – but, even if that is taken away, the ageing fleet will give them another reason to look again at projects.

Repowering is important for small projects too, and those outside the US. This week, Acciona picked Nordex to repower its 25-year old, 30MW El Cabrito wind farm in Spain replacing 90 older machines with 12 new turbines.

And IHS Markit also reported that at least a quarter of the turbines analysed need replacement during the first decade of operations.

What does this mean for wind businesses? Well, as more project owners prepare to invest in repowering, new opportunities should open up for manufacturers and others that offer these services. Almost every turbine supply contract includes operation and maintenance agreements and, for example, turbine makers such as Vestas and Siemens Gamesa are now building their service offer in the US market.

There could be another option. As the sector grows, wind farm owners could expand their own O&M expertise. Utilities like E.On Climate & Renewables, EDF Renewable Energy and Duke Energy have launched business units servicing turbines. Repowering is rising up the agenda and the battle for dominance is underway

Turbines have evolved from tiny 50kW machines to 9.5MW giants over the last four decades. This massive change opens up new opportunities for wind farm owners to repower projects – in other words, replace older turbines with bigger newer ones.

Conventional wisdom is that turbines have an average lifespan of 25 years, and the UK’s Engineering & Physical Sciences Research Council has found that mechanical degradation can lead to a 1.6% decline in output each year. As turbines continue to age, they need extra care from wind farm owners to be kept safe and profitable.

Repowering is not yet a huge part of the market. The Global Wind Energy Council estimates 81% of the world’s installed capacity of 487GW has been built in the last decade, with just 7% of projects built between 15 and 20 years ago. Even so, this 7% represents projects of 34GW, and we are set to see owners of these projects taking decisions on whether to repower in the next 5-10 years.

In recent years, it looked as though companies in Germany were set to be repowering leaders given the age of the oldest German wind farms. However, it now looks like the United States could be at the front of a repowering revolution and this, as so much in the US wind industry, is driven by the wind production tax credit.

The PTC is currently under threat from planned tax reforms (see today's news section). Even so, under current rules, wind farm owners have until the end of 2019 to repower old schemes and qualify for an additional ten years of PTC support.

This is a big reason behind NextEra Energy’s plan to invest up to $3bn to upgrade and replace aging turbines at operating wind farms in the US by 2020.

And Warren Buffett’s MidAmerican Energy is also planning a $1bn programme to repower about 706 older turbines in Iowa, totalling almost 1GW and representing around a quarter of its total wind capacity in the state. It has picked General Electric to carry out the work and it has estimated that the repowering programme would increase the turbines’ generation capacity of up to 28%.

And across the US we see big potential for repowering. This week we read the ‘2017 IHS Markit Wind O&M Benchmarking in North America’ report by research company IHS Market. The report has analysed nearly 20,000 turbines, installed across 300 wind farms and totalling up to 30GW in North America.

IHS Markit forecasts that operations and maintenance costs for the wind sector are set to exceed $40bn cumulatively from 2015 to 2025. This follows its estimate that the average age of operational wind turbines in North America is set to rise from 5.5 years in 2015 to 7 years in 2020, and to 14 years in 2030, with O&M costs in the first ten years of a turbine’s lifetime averaging between $42,000 and $48,000 per MW.

The PTC may be giving firms an argument to repower now – but, even if that is taken away, the ageing fleet will give them another reason to look again at projects.

Repowering is important for small projects too, and those outside the US. This week, Acciona picked Nordex to repower its 25-year old, 30MW El Cabrito wind farm in Spain replacing 90 older machines with 12 new turbines.

And IHS Markit also reported that at least a quarter of the turbines analysed need replacement during the first decade of operations.

What does this mean for wind businesses? Well, as more project owners prepare to invest in repowering, new opportunities should open up for manufacturers and others that offer these services. Almost every turbine supply contract includes operation and maintenance agreements and, for example, turbine makers such as Vestas and Siemens Gamesa are now building their service offer in the US market.

There could be another option. As the sector grows, wind farm owners could expand their own O&M expertise. Utilities like E.On Climate & Renewables, EDF Renewable Energy and Duke Energy have launched business units servicing turbines. Repowering is rising up the agenda and the battle for dominance is underway

Turbines have evolved from tiny 50kW machines to 9.5MW giants over the last four decades. This massive change opens up new opportunities for wind farm owners to repower projects – in other words, replace older turbines with bigger newer ones.

Conventional wisdom is that turbines have an average lifespan of 25 years, and the UK’s Engineering & Physical Sciences Research Council has found that mechanical degradation can lead to a 1.6% decline in output each year. As turbines continue to age, they need extra care from wind farm owners to be kept safe and profitable.

Repowering is not yet a huge part of the market. The Global Wind Energy Council estimates 81% of the world’s installed capacity of 487GW has been built in the last decade, with just 7% of projects built between 15 and 20 years ago. Even so, this 7% represents projects of 34GW, and we are set to see owners of these projects taking decisions on whether to repower in the next 5-10 years.

In recent years, it looked as though companies in Germany were set to be repowering leaders given the age of the oldest German wind farms. However, it now looks like the United States could be at the front of a repowering revolution and this, as so much in the US wind industry, is driven by the wind production tax credit.

The PTC is currently under threat from planned tax reforms (see today's news section). Even so, under current rules, wind farm owners have until the end of 2019 to repower old schemes and qualify for an additional ten years of PTC support.

This is a big reason behind NextEra Energy’s plan to invest up to $3bn to upgrade and replace aging turbines at operating wind farms in the US by 2020.

And Warren Buffett’s MidAmerican Energy is also planning a $1bn programme to repower about 706 older turbines in Iowa, totalling almost 1GW and representing around a quarter of its total wind capacity in the state. It has picked General Electric to carry out the work and it has estimated that the repowering programme would increase the turbines’ generation capacity of up to 28%.

And across the US we see big potential for repowering. This week we read the ‘2017 IHS Markit Wind O&M Benchmarking in North America’ report by research company IHS Market. The report has analysed nearly 20,000 turbines, installed across 300 wind farms and totalling up to 30GW in North America.

IHS Markit forecasts that operations and maintenance costs for the wind sector are set to exceed $40bn cumulatively from 2015 to 2025. This follows its estimate that the average age of operational wind turbines in North America is set to rise from 5.5 years in 2015 to 7 years in 2020, and to 14 years in 2030, with O&M costs in the first ten years of a turbine’s lifetime averaging between $42,000 and $48,000 per MW.

The PTC may be giving firms an argument to repower now – but, even if that is taken away, the ageing fleet will give them another reason to look again at projects.

Repowering is important for small projects too, and those outside the US. This week, Acciona picked Nordex to repower its 25-year old, 30MW El Cabrito wind farm in Spain replacing 90 older machines with 12 new turbines.

And IHS Markit also reported that at least a quarter of the turbines analysed need replacement during the first decade of operations.

What does this mean for wind businesses? Well, as more project owners prepare to invest in repowering, new opportunities should open up for manufacturers and others that offer these services. Almost every turbine supply contract includes operation and maintenance agreements and, for example, turbine makers such as Vestas and Siemens Gamesa are now building their service offer in the US market.

There could be another option. As the sector grows, wind farm owners could expand their own O&M expertise. Utilities like E.On Climate & Renewables, EDF Renewable Energy and Duke Energy have launched business units servicing turbines. Repowering is rising up the agenda and the battle for dominance is underway

Turbines have evolved from tiny 50kW machines to 9.5MW giants over the last four decades. This massive change opens up new opportunities for wind farm owners to repower projects – in other words, replace older turbines with bigger newer ones.

Conventional wisdom is that turbines have an average lifespan of 25 years, and the UK’s Engineering & Physical Sciences Research Council has found that mechanical degradation can lead to a 1.6% decline in output each year. As turbines continue to age, they need extra care from wind farm owners to be kept safe and profitable.

Repowering is not yet a huge part of the market. The Global Wind Energy Council estimates 81% of the world’s installed capacity of 487GW has been built in the last decade, with just 7% of projects built between 15 and 20 years ago. Even so, this 7% represents projects of 34GW, and we are set to see owners of these projects taking decisions on whether to repower in the next 5-10 years.

In recent years, it looked as though companies in Germany were set to be repowering leaders given the age of the oldest German wind farms. However, it now looks like the United States could be at the front of a repowering revolution and this, as so much in the US wind industry, is driven by the wind production tax credit.

The PTC is currently under threat from planned tax reforms (see today's news section). Even so, under current rules, wind farm owners have until the end of 2019 to repower old schemes and qualify for an additional ten years of PTC support.

This is a big reason behind NextEra Energy’s plan to invest up to $3bn to upgrade and replace aging turbines at operating wind farms in the US by 2020.

And Warren Buffett’s MidAmerican Energy is also planning a $1bn programme to repower about 706 older turbines in Iowa, totalling almost 1GW and representing around a quarter of its total wind capacity in the state. It has picked General Electric to carry out the work and it has estimated that the repowering programme would increase the turbines’ generation capacity of up to 28%.

And across the US we see big potential for repowering. This week we read the ‘2017 IHS Markit Wind O&M Benchmarking in North America’ report by research company IHS Market. The report has analysed nearly 20,000 turbines, installed across 300 wind farms and totalling up to 30GW in North America.

IHS Markit forecasts that operations and maintenance costs for the wind sector are set to exceed $40bn cumulatively from 2015 to 2025. This follows its estimate that the average age of operational wind turbines in North America is set to rise from 5.5 years in 2015 to 7 years in 2020, and to 14 years in 2030, with O&M costs in the first ten years of a turbine’s lifetime averaging between $42,000 and $48,000 per MW.

The PTC may be giving firms an argument to repower now – but, even if that is taken away, the ageing fleet will give them another reason to look again at projects.

Repowering is important for small projects too, and those outside the US. This week, Acciona picked Nordex to repower its 25-year old, 30MW El Cabrito wind farm in Spain replacing 90 older machines with 12 new turbines.

And IHS Markit also reported that at least a quarter of the turbines analysed need replacement during the first decade of operations.

What does this mean for wind businesses? Well, as more project owners prepare to invest in repowering, new opportunities should open up for manufacturers and others that offer these services. Almost every turbine supply contract includes operation and maintenance agreements and, for example, turbine makers such as Vestas and Siemens Gamesa are now building their service offer in the US market.

There could be another option. As the sector grows, wind farm owners could expand their own O&M expertise. Utilities like E.On Climate & Renewables, EDF Renewable Energy and Duke Energy have launched business units servicing turbines. Repowering is rising up the agenda and the battle for dominance is underway

Turbines have evolved from tiny 50kW machines to 9.5MW giants over the last four decades. This massive change opens up new opportunities for wind farm owners to repower projects – in other words, replace older turbines with bigger newer ones.

Conventional wisdom is that turbines have an average lifespan of 25 years, and the UK’s Engineering & Physical Sciences Research Council has found that mechanical degradation can lead to a 1.6% decline in output each year. As turbines continue to age, they need extra care from wind farm owners to be kept safe and profitable.

Repowering is not yet a huge part of the market. The Global Wind Energy Council estimates 81% of the world’s installed capacity of 487GW has been built in the last decade, with just 7% of projects built between 15 and 20 years ago. Even so, this 7% represents projects of 34GW, and we are set to see owners of these projects taking decisions on whether to repower in the next 5-10 years.

In recent years, it looked as though companies in Germany were set to be repowering leaders given the age of the oldest German wind farms. However, it now looks like the United States could be at the front of a repowering revolution and this, as so much in the US wind industry, is driven by the wind production tax credit.

The PTC is currently under threat from planned tax reforms (see today's news section). Even so, under current rules, wind farm owners have until the end of 2019 to repower old schemes and qualify for an additional ten years of PTC support.

This is a big reason behind NextEra Energy’s plan to invest up to $3bn to upgrade and replace aging turbines at operating wind farms in the US by 2020.

And Warren Buffett’s MidAmerican Energy is also planning a $1bn programme to repower about 706 older turbines in Iowa, totalling almost 1GW and representing around a quarter of its total wind capacity in the state. It has picked General Electric to carry out the work and it has estimated that the repowering programme would increase the turbines’ generation capacity of up to 28%.

And across the US we see big potential for repowering. This week we read the ‘2017 IHS Markit Wind O&M Benchmarking in North America’ report by research company IHS Market. The report has analysed nearly 20,000 turbines, installed across 300 wind farms and totalling up to 30GW in North America.

IHS Markit forecasts that operations and maintenance costs for the wind sector are set to exceed $40bn cumulatively from 2015 to 2025. This follows its estimate that the average age of operational wind turbines in North America is set to rise from 5.5 years in 2015 to 7 years in 2020, and to 14 years in 2030, with O&M costs in the first ten years of a turbine’s lifetime averaging between $42,000 and $48,000 per MW.

The PTC may be giving firms an argument to repower now – but, even if that is taken away, the ageing fleet will give them another reason to look again at projects.

Repowering is important for small projects too, and those outside the US. This week, Acciona picked Nordex to repower its 25-year old, 30MW El Cabrito wind farm in Spain replacing 90 older machines with 12 new turbines.

And IHS Markit also reported that at least a quarter of the turbines analysed need replacement during the first decade of operations.

What does this mean for wind businesses? Well, as more project owners prepare to invest in repowering, new opportunities should open up for manufacturers and others that offer these services. Almost every turbine supply contract includes operation and maintenance agreements and, for example, turbine makers such as Vestas and Siemens Gamesa are now building their service offer in the US market.

There could be another option. As the sector grows, wind farm owners could expand their own O&M expertise. Utilities like E.On Climate & Renewables, EDF Renewable Energy and Duke Energy have launched business units servicing turbines. Repowering is rising up the agenda and the battle for dominance is underway

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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.