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Wind farm repowering and decommissioning is big business

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According to estimates by the Global Wind Energy Council (GWEC), at the end of 2018, there were 568.4 gigawatts (GW) of operating onshore wind capacity spread across the world, with China accounting for the majority at 206.8 GW (36.4%), Europe at 171.3 GW (30.1%), the United States at 96.6 GW (17.0%), and the remaining countries representing 93.7 GW (16.5%).  

By the end of 2019, there will be 108.7 gigawatts (GW) of wind capacity operating in the U.S., according to data compiled by the ABB Velocity Suite team. The estimated number of individual structures including foundations, towers, generators, and blades is expected to top 60,000 in the U.S. this year and will continue to grow as new wind farm projects come online in 2020 and beyond.

Operating wind farms in North America

 Source: ABB Ability Velocity Suite

Today only 1.8 GW (2%) of all operating capacity in the U.S. is more than 20 years old, and 4% (4.2 GW) is between 15 and 20 years in age. Most of these older turbines are relatively small and inefficient. About one-quarter (28.6 GW) of the operating wind capacity in the U.S. is between 10 and 15 years old, with an additional 30.8 GW (28%) between 5 and 10 years in age. 

The wind industry cites 20 to 30 years as the typical life-cycle of an operating turbine, but recent reports show a trend to replace much younger wind farms. New technologies designed to increase efficiency and energy availability have made wind farms, with little more than 10 years of service, become attractive new repowering projects.

U.S. wind power capacity (GW) by age in years

Source: ABB Ability Velocity Suite

To repower or decommission?

Wind farm owners are responsible for end-of-life cycle costs, and both a repower or decommissioning project require new permits and approvals. 

Repowering can involve decommissioning if a project is to undergo big changes in infrastructure including the implementation of larger generators, taller towers, longer blades, bigger access roads, deeper foundations, and upgraded wires and electrical equipment. 

Repower projects qualify for tax credits because they are considered a new project. Asset owners can qualify for another 10-year tax credit under the federal Production Tax Credit (PTC), but the current PTC will phase out by the end of 2020.

Decommissioning involves deconstruction of the infrastructure including the removal of blades, towers, control equipment, and the foundations – basically returning the land to the same state it was in prior to construction. The process further involves dividing materials for disposal or recycling. Fiberglass blades and oil and grease lubricants are disposed of while most electrical and metal parts are recycled.

Driven by the ability to leverage the initial investment in structures, roads and established relationships with landowners, the economics of repowering far outweigh the benefits of decommissioning, which is limited by the inability to recycle blades and other unrecyclable components.   

Recent repowering activity

Recent activity indicates several repowering projects are underway or being planned, including work on wind farms that are only about a decade old. 

In late September, German energy group E.ON announced it had obtained over $200 million in tax equity financing to repower its 258 MW (172 towers) Panther Creek I and Panther Creek II wind farms in Texas.

GE Financial Services has underwritten and committed a portion of the tax equity, enabling E.ON to move forward with the life-extension project designed to improve the efficiency of the two wind farms going forward. The project involves the replacement and installation of new drive trains and an upgrade of the current 1.5-MW turbines with longer rotors. The Panther wind farms came online just 11 years ago in 2008.

In early July, Siemens Gamesa Renewable Energy SA, signed an agreement to supply new turbines for the 429.3 MW Rolling Hills wind farm repower project in Iowa. Rolling Hills is only 7 years old, having come online in 2011. The customer is Berkshire Hathaway’s Iowa-based subsidiary, MidAmerican Energy Company. The Siemens contract calls for 163 SG 2.7-129 machines and the installation of 18 (previously sold) SWT 2.3-108 turbines. The repower project is expected to be operational by the end of 2021. This marks the largest repower deal in the U.S. to date.

NextEra Energy Resources announced in early October they will start a six-month project next year to upgrade 214 wind turbines at the Peetz Table and Northern Colorado wind farms. These upgrades include replacing existing blades with longer blades and upgrading some generator components. Peetz Table came online 11 years ago in 2008, while the Northern Colorado wind farm is 10 years old – coming online in 2009.

GE Renewable Energy, one of the leading wind turbine manufacturers in the world, announced back in mid-May that in just the past two years, the company had completed over 4 GW of repowering projects in the U.S. The announcement included plans to repower an additional 3 GW by the end of 2020. GE’s operational life-extension work, representing over 2,500 turbine replacements, covered 36 different wind farms run by developers including NextEra Energy, E.ON and MidAmerican Energy. 

The additional projects expected to be completed by the end of 2020 include work for 11 developers at 25 different wind farms.  GE cited an average increase in annual energy production of 25% and a boost in energy availability of 1.5% compared to pre-repower performance statistics.

Wind repowering and the decommissioning market is big business

In 2013, the National Renewable Energy Laboratory estimated that annual repowering investment in the U.S. alone could reach $25 billion by 2030. Given the growth in wind development over the past several years, that estimate will easily be exceeded. With more than 350,000 turbines operating worldwide today, and over 60,000 in the U.S., the future for repowering will only grow. 

Decommissioning will create an opportunity for companies involved in the demolition and recycling of obsolete wind structures as the current fleet ages. To put this into perspective, consider that the cost of decommissioning 50,000 turbines, at a conservative $200,000/turbine, represents a $10 billion market opportunity. Some decommissioning cost estimates have been pegged as high as $450,000/turbine, which calculates to $22.5 billion.

These statistics highlight the growing potential market for repowering and decommissioning wind farms where the activity will only increase as the fleet continues to age.

Kent Knutson's picture

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Discussions

Matt Chester's picture
Matt Chester on Nov 5, 2019 11:34 pm GMT

Decommissioning will create an opportunity for companies involved in the demolition and recycling of obsolete wind structures as the current fleet ages. To put this into perspective, consider that the cost of decommissioning 50,000 turbines, at a conservative $200,000/turbine, represents a $10 billion market opportunity. Some decommissioning cost estimates have been pegged as high as $450,000/turbine, which calculates to $22.5 billion.

Regardless of the environmental and energy implications, wow those numbers do exactly what you said: paint a market opportunity. I'll be curious if there are any providers that are able to come along and give second life to the turbines/turbine parts that still allow them to be in the field of generation. 

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