Wind turbines are the biggest single cost for any wind project, so it follows that the original equipment manufacturer (OEM) would have the biggest impact on a wind project’s cost of energy (COE).
However, OEMs can influence the COE for wind projects in many other areas as well. When different factors that contribute to the COE are broken down, it is possible to find levers where OEMs can contribute to a lower COE in all areas of a project. By thinking beyond the turbine cost and focusing on things such as the balance of plant, operations and maintenance (O&M), and optimized energy production for the site, an OEM can partner with project owners and developers to lower a project’s COE and help it succeed.
The COE is an intuitive concept, but to understand where the COE number comes from, it helps to explain the formula used to calculate it. The actual economics of a project are much more complicated once incentives and financing structures are factored in; however, the COE is a good way to normalize comparisons between technologies and understand the main cost drivers. At a basic level, the COE is a levelized number that represents a project’s total lifecycle cost divided by its total energy production, as seen in the equation in Figure 1.
As Figure 2 shows, the COE can be further expanded to understand the relative contribution of each cost driver within the larger categories of capital expenditure (CAPEX), operational expenditure (OPEX) and annual energy production (AEP). It is useful to know how much each aspect of the value chain contributes to the COE in order to understand how changes in design, process or approach can impact the overall project economics. The percentage breakouts shown in the figure are for illustration only and will fluctuate based on many factors, but they give a general idea of the relative contribution of each driver.
For example, major corrective maintenance based on observed and projected potential failures (gearbox, generator or blade replacement) may contribute 3% to the COE, whereas the civil work construction contributes 13% in this example. This doesn’t mean owners and operators should avoid reducing corrective maintenance, but it may indicate that the OEM should think through the complete value chain, not just the wind turbine itself, to find ways to lower the COE. For example, our firm has developed different foundation concepts including a “ribbed” design that reduces concrete and rebar requirements, which can help significantly lower the balance-of-plant CAPEX.
Furthermore, it is possible to evaluate how assumption changes for things such as failure rates could impact the COE. For example, if a wind farm has a 100% gearbox failure rate over the life of the project (i.e., one failure per wind turbine within 20 years), this will have only a 2% impact on the COE. Every percentage point counts, but in this apparently extreme example, the impact is still modest compared to other COE contributors.
Another consideration when thinking through how to reduce the COE is the domino effect that a change in one design or process may have throughout the value chain. One technology that a handful of providers are starting to introduce is medium-voltage generation.
For instance, a 12 kV generator can make it possible to avoid the use of pad-mounted transformers when the wind turbines are centrally located to the project transformer. As shown in Figure 3, this one technology difference flows through many aspects of the value chain. In this case, the savings created by avoiding pad-mount transformers is offset by a more expensive collection system (more cabling) – having no effect on CAPEX. But without pad-mount transformers, there is no loss in the electricity conversion (normally 690 V to 34.5 kV), and one point of failure is eliminated. On net, this may result in a 2% lower COE compared to a more common 690 V solution with external transformers.
This is just one example of how changes in design and technology can have an impact throughout the value chain. It is critical that wind plant developers appropriately model how a particular design will factor into the entire economic equation of their project. In an effort to simplify things, the industry will sometimes focus solely on one piece of the COE equation, such as CAPEX, to judge competitiveness. This can lead to big mistakes that could destroy a project.
Another area of cost reduction that is influenced by the OEM but is not reflected in the wind turbine cost is related to O&M. The OEM can influence many things including maintenance interval requirements (sometimes a function of adding automatic lubrication systems to the design), control set points for triggering alarms, and the design of certain components. In the last case, it is interesting to note that while the capital cost of the wind turbine may increase, the lifecycle cost may decrease. This is one of the tenets ACCIONA follows. Regarding the project as a whole, higher CAPEX investment that leads to lower failure rates – and, therefore, a lower overall COE – makes sense.
As important as CAPEX and OPEX are in the overall COE equation, AEP is also an essential component. Figure 2 does not break out AEP as a percentage contributor to the COE, as it is more effective to examine how changes in AEP impact the result. Choosing the most appropriate wind turbine is essential, but it is not as straightforward as it may seem. The nameplate size, rotor length and tower height are just the start. To extract the most wind energy possible from the site, detailed micro-siting is necessary in conjunction with optimized control strategies, which may involve mixed layouts (different wind turbine models on the site) and site- or turbine-specific power curves. From our experience, sites that have gone through this process of optimization can see COE savings upwards of 5%.
As the wind industry works to continually lower the COE, developers and owners should consider all the factors that contribute to it, and OEMs play a critical role influencing all aspects of the value chain. w
Industry At Large: Operations & Maintenance
Lowering The Cost Of Energy: An OEM’s Perspective
By Scott Baron
Original equipment manufacturers can help wind farm owners and operators reduce the economics of all aspects of the value chain, not just the turbine.