Wind Farm Design Life: 40 years+ ( working on a title)

Let’s start at the beginning and define what is meant by “design life”?

The term "design life" is often used to refer to design life of wind turbines and the wind farm

interchangeably. For many wind farms this is also the reality as the wind farm project itself has been

designed to be the same length of time as that of design life of the wind turbine, typically 20 years.

However it does not need to be the case that the design life for both must be the same. Indeed many of

the wind farm projects that were designed for 20 years will in the end be extended, by varying degrees.

At this point it is very important that we define the difference between wind turbine design life and project

design life. One could consider the theoretical situation where the wind turbines within a project are

replaced with identical turbines every 20 years for 40, 60, 80, 100, 120 years and so on indefinitely. You can

see from this exercise that the project design life can be pretty much whatever the owner wants it to be.

Whilst the design life for the turbines themselves is determined by the manufacturer of the wind turbines.

The questions are therefore why is "project design life" usually defined as the outset the same as the

turbine design life? Why are projects not being designed for longer?

The wind turbine design life has been very carefully engineered, or rather the component choices and

design specification of the manufacturer are carefully calculated to give a design life of 20 years generally

and occasionally 25 years. However the project design life is a more arbitrary number of 20 years. There

seems to be anecdotal evidence that the finance industry wants a project design life of a minimum of 20

years to make sure the project can pay the debt that may have been lent for up to 15 years. The 5 years

extra being a buffer in case something goes wrong, and used to give comfort to the lenders. Comparing the

onshore wind industry with other forms of power generation, it’s evident that the oil, gas & coal fired

power stations have much longer project design lives, starting out with 40 years project design life Nuclear

is 60 years, hydro power 80 or even 120 years. Only wind, offshore wind and solar are designing projects

for 20 years. It could be argued that now wind energy is at "utility" scale. However if wind farm developers,

develop at this scale, consideration to scale up its design life also needs to be addressed. The time seems

ripe for finding a new standard for the renewable industry of 30, 0 years or more.

What are the benefits of extending a wind farm design life and why bother at all?

The benefits are twofold, firstly an increase in the asset value of the project and secondly a lower overall

cost of energy.

1) To increase the asset value of a windfarm one needs to both the construction cost (CAPEX) and

the operating costs (OPEX) to the maximum possible, but it is also often a compromise between

these various factors. There is no doubt however that a longer project life will increase the value of

the asset, not least as the eventual owners of a project such as these are often long-term

investment funds such as insurance or pension funds. This type of equity owning fund values lower

risk and longer project life above all else as it fits the risk profile for their investors well.

2) For a technology that has most of its lifetime costs as CAPEX and relatively low OPEX, doubling

the project life and therefore a potential doubling of energy production means a lower overall

Levelised cost of energy (LCOE). The LCOE is one of the utility industry’s primary metrics for the

cost of electricity produced by a generator. It is calculated by accounting for all of a system’s

expected lifetime costs (including construction, financing, fuel, maintenance, taxes, insurance and

incentives), which are then divided by the system’s lifetime expected power output (kWh). All cost

and benefit estimates are adjusted for inflation and discounted to account for the time-value of

money.

How does the industry make this a reality?

If an increased design life of 30 or 40 years is feasible a different way of planning out the wind farm project

is required to make it happen. This involves the components, certification, planning & permitting, lease &

land agreements and also Operations & Maintenance.

Components In physical terms, the main factors in determining if prolonging the wind farm life is a reality are the

components themselves. There are essentially two categories in a wind farm;

One category are components that have a specification that would normally be described in design

life terms as substantially longer than 20 years, even though for a wind farm the certification is for

only 20 years. For example if one saw the foundation and the tower in a different application, like a

communication tower, the design life and certification may well be for 50 years or longer. The

same holds for cabling, substations, roads, hardstandings etc.

A second category, are components that would not last for 20 years. Oil, bearings, gearboxes,

blades, and a whole host of small components will be replaced multiple times during the planned 20

years of operation. One might call these components "consumables" and should plan the

appropriate replacement for each type of component. For some the component may be changed

every year, for others every 10 years.

There is no individual component of a wind farm that has a design life of 20 years. Typically they are

shorter or longer So this begs the question, why a 20 year design life?

The owner/developer of a wind farm project has a varying degree of control over how long the various

component parts of a wind farm are designed for, by which I mean the design life. For some components

the developer can choose to specify longer design lives; such as the roads, the grid connection, the

transformer etc. Many of these parts are naturally designed for longer than 25 years in other scenarios and

are effectively de-rated for a wind farm. For example a grid connection and transformer for any other

application of exactly the same specification, would not be designated as a 25 year design life, but much

longer. For some parts the developer can choose to pay a little more for a design life that is longer. The

main exception to this is the wind turbine, which manufacturers usually limit to a 20 or 25 year "design

life".. We have seen recently some manufacturers looking at how to define a longer project life for existing

wind farms, but progress in the area remains limited. In short, where a developer can specify longer they

should.

Certification In some countries certification of the wind turbine and the wind farm is mandatory and in others a matter

of choice. It certainly adds some comfort to a project where external investors and lenders are needed.

For a longer project design life, certification needs to for a longer period too, and for some parts of the

wind farm a programme of re-certifying periodically, where a 30 or 40 year certificate cannot be achieved.

Planning In the UK a planning permission (permit) for most other types of application are granted "in perpetuity",

except a very few specific examples, one of which is wind farm applications which are typically for 26 years..

The sense that a wind farm needs to be in some way "temporary" to gain planning permission is somewhat

over-exaggerated and certainly at 26 years it is no more (or less) temporary than 41 years, compared to an

2-5 year application Similarly the political implications of permitting for 41 years versus 26 years are

minimal. A locally elected Councillor or a Local Planning Authority officer are both likely to be long retired

or moved on either 26 years or 41 years later, the local public may have long forgotten the arguments for

and against, and accepted the project in the local landscape.

In short, when filling out the forms for a planning permit there is no additional cost, delay or risk attached

to inserting the number 41 instead of 26. Indeed doing this at the beginning saves a lot of paperwork, time,

money and headache later on, if one decides to extend the life of the wind farm project. Why not even

apply for a permit In Perpetuity like other structures? Permitting for longer from the very start also adds

value to the owner’s asset.

Land lease agreements It is a similar position for leases and land agreements, which are typically signed for around 25 years,

although it differs in some countries. In general, however if you need to go back and re-negotiate a lease to

try and get an extension, once a wind farm is already operational, you will not be in the most favourable

negotiation position. The best scenario is to negotiate a longer lease of 42 years plus, with clauses allowing

for early get-out in case it is needed. Perhaps a fair way of structuring it would be to agree a percentage of

the revenue from the wind farm, rather than a fixed fee per year as payment to the landowner. This would

incentivise the landowner to allow a longer lease. For a wind farm that is already in operation, the earlier

you can start the renegotiation the better. Considering that the location will continue to be windy, and that

the cost of wind energy is likely to continue to fall, one might even consider negotiating an indefinite lease,

a 99 year lease or 999 year lease. In general the longer the lease the more value you add to the project

company that owns the wind farm.

Operations & Maintenance To achieve a longer project life, a different O&M strategy is required. At the basic level, the plan was

previously for 20 years but needs readdressing to plan for up to 30 or 40 years. Then we come to the

detail of what would be needed to enable the installed wind turbine continue to operate, and operate in a

cost-effective, productive, manner for a longer period of time. There is no single answer but suffice to

comprehensive studies will determine the best and optimised O&M strategy for longer life.

Some of the factors however stand out such as a) planned maintenance schedule that allows for

maintenance for 30-40 years b) a budget for spare part replacement that stretches over a period up to

twice as long, and therefore likely requires a total of twice as many spare parts and, c) a more predictive

and proactive maintenance rather than reactive to allow for less wear and tear.

It is unlikely that the original manufacturer of the turbines will offer an O&M package for 30 or 40 years so

the owner would need to take control and responsibility for the asset and this may mean arranging it as

separately "O" and "M". The owner taking responsibility for the "O", in the form of an independent wind

farm operator to undertake this on their behalf. The “M” would then be a separate contract for the service

and maintenance, potentially even with the original manufacturer, but it can also be by contracting a 3rd

party. This approach increases control and reduces cost, although it does require some effort on the part

of the owner. More importantly what it allows the owner to do is to plan a project life length that suits the

owner, rather than the standard 20 or 25 years.

Warranty period For some, the fact the warranty period offered by a wind turbine manufacturer, or that the stated "design

life" by a manufacturer will not stretch to 40 years may be a problem. However in other industries what we

see is that after a specified period the owner of the equipment is essentially on their own without any

recourse to the manufacturer. The warranty on domestic appliances is anything from 3 years to 7 years,

and can often be extended to up to 7 or 10 years by paying extra. Beyond 10 years the owner is essentially

on their own. How long a domestic appliance will last depends on how it is operated and how it is

maintained. The argument here would be, that the owner of a wind farm should take responsibility for his

asset and plan the operations and maintenance appropriate to his plan the wind farm project design life.

The current norm of agreeing, permitting, building and operating a wind farm for 20-25 years "costs" an

amount of money, an amount of environmental impact, an amount of CO2, and amount of human impact;

to build and then decommission. If the wind farm project life can be doubled then in rough numbers, the

cost, environmental costs and embedded carbon cost etc will be around half per MWh produced.

To put this in numbers, studies show that a 20-year turbine life results in an average of 40.7g/kWh, falling

to 28.5 g/kWh for 25 years and 25.3 g/kWh for 30 years, and this would be lower still for 40 years.

Is extending a wind farms design life feasible?

Wind Power is now a “conventional” power source in that more money is invested per year in wind

energy globally than any other power technology, and it is time for the wind industry to join the other

conventional power generators and start designing projects for 40 years and longer. If planned correctly, a

longer design life for a wind farm project, designed from scratch means a project could run for as long as a

developer/owner wants it to. However, re-working an operational wind farm for a longer project design

life is harder, more costly but certainly do-able and still better value than building another new wind farm

instead. A longer project design life for a wind farm project brings a lower cost of electricity per KWh, a

better environmental footprint and reduced CO2 per KWh. There can be no doubt that increasing the

project design life of a wind farm, leads to increased asset value. There is no conceivable reason why a wind

farm project cannot be designed for a 40 year operational period, especially if done from the outset.

Indeed, why not longer than 40 years?