One year ago, GE and TUV-Nord announced the first certification of a wind turbine for 40 years of lifetime, but months later, the market does not seem to have followed GE. Let’s analyse the possible reasons below by looking at the pros and cons for the different market players.
The truth is that it was a surprising announcement as it doubled the current onshore machine lifespan and seemed to open a new path to reduce the LCoE of projects. Historically, the lifetime of generation plants had been one of the major differences between “modern renewables” (wind and solar) and conventional ones. In fact, before the popularization of LCoE as a comparison criterion, it was seen as a disadvantage that wind power had a 20-year lifespan compared to 40 years for coal-fired plants, 50 years for nuclear plants or 60 years for hydroelectric plants.
With the LCoE, the lifetime is factored in so that many discussions are avoided, but even in the last few years, it is being seen how solar is increasing the lifetime of the parks, bringing them to 30 years, leaving wind plants as the least lasting installations with 20 years for onshore and 25 for offshore.
Thus, it seems that extending the theoretical life of the plants is a good idea. But as we like to go deeper into the topics in this blog, let’s go with the analysis
- Extending the service life without increasing costs clearly improves the LCoE of a project. A quick analysis with the WBT simulation tool shows that a standard onshore project improves its LCoE by 13% when moving from 20 to 30 years of life. The analysis concludes that as long as we keep extra- CAPEX and OPEX (years 21-30) below 20%, the LCoE will improve.
- The extra costs we can expect as we increase the design life will be:
- Higher manufacturing cost as components must be stronger
- Higher development cost as design and validation will be more complex
- Higher cost of certification
- Higher cost of O&M in extended years
- The reality is that currently developers already have an alternative scheme to the certification of longer life: the life extension. It consists of analyzing the turbine before it reaches 20 years of age and changing the components needed to keep it working for a few more years. It is a very flexible scheme but it introduces risk into the project
- Additionally, the speed at which wind technology improves and new models are launched does not encourage the extension of the life of obsolete wind farms. In fact, there are large wind farms that are being repowered before they reach 20 years of life like this MidAmerican wind farm in Iowa. If costs continue to fall, financing is available, and permits are not a problem, repowering will be a more profitable option.
- It seems technically feasible to design, test, certify and maintain turbines with a 30-40 year life span. What I’m not so sure about is whether it would be possible to keep these extra costs below the limit to improve the LCoE. I am not a technician, but it seems clear that the most sensitive element would be the blades, which should be reinforced, introducing more weight and therefore more loads.
- But beyond the technical details, the key is that if the turbines last 40 years, the turnover is reduced by half. OEMs should then be able to compensate for this reduction in revenue with longer and more expensive O&M contracts. Basically it would be moving some of the business from sales to service and considering the profitability of both activities, perhaps it wouldn’t be a bad idea.
- If the sale of turbines is reduced, the frequency of new launches and therefore innovation will also be reduced. As Enercon says in this article, there is a danger of turning wind power into a much more static and conservative sector. On the contrary, innovation will increase in the O&M part, since maintaining machines until 40 years old will be a huge challenge.
3. Certification bodies
- Like the manufacturers, in a scenario with fewer new model launches, the certification entities would have less activity. This would increase the cost of certification and perhaps reduce the number of suppliers.
- In addition, certification companies currently have the additional revenue from life extension certification that would also disappear in the new scenario
It does not seem that any of the main actors in the sector have a special interest in pushing for an increase in the wind turbine lifetime. Developers are quite comfortable with the current life extension scheme and in such a dynamic sector as wind power, two 20-year projects with improved technology and costs are preferable to a 40-year project with obsolete technology.
Manufacturers and certification companies would lose sales opportunities which would force them to modify their business cases and this is not usually done on a voluntary basis so it does not seem that they will push this trend.
In conclusion, it seems that in the medium term we will not see turbines designed to last 40 years but once the wind is a more mature sector with stable technology and (even) more commoditized product, surely this is one of the ways to increase the profitability of projects while moving the business to long-term maintenance, whose profitability is much higher than the mere sale of turbines.