Navigant Research Blog

High Focus on Low Wind Turbines

— October 5, 2015

Wind turbines with taller towers and larger rotors designed for efficient power generation in areas of low-speed wind have taken over the industry over the past few years with no sign of slowing. At this year’s HUSUM Wind 2015 wind conference and exhibition in Germany, four new low wind speed models were unveiled to the market by four top wind turbine original equipment manufacturers (OEMs). These turbines are targeted toward the Northern European wind market where low wind speeds and space constraints favor these designs, but they are growing more popular. The system specs show the industry is continuing to innovate and push the boundaries for onshore wind turbines.

Denmark’s Vestas unveiled the largest rotor variant of its 3 MW platform—its new V136-3.45 designed for low wind International Electrotechnical Commission (IEC) class IIIA sites. Following now-typical naming conventions in the industry, the 136 denotes rotor diameter in meters, and the 3.45 represents the turbine’s rated megawatt capacity. The 66.7 m blades are Vestas’ largest yet for onshore turbines, and are the latest in a series of blades released in recent years that follow the company’s switch to structural shell designs after decades of using a central spar design. As with long blades from other vendors, preimpregnated carbon fiber plays a key role in achieving strength and length with manageable weight. The blades also have a slim design that is augmented with aerofoils, vortex generators, and serrated trailing edges (which appears to be a newly revoked patent previously owned by Siemens).

Also notable is the use of the Vestas’ large diameter steel tower (LDST), a tower design that is detailed in Navigant Research’s Supply Chain Assessment 2014 – Wind Energy report. Put simply, the tower design vertically splits the largest bottom tower section into three shell sections that are bolted together at the wind plant site. This allows for a wide enough base (6.5 m) to support hub heights of 132 m and 149 m.

Germany’s Senvion also unveiled a new IEC IIIA low wind turbine, the 3.4M140, which features a 140 m rotor using 68 m carbon-infused blades and hub heights of 110 m and 130 m. This is an uprated design from the company’s current 3.2 MW, 122 m rotor offering. Notably, the doubly fed induction generation drivetrain moves to full power conversion on the new model from partial conversion on the existing 3.2 MW units. Senvion achieves its tall hub heights using a hybrid approach that combines lower sections of prestressed concrete with standard tubular upper sections. Navigant Research has detailed recent hybrid tower designs, which are the most common approach used to reach high hub heights.

Uprating the drivetrain is German company Nordex’s approach to its new low wind turbine, the N131-3.3MW. This turbine retains the existing 131 m rotor and carbon-infused 65.5 m blades used on the company’s current N131-3.0 offering, but uprates the power output with changes in gearbox torque, generator, and power converter (retaining DFIG with partial conversion). The N131-3.3MW is also designed for remarkably tall hub heights of 134 m and 164 m by use of hybrid concrete and steel towers.

European OEMs weren’t the only players showcasing new low wind offerings at HUSUM. U.S.-based General Electric (GE)—which has grown minor market share in Germany—unveiled a 3.2 MW turbine with a 130 m rotor turbine designed for IEC IIIA wind speeds. GE’s largest offering presently in the low wind category is its 2.75-120 model, so this is a notable uptick that brings the company closer in line with its European competitors. Hub heights for the 3.2 MW turbine will range from 85 m to 155 m, with the higher-end options employing GE’s unique space frame design, which features a bolted lattice tower covered in fabric.


Wind Power Implications of the GE and Alstom Deal

— September 10, 2015

European regulators signed off on the massive $13.4 billion deal between General Electric (GE) and France-based Alstom this week. The principal driver of the deal is GE’s acquisition of Alstom’s power generation business. While the wind power aspect is small with regards to the broader deal, it represents one of the more significant shake-ups in the wind sector in quite some time.

GE will fully acquire Alstom’s onshore wind business, taking over the latter’s wind turbine assets. These currently consist of three turbine models, the ECO 100, 110, and 122, all of which are rated at 3 MW (and one 2.7 MW variant of the ECO 122). Tall hub heights at 119 meters and 139 meters are available for the ECO 122 turbine using hybrid concrete and steel designs. The turbines use doubly-fed induction generator (DFIG) high-speed geared drivetrains, the most common drivetrain design globally. This type of drivetrain is also used by most of GE’s turbines, which is likely to open up some supply chain efficiencies post-acquisition.

Alstom’s offshore wind business will not be fully acquired by GE. Instead, a 50/50 offshore joint venture (JV) will be created between Alstom and GE. Alstom’s primary asset in this area is its 6 MW direct drive Haliade wind turbine. This is the turbine of choice for close to 1,500 MW of awarded French offshore wind tenders, which provides a promising pipeline. The Haliade is also the turbine of choice for Deepwater Wind’s 30 MW Block Island wind project, the first offshore wind plant in the United States, currently under construction off Rhode Island.

Perspective on Scale

It is important to put the scale of the two wind businesses into perspective. In 2014, GE installed 4,624 MW of wind capacity while Alstom installed 286 MW, according to Navigant Research’s World Wind Energy Market Update 2015 report. This put their annual global market shares at 3rd and 24th, respectively, which means that GE is not acquiring an enormous new wind business. Its wind division and supply chain are already optimized for GE’s own wind business, which is focused on the U.S. market, followed by Canada and Brazil. What the acquisition will give GE is a small market share increase in Europe, where so far it has had limited success, mostly in Germany.

Brazil is one market where GE and Alstom have notable overlap. Based on Navigant Research’s figures for wind turbines installed during 2014 in Brazil, GE secured 22.2% market share while Alstom secured 13.5%. This is likely to be the first market where supply chain consolidations and efficiencies are enacted and the combined venture becomes a market leader. One clear benefit to GE’s wind business is that the more market share the company can pick up outside of the United States, the better it can cushion the impacts of the tendency for the U.S. market to face on and off again wind policies, resulting in booms and busts.

Offshore Potential

GE is not active in offshore wind and has stated it is because of offshore wind’s high cost, risk, and reliance on subsidies. Expect that tune to change since entering into the JV is an implicit acceptance of and de facto entry into offshore wind.

Part of what has been behind GE’s reservations about offshore is a reluctance to compete in a capital-intensive sector, where it would face stiff competition exacerbated by brand loyalty to European companies such as Siemens and Vestas. The fact that Alstom’s offshore turbines are part of this new JV should continue to give those turbines an edge in France and, more broadly, in Europe.


Wind Industry Poised to Benefit from Intellectual Property Court Ruling

— August 5, 2015

Intellectual property (IP) is a double-edged sword in every industry. The marketplace rewards companies with the best innovations. In aggregate, these technology advances accelerate competitiveness and improve the offerings to the marketplace. However, companies pay princely sums and engage small armies of attorneys and experts to vigorously pursue and defend IP advantages over their peers. These battles churn out winners and losers on a regular basis and can often stifle the broader progress of an industry.

The wind power industry has had its fair share of IP battles. One of the latest fights is over so-called de-rated operation. Late July saw a U.K. court rule in favor of Siemens over ENERCON. ENERCON has been defending its IP over its Storm Control solution, which is its name for de-rated operation.

De-rated operation is the ability of a wind turbine to operate below its maximum capacity during times of high wind speed.  Traditionally, when a wind turbine reaches its threshold for maximum wind speed (around 25 meters per second), it will enter a cut-out shutdown mode to protect the turbine from damaging high winds.

The traditional process takes the electricity production offline, which can destabilize the broader power grid.  As the commercial-scale deployment of wind turbines increases, this becomes a larger concern.   To address this concern, de-rating allows a turbine to remain online, using a range of control methods from pitch control of blades to generator torque control to operate a wind turbine at below its maximum capacity.

For example, instead of a 2 MW wind turbine shutting off once it encounters its threshold cut-off wind speed parameters, it can reduce its output to 50% capacity, or 1 MW.  This ensures that the wind plant remains operational, balancing the electrical grid, and that kilowatt-hours continue to be produced instead of lost due to a full shutdown.  There are also economic inefficiencies associated with stopping and restarting wind turbines that can be avoided by running at reduced load.  This approach can also be used to continue the operation and revenue generation of a wind turbine that is experiencing high operating temperatures within the turbine drivetrain. De-rating can allow power production to continue while temperatures are reduced to acceptable levels without entirely shutting the turbine down.

ENERCON said that Siemens’ High Wind Ride Through (HWRT) infringed on ENERCON’s Storm Control system. Judge Justice Biress of the London High Court ruled the challenge invalid in favor of Siemens. Some of the technical aspects of prior art, or known technology, that bolstered Siemens’ case are well-cited at Windpower Monthly. In short, the judge accepted submitted evidence that previous technology existed–and was even obvious for de-rated operation, ramping generation down as wind speeds went up.

Making an Appeal

ENERCON says it is considering its options for appeal. In the meantime, the U.K. decision may sway how the issue is interpreted by the European Patent Office (EPO), which would have reverberations across the European market. Should the U.K. ruling stand, and the EPO meet a similar conclusion, this ruling will produce a broader benefit to the wind industry, allowing de-rated approaches from Siemens and other vendors.

ENERCON is among the most highly respected wind turbine companies, with solid performance and reputation, and it has always been on the leading edge of innovation and should be lauded for it. But if this case means more efficient and cost-effective wind technology is available for most or all wind turbine vendors, then wind plant owners, electricity consumers, and anyone with a vested interest in more clean generation are winners.


Momentum Builds for Reinstatement of Wind Tax Credits

— July 24, 2015

The legislative effort to renew the expired wind energy tax credits took a big step this week in Congress as supporters of wind energy secured a 2-year extension of the wind credits. The Senate Finance Committee voted 23 to 3 to extend roughly $95 billion in 52 tax breaks for various industries and interests, including wind.

The Production Tax Credit (PTC) provides $0.023/kWh in tax credits for a 10-year duration to wind plant owners. A 30% Investment Tax Credit (ITC) is also included as an alternative. Both are comparable in value, offsetting around 30% of the installed cost of a wind plant.

The package also includes a 2-year extension of the 50% bonus depreciation, which allows an owner in a new wind plant to deduct 50% of the tax basis in wind turbine capital costs and depreciate the other 50% over the normal depreciation period. The PTC/ITC extension also includes geothermal, biomass, landfill gas, and ocean energy projects. Notably, solar energy was excluded from the package, but intense lobbying is underway from that industry to get it included.

The tax credits for wind, which expired in 2014, must be renewed to prevent the U.S. wind market from collapsing, as it does from time to time when Congress fails to renew them. The wind industry is currently in a build cycle, with over 8,600 MW expected to be brought online this year of more than 13,600 MW under construction. This momentum, however, is riding on special start construction and other safe-harbor regulations provided by the Internal Revenue Service (IRS) that allows wind plants to qualify for the tax credits if construction is finished by the end of 2016.

The new 2-year extension would re-enact the PTC and ITC for a 2-year period through the end of 2016, and wind projects would have to begin construction during this 2-year window to be eligible. IRS guidance to the wind industry in recent years has allowed a 2-year window for wind plants to be built, and this is expected to be applied to this new extension. In practice, new wind plants that meet IRS guidelines for either starting construction or meeting other safe-harbor regulations will have 2 years to finalize construction. The ultimate result would be securing stable wind turbine installations in the United States from now through 2018.

Promising but Uncertain

The path forward for these tax extenders to be signed into law is promising but uncertain. It is promising because the wind industry tax credits on their own could be a hard sell in today’s polarized Congress, but when rolled into a larger package that appeases broad industry interests, Congress is more likely to approve the package. Also, the well-known but not well publicized reality in the wind industry is that most U.S. wind plants are majority owned by so-called tax equity financial firms, usually large banks, all of whom have the large tax bills necessary to fully monetize the tax credits. These companies have enormous lobbying power that can help get their interests over the finishing line.

Passage by the full Senate is required, plus a reconciliation with a House version of the bill that has yet to emerge. Importantly, lawmakers are moving ahead with this extenders package now instead of the end of the year when a last minute rush can doom even the most straight-forward and uncontentious legislation. Allowing the extender effort to fall into next year would be even worse, as the effort would become entangled and politicized by the 2016 presidential and congressional elections. All eyes in the wind industry will be on this effort going forward.


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