Navigant Research Blog

New Wind Turbine Battleground Focused on 4 MW Units

— September 28, 2017

The latest battleground in the ever tightening wind turbine market is with onshore wind turbines in the 4 MW range. Until now, this segment has had few offerings and only minor commercial deployments. No less than four turbine OEMs announced new 4 MW turbine models over the past few months. The overwhelming majority of annual onshore wind turbines installations are in the 2 MW to 3 MW range, and innovation continues to occur rapidly in that nameplate space.

Power Contract Auctions Prevail

However, a number of factors are pushing turbine OEMs to design more turbines with higher nameplate capacities. This includes the steady shift in Europe and other markets from fixed priced contracts for wind to highly competitive power contract auctions. These auctions squeeze power purchase agreement pricing for wind projects as low as developers and investors are willing to go, and taller tower, larger rotor, larger nameplate machines promise higher annual energy production (AEP). Larger turbines also maximize AEP in a geographically limited location. Europe in particular is already a population-dense continent and land availability for wind projects is becoming increasingly constrained.

There are also efficiencies of scale with producing the most megawatt-hours from each single wind turbine foundation and tower. This factor is more quantifiable with offshore wind, where foundations and installation cost is proportionally much higher than it is for onshore. In general, onshore turbines represent around two-thirds of onshore project CAPEX while offshore turbines represent one-third of offshore project CAPEX due to the higher foundation cost. This is why offshore wind turbines may double in size by 2025. The same principle applies (to a lesser degree) that the more AEP per turbine in the onshore realm, the better the project economics.

Competitors Abound

The following are summaries of the most recently announced turbines competing in this new 4 MW battleground:

  • GE Renewable Energy: GE Renewable Energy announced its first turbine offering in the 4 MW range with a new 4.8 MW unit that features a 158-meter rotor enabled by carbon blades. GE has historically avoided carbon fiber for most of its blades, but the demands of longer blades for this oversize turbine may have made carbon use unavoidable. The turbine will have around 30% higher AEP than GE’s previous 3 MW range turbines. Tower heights are 101 meters, 120.9 meters, 149 meters, and 161 meters. GE’s acquisition of Alstom Wind, LM Wind Power, and Blade Dynamics likely played a role in this new 4 MW platform.
  • Vestas: Vestas upgraded and uprated its 3 MW range to now include three models in the 4 MW range. This includes the high wind V117-4.0/4.2MW, which is designed to handle wind gusts up to 80 meters per second that would enable it to handle hurricane and typhoons. V136-4.2MW and the V150-4MW/4.2MW are medium to low wind turbines designed for most areas in Europe and other global markets.
  • Nordex: Nordex is uprating its 3 MW Delta series into a 4 MW-4.5 MW turbine with a 149-meter rotor for medium wind speeds. The turbines are planned for prototype testing in the third quarter of 2018, followed by several pre-series turbines and series production starting in 2019. The company touts the turbine’s wide power range from 4 MW to 4.5 MW, which is ideal for adapting individual installations to a specific grid operator’s requirements and to local wind conditions or noise restraints. Steel towers come in 105- and 125-meter hub heights and concrete-hybrid towers offer hub heights of 145 and 164 meters.
  • Enercon: Germany’s Enercon has been ahead of all other turbine OEMs with 4MW class turbines, having had its EP4 turbines (4-4.2 MW) E-126 and E-141 already commercially available roughly 2 years ahead of Vestas and others. In fact, the newest E-series turbines are downrated from a previous E-126 model that had exceeded 7 MW nameplate capacity as far back as 2012. The E-141 units feature concrete-steel hybrid towers to enable a 159-meter hub height. Enercon is also rapidly evolving its 4 MW class turbines with some radical design departures, which is thoroughly explained by Windpower Monthly.

A Small Change with a Big Impact for U.S. Wind Incentives

— May 19, 2016

Der Rotor wird angesetztAn easily overlooked change in guidance from the Internal Revenue Service (IRS) last week may seem like arcane minutia, but it will have a profound impact on the U.S. wind market, measured in billions of dollars and gigawatts installed through 2023.

First some background. In late 2015, the U.S. wind industry and its stakeholders succeeded in securing from congress an elusive policy goal: long-term market certainty. Federal tax credits, predominantly in the form of the Production Tax Credit (PTC), have typically been provided to the wind industry in 1- and 2-year increments. The PTC pays $0.023 per kWh of energy produced for 10 years of operation of a wind plant, which amounts to roughly 30% of the total installed cost of a wind plant. Or it can be taken as a one-time Investment Tax Credit (ITC) worth approximately the same amount.

The 2015 legislation was a significant twist on wind policy. It was a deal between industry and government for the wind industry to eventually give up its tax credits in exchange for a 4-year gradual phaseout of the credits. It was structured so that wind plants that began construction by the end of 2016 would receive 100% PTC value, projects starting construction in 2017 would receive 80% of the PTC value, 60% in 2018, 40% in 2019, and zero in 2020. Start construction is defined as significant site work or 5% of project cost incurred.

The minutia that matters is the start construction guidelines and how long a wind plant is given to come online. In recent years, the IRS guidance of the PTC was to allow wind plants 2 years to complete construction in order to avoid a requirement to show continuous construction progress. That would result in 2018 being the peak capacity installation year, as wind plants starting construction in 2016 would come online by 2018 in order to secure 100% PTC value.

A Pathway to Offshore Wind

The guidance provided by the IRS last week changed the construction window from 2 years to 4 years. It also removes a previous guideline that stipulated construction must be continuous in nature. Combined, this will take a lot of pressure off the wind industry so it doesn’t have to rapidly build as fast as possible to meet a 2-year window. Wind plants seeking 100% PTC value and starting construction in 2016 will have until 2020 to be built. Applying the 4-year guidance, projects starting in 2017 will receive 80% value if completed by 2021, 60% value by starting in 2018 and completed by 2022, and 40% if starting in 2019 and completed by 2023.

The new 4-year window means that capacity additions will see less of a short-term spike and more of a smoothed out deployment cycle. Most wind plants don’t need 4 years for construction, so many will stick to shorter planned schedules. However, large offshore wind projects require longer construction timelines, and this new 4-year window could mean the difference between one or more large offshore projects proceeding that may not have before. For onshore wind, many developers will optimize their development cycles, turbine supply agreements, component transportation, and construction logistics to enable the most cost-effective and largest build cycle possible under these more flexible guidelines. For example, some developers may have a few foundations poured during the first year of construction at a site and turbines not installed until the fourthyear while development is prioritized elsewhere.


Blog Articles

Most Recent

By Date


Clean Transportation, Digital Utility Strategies, Electric Vehicles, Energy Technologies, Finance & Investing, Policy & Regulation, Renewable Energy, Smart Energy Program, Transportation Efficiencies, Utility Transformations

By Author

{"userID":"","pageName":"Onshore Wind","path":"\/tag\/onshore-wind","date":"5\/24\/2018"}