Navigant Research Blog

Wind Energy Innovation: Vortex Generators

— July 15, 2014

The wind energy industry has doggedly pursued higher energy yields and lower costs of energy with each successive generation of wind turbines.  As a result, the wind energy industry has lowered its costs by over 40% in just the past 4 years.  Innovations in wind turbine design, materials, and the sub-component supply chain are continually yielding advances – sometimes from the smallest places.

The mature aerospace industry has provided many complementary solutions to the wind industry in terms of design, materials, manufacturing, and the operation of large rotors.  Among these is the relatively recent introduction of vortex generators (VGs).  These small, simple fins, usually less than 8 centimeters tall and wide, energize airflow directionally around a blade when applied in multiples and keep it from erratically scattering as it passes over the blade surface.

The image below, from LM Windpower, the largest global independent blade manufacturer, shows the difference in airflow over a blade during recent testing.  The benefits are most pronounced close to the thickest section of the blade, near the blade root.

(Source: LM Windpower)

Lower Speed, More Energy

Lessons learned long ago in aviation show that planes with wings equipped with VGs are able to reach slower speeds before stalling out, as the VGs helped increase lift on the wings.  Wind blades operate similarly to aircraft wings, in that wings capture passing wind to create loft for flight, and blades capture passing wind as loft for mechanical turning power of the rotor.  The effects proven in aviation are also more pronounced at lower air speeds, when wing flap angles are more aggressively angled toward the passing wind.

Similarly, the effects of VGs appear to increase the productivity of a wind turbine more during medium and low wind speeds versus high wind speed environments.  This is complementary to the fact that, in recent years, the majority of new turbines installed in the mature markets of North America and Europe are designed for lower wind speed environments.

No wind blades presently are manufactured with VGs attached out of the factory, but a robust retrofit business has evolved among some independent service providers (ISPs) to install VGs during blade maintenance and inspection.

UpWind Solutions, an ISP based in North America, says it has installed 22,000 VGs across multiple wind turbine models and found that assumptions around a General Electric (GE) 1.5 MW turbine, with a power purchase agreement of $50/MWh and operating at a 40% annual capacity factor, would see an increase in annual energy production (AEP) of around 2.2% and recoup the cost of VG installation in 20 months.

From the Factory, Soon

Siemens has discovered the value of VGs and other aerodynamic add-ons and has incorporated these into aftermarket power curve upgrade services, similar to UpWind’s applications.  In early 2014, Siemens added VGs as a retrofit upgrade to the existing 175 wind turbines at the 630 MW London Array offshore wind project.  Siemens says the aerodynamic upgrades will yield about a 1.5% increase in AEP.

Independent blade manufacturer LM Windpower also offers VGs as an add-on service to blades.  With ISPs, turbine vendors and blade manufacturers offering VGs as add-on aftermarket services, it’s only a matter of time before vendors begin offering VGs with their standard blade offerings.

After all, they are already standard offerings on your average mallard duck.


U.S. Wind Market Buffeted by Boom-Bust Cycles

— May 28, 2014

The wind energy market in the United States operates in a boom and bust environment that, this year, once again, highlights the absurdity of U.S. policies around clean energy – or the lack thereof.  The Production Tax Credit (PTC) and its accompanying Investment Tax Credit (ITC) are the central pillars of government support for the U.S. wind market.  The PTC provides $0.23/kWh for 10 years from project commissioning, while the ITC provides a roughly equivalent cash grant.  Both credits are worth approximately 30% of the full installed cost of a wind plant, although the PTC is more valuable in areas of high wind speed (more kilowatt-hours relative to installed cost).

Both of these incentives are currently expired.  And yet, the wind industry is booming, with as much as 13 GW in various stages of construction in over 20 states and over 95 projects.  This is the result of the PTC being enacted on January 1, 2013, for 1 year.  Special safe harbor guidance from the Internal Revenue Service (IRS) allows for wind plants that began construction during the enacted PTC to qualify, as long as developers either began construction in 2013 – the physical work test – or spent at least 5% of the project capital costs.  Projects that went either route then have 2 years to come online in order to qualify for the PTC or ITC.

Time Running Short

In an ideal scenario, the 13 GW of construction reportedly underway may come online by the end of the 2-year window ending December 31, 2015.  Navigant Research forecasts around 12 GW of the 13 GW will come online, roughly split between 2014 and 2015.  A few items of uncertainty around this build cycle are in play.  Around 9 GW of power purchase agreements (PPAs) were signed during 2013 and through 1Q 2014.  PPAs, in almost all cases, are essential for wind plants in the United States to secure financing.  That’s not to say a further 3 GW to 4 GW of PPAs cannot be signed for this build cycle, but time is running out.

Time is also running out for turbine purchases, with top executives of major turbine vendors saying that only a few months remain to secure turbines for end-2015 installation.  They also worry that many developers that started construction, but did not put down payments on turbines by the end of 2013, may ultimately not secure PPAs, turbines, financing, or qualify under the IRS safe harbor stipulations during this build cycle.

Start Up, Again

Would that be a disaster?  Not necessarily.  If just over 9 GW is commissioned between 2014 and 2015, that still represents a healthy baseline of wind installation.  But it shows again the inefficiency of the U.S. system of stop-start development cycles, driven by the federal government’s inability to provide the wind industry long-term stability.  Most tax and other subsidy incentives for the fossil fuel sectors are written into permanent tax law and do not require contentious re-authorizations from a dysfunctional Congress every 1 or 2 years.

The PTC doesn’t have to exist forever.  Wind is increasingly competitive with new national gas plants in windy areas of the country.  But for now, the PTC needs to be extended to continue wind’s momentum.  In the longer term, the PTC should be reduced in value in exchange for a long-term multiyear phaseout when gas prices have recovered to realistic and sustainable cost levels.  Otherwise, the insane and inefficient boom and bust cycles will continue.


Big Business Buys into Big Wind

— May 23, 2014

Thirteen billion Snickers bars.  That’s how many chocolate treats can be produced annually from the wind power purchase agreement (PPA) that Snickers-maker Mars Inc. signed in late April that effectively underwrites a new 200 MW wind plant near Lamesa, Texas.

Mars thus joined a swelling chorus of big corporations that are investing in, and powering their businesses with, wind power.  Corporate purchases of renewable energy certificates (RECs) aren’t new.  But several tech-savvy firms are increasingly going beyond REC purchases and are opting for direct purchases of bulk wholesale renewable energy from individual wind plants and making equity investments in projects – effectively becoming new customers for wind plants beyond the traditional utility base.

Utilities have typically been the only customers that sign PPAs with wind plant developers and owners.  However, companies like Mars Inc., Google, Intel, Ikea, and Facebook (just to name a few) represent a new customer base for wind plant developers.  And these are not small, symbolic greenwashing pursuits.  These are real and substantial investments enabling the construction of significant new wind power plants.

Earth Day Deal

Google in particular has been on a wind buying spree.  Fittingly, on Earth Day, April 22, Google announced it had inked a deal with MidAmerican Energy to purchase 407 MW of wind power.  Unlike most utilities, which purchase wind power from independent power producers, the Iowa-based utility has strongly embraced wind by becoming a wind plant developer and owner itself.  With Google’s PPA in support, MidAmerican will build out its wind plant capacity by the end of 2015 and will sell the equivalent amount of power and bundled RECs to Google to partially power its data centers in Iowa.

This comes on the heels of Google signing PPAs totaling 101 MW in Sweden, 239.2 MW in Texas, 100.8 MW in Oklahoma, and 114 MW in Iowa, as well as the equity purchase of a 161 MW wind plant in Texas.  All told, the search engine giant has over 1 GW of wind PPAs in addition to equity investments.  None of these deals are behind the meter arrangements providing direct power, but these deals are structured in markets close to where Google operates its power-hungry data centers, thus ensuring that its investments are greening the electricity grid where the company operates facilities and that some proportion of the facilities’ consumption is produced from these local wind investments.

No Assembly Required

The Lamesa plant underwritten by Mars Inc.’s PPA is being developed in partnership with Sumitomo and BNB Renewable Energy, and is expected to go online by the end of 2015.  The expected 800,000 MWh of annual electricity generated by the facility is more than the Mars Inc. company’s annual electricity needs at its 37 U.S. factories and 70 workplaces.

Somewhere in those Mars Inc. offices, most likely, sits some furniture from Ikea.  The Swedish furniture giant also announced in April that it would purchase a 98 MW wind plant developed by Apex Clean Energy in Illinois.  No doubt, the equity investment is sweetened by the company’s appetite for tax credits, but it also offsets the equivalent of 165% of the electricity consumed by Ikea’s 38 stores in the United States.

Social media giant Facebook is not far behind.  In late 2013, Facebook announced a deal – also with MidAmerican Energy – to buy all the output from a 138 MW wind plant developed by RPM Access that would offset the energy needs of the company’s new data center under construction in Altoona, Iowa.

These deals demonstrate that large energy users are increasingly educating themselves on the role wind energy can play in their efforts to achieve a sustainable triple bottom line that balances social, environmental, and economic business needs.


How the GE-Alstom Combination Could Save the Offshore Wind Power Industry

— May 8, 2014

GE’s proposal to acquire French power engineering group Alstom’s power generation business for $13 billion is not a done deal – the French government has said it is conducting a review of the purchase, and Germany’s Siemens has provided a counterbid while it conducts due diligence.  This proposal will, if completed, have major implications for all forms of generation – including wind power.

In truth, the prospective deal raises more questions than it answers regarding how the wind energy businesses of the two companies will merge.  First is how to square GE’s hesitant approach to offshore wind with Alstom’s serious and capable pursuit of the market.  If that happens, this deal could provide a much needed boost to the promising, but struggling, offshore wind sector.

Nothing Further

Alstom has chosen direct-drive turbines for its next-generation offshore turbine, the 6 MW Haliade.  The first prototype was installed in French waters in 2012 and a second in 2013.  The same units are destined for a Rhode Island, Connecticut offshore wind farm.  Alstom also won the right to be the exclusive turbine supplier to the consortium led by EDF Energies that secured three offshore projects with a combined capacity of 1,428 MW in the first French offshore wind tender expected to be commissioned by 2018.

Beyond that, the future for both Alstom and GE offshore is unclear.  At the annual European wind conference in March, GE’s vice president for renewables Anne McEntee said the company was focused on the onshore wind market and questioned if offshore wind makes economic sense due to its high cost and vulnerability to policy volatility.  GE knows from experience.  It installed a 3.6 MW turbine offshore in Ireland in 2003, and since then has been largely quiet on offshore.  GE’s re-entry into offshore seemed imminent in 2009 when it acquired Sweden’s ScanWind, which offered a 4.1 MW direct-drive offshore turbine.  GE installed one in Sweden in 2011, but there’s been no further news.

Bigger Is Better

The future is likely one with fewer but stronger wind turbine vendors than exist today.  In offshore, consolidation is the strategy of choice, with Vestas forming a joint venture with Mitsubishi and Areva forming a joint venture with Gamesa.  If GE plans to use the Alstom acquisition to re-enter the offshore wind market, that furthers the consolidation trend and will help GE in terms of offshore turbine technology and market entry.  Alstom’s offshore turbine is larger and arguably more advanced and robust than GE’s 4.1 MW unit.  Also, GE’s financial strength is exactly what the offshore sector needs right now to increase the confidence of offshore wind investors and, in turn, help find solutions to bring down the cost of offshore wind for the entire industry.

Alstom’s onshore turbines are likely to be phased out as a brand, but the technology will be rolled into GE’s fleet and will augment GE’s 2.5 MW turbine offering with 2.7 MW and 3.0 MW units. Alstom turbines spin in 15 countries, and the company has a nacelle facility in Texas.  Alstom also has a strong presence in Brazil, where it delivered 238 MW in 2013.  Yet, GE took top market share in that country for the first time in 2013.  The merger would result in one less competitor for the limited market and cement GE as the most formidable competitor.


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