Wind-power technology has made great strides in efficiency over the past 15-20 years, lowering the cost of energy in the process.
Arguably, many old turbines are occupying some of the best wind-resource sites, and it would seem to make more economic and environmental sense to repower these sites sooner rather than later.
But as EU member states increasingly replace feed-in tariffs and other support systems for onshore wind with auction mechanisms, repowering projects are having to compete with new developments, often against a background of reduced targets for capacity growth.
In theory, Europe should be on the verge of a repowering surge. More than 10GW of wind was installed between 1996 and 2000, which, assuming a standard 20-year lifetime, should be replaced or dismantled over the next few years (see chart, below).
Surely a growing wave of wind-farm replacements should be under way, in particular, among the oldest fleets largely located in Denmark, Spain and Germany?
Not so. Since repowering incentives have been abolished, framework conditions for onshore wind across Europe do not favour repowering over new build, but have all onshore projects competing with each other. And where the general climate for onshore wind is poor, as in Spain, repowering has no redeeming features.
In Denmark, a "scrapping bonus" for turbines up to 450kW, introduced in 2004, was eliminated in 2011. But the country's experience indicates that a repowering bonus may not be necessary.
Under the scheme, decommissionings peaked at 244 turbines totalling 44.4MW in 2010. But in 2015-2016, 309 turbines with a total capacity of 109MW were dismantled, possibly as part of repowering projects (see chart).
However, Denmark's onshore-wind support mechanism is due to expire in February 2018, to be replaced by competitive tendering.
Whether the auctions will be technology-neutral, where all types of renewables compete against each other, or technology-specific, where onshore projects only compete with each other, is not yet clear. And how repowering will fare in either environment is up in the air.
In Germany last year, 336 turbines totalling 366MW were dismantled and replaced with 238 turbines worth 679MW. This was up on 2015, when 253 turbines totalling 195MW were replaced by 176 turbines adding up to 484MW.
But the 2015 repowering business was sharply down from the previous year, when 544 turbines of 364MW made way for 413 machines totalling 1,148MW.
The surge in 2014 is widely attributed to a last-minute rush before a €0.005/kWh repowering bonus was abolished on 1 August 2014. The bonus was introduced in 2009 to encourage dismantling of old turbines that had been installed before priority areas for wind were defined, mainly in Germany's windy northern states.
The bonus was scrapped because projects were lucrative enough to manage without it. Old turbines operating right to the end of their technical lifetimes could produce the cheapest electricity, according to an analysis by the Leipziger Institut fur Energie.
The institute also argued that delaying repowering could relieve pressure to expand the electricity transmission networks, which at that time were already showing up bottleneck problems.
Repowering in Germany is running slower than might be expected. The 195MW dismantled in 2015 was less than half the new build 20 years earlier.
This may be because many of the very old 250-300kW turbines had in fact already been repowered, noted HSH Nordbank, which has been involved in financing over 3GW of German onshore wind capacity since 1995.
Assuming turbines are dismantled after 20 years of use, which is when support ends, by 2020 some 1.5GW could be potentially be closed in Germany, rising to a maximum of just over 3GW in 2023, suggests the bank's Europe-focused Industry Study – Wind Energy, released in September 2016.
But owing to mounting constraints, only a fraction of this will be repowered, and dismantling of aged capacity may be stretched out over a longer period, it concluded.
The constraints include growing resistance to newer and taller turbines for their impact on the landscape, and dwindling availability of priority areas for wind. Some regions are trying to counter these constraints.
To improve public acceptance of wind energy, the north-east German state of Mecklenburg-West Pomerania passed a law in April 2016 law requiring that citizens and municipalities within five kilometres of a wind project must be offered at least 20% in the project, with minimum stakes of €500 apiece.
Citizen participation is an issue growing in importance, and the arrangement could be copied around Europe if proves successful and does not scare off investors.
After factoring in the constraints, just 300-500MW of old turbines are likely to be taken down in 2016-2020 in Germany each year, rising to 600-800MW per year in 2021-2025, according to the HSH Nordbank study.
Germany's auction mechanism, which comes into effect this year, pitches repowering projects against new build for a capacity that will capped at 2.8GW a year in 2017-19, rising to 2.9GW from 2020.
The increasing requirement for dismantling, the study warns, means "there will be significant decline in capacity expansion of onshore wind energy in Germany over the next few years".
For example, with the expected gross additions of 2.9GW in 2020, and 500MW of closures, net installations will amount to 2.4GW. If the 500MW to close is fully repowered with double the capacity, or 1GW, greenfield projects will thus amount to only 1.9GW in 2020.
The reason that capacities expected to be scrapped are often less than half of what was installed 20 years earlier is largely a question of economics.
After 12-15 years of operation, the technical condition of the wind turbines, the earnings achieved at the location, and the liquidity of the operating company are all indicators for an evaluation as to whether the site should continue in operation or be repowered, says German wind developer Wpd.
A repowering project needs just as much preparation and work as a new project, requiring three to five years from start of planning to project commissioning, says Peter Spengemann, repowering expert at Wpd.
The developer is replacing four wind farms in 2017 and anticipates similar progress in the coming years. Nominal capacity at each project will more than double, but generation output will increase by a higher factor, he says.
Repowering of an old wind farm before the support period has expired is usually triggered by its poor economic performance, which, in turn, is often due to an inaccurate assessment of wind conditions at the site when the project was planned, says Spengemann.
Replacing a loss-making wind farm at an existing site is likely to make economic sense if the new turbines can be installed on much higher towers. But if the location is subject to hub-height restrictions, the project is more likely to be dismantled than replaced.
And just because a wind farm is 12 or 15 years old does not mean it is more expensive to run, Spengemann stresses. The turbines' technical condition is well known, and an old project can be serviced under a reasonably priced operations and maintenance (O&M) contract from an independent supplier.
By contrast, banks funding new wind farms may impose an expensive, full-service O&M contract running for 15 years as a financing condition, he adds.
Replacing an old wind farm involves the costs of dismantling and disposing of the old turbines, removing the concrete foundations, and probably upgrading the access and electricity transmission infrastructure. Use of an existing site does not offer much in the way of synergies or cost savings, he admits.
One main advantage, however, is the cooperative approach with the land owner over the rental cost of the site when it comes to competing with greenfield projects at auction.
The landowner will hope to maintain rental income and may agree to better conditions to ensure a repowering project wins support at auction. The aim is for a win-win situation for both sides, according to Wpd.
If the chances of a repowering project winning support at auction are poor, the operator is likely to try to continue running the wind farm for as long as possible after the support period has expired, assuming O&M costs remain at a viable level.
The forecast of slowly increasing wholesale electricity prices beyond 2020 improves the prospects for turbines then exiting the support period to operate profitably in a lifetime extension.
Competition between repowering and new-build projects will be particularly fierce in northern Germany over the coming years.
To help transmission system operators improve transmission capacity in the region, federal energy regulator Bundesnetzagentur was asked to draw up a regulation (due to be in force from 1 March 2017 to 31 December 2020) restricting annual auction volumes to 902MW a year for a so-called network-expansion region.
Limited to northern Germany, this encompasses large parts of the states of Schleswig-Holstein, Lower Saxony and Mecklenburg-West Pomerania, plus the city states of Bremen and Hamburg, where most of Germany's oldest turbines are installed.
Despite this heavily restrictive policy imposed by the federal government, the Schleswig-Holstein state government is still keen to clear away the old wind turbines that were scattered randomly across the countryside before wind-energy spatial planning was able to control developments.
The first draft of a new wind section of the state spatial development plan presented in December 2016 prioritised over 30 square kilometres for repowering projects sited outside priority areas for wind over the next ten years. The aim, it said, is to "correct past planning mistakes".
Some 1,300 old turbines are located in areas in Schleswig-Holstein that are not prioritised for wind. The area reserved is sufficient to house around 290 modern turbines (roughly 900MW) over a decade, which would replace up to 600 old machines, says Volker Brokelmann, a senior analyst at HSH Nordbank.
The remaining 700 old turbines may continue to be operated, but under the draft rules these installations will be prevented from being significantly retrofitted. Sooner or later, they will be dismantled, says Brokelmann.
Each wind-project owner has to do the sums and evaluate the asset on its own merits. "Virtually every wind-farm owner is keen to repower," says Inka Klinger, energy expert at HSH Nordbank.
"With the amortisation period for an aged wind farm usually 12 to 16 years, each wind park has to be examined individually to decide when breakeven is reached and repowering could make sense."
THE CASE FOR REPOWERING
Many factors seem to give repowering projects an advantage over greenfield sites. Potentially, some of the infrastructure could be re-used and, as the existing turbines have become part of the landscape view, public acceptance can be easier to achieve.
Landowners with turbines on their property will want to keep their rental income. Municipalities receiving local trade tax from wind-farm operators will also be keen not to lose the money. The accumulated long-term wind data of existing projects will help reduce risk by allowing accurate calculation of future performance.
Another strong argument for repowering rather than retrofitting to extend turbine life, is the substantial gain in nominal capacity and electricity output. As a rule of thumb, a repowering project involves halving the number of turbines, while doubling the nominal capacity and trebling the electricity yield.
Average rated capacity for onshore wind turbines in Germany has risen nearly sixfold over 20 years, from 472kW in 1995 to 1,723kW in 2005, and 2,739kW in 2015. And while the rotor diameter of early turbines rarely topped 45 metres, most new turbines today exceed 100 metres.
In practice, a 500kW turbine from 1995 generating 1GWh/year at an inland site can be replaced with a modern 3MW machine with a 100-metre rotor diameter that generates six to nine times as much electricity, said Ingo Sebastiani, head of repowering at German developer Juwi.
Capacity factors for individual turbines have also substantially increased over the past 20 years, now reaching more than 40% in coastal regions and up to 30% at inland sites.
INDIA AIMS TO REPLACE PRIME SITE BLOCKERS
India has many roughly 50-metre high 100-400kW turbines that were installed in the mid-1990s, and quite a few slightly larger, newer machines up to 1MW.
Local manufacturing capability was limited in the early days and most of these turbines were IEC Class I or II models, not best suited to India's low-wind conditions.
Now, the top three OEMs in the country - Gamesa, Suzlon and Inox Wind - all offer IEC Class III 2MW-plus turbines with rotor diameters of more than 100 metres and hub heights in the 90-120-metre range.
Many of the manufacturers and project developers behind the older projects are no longer trading, and the turbines suffer recurring breakdowns and stoppages, effectively blocking the best wind-resource sites.
Studies have been done to assess the country's repowering potential, but progress on policy was slow. That changed in August 2016 when the government allowed all turbines below 1MW to be repowered without putting any stipulation on project life.
The new policy extends all existing benefits for new-build to repowered projects and provides an additional 0.25% interest rate rebate from the Indian Renewable Energy Development Agency.
It also lets repowering projects sell additional generation (over and above the average of three years' generation from the old project) at the prevalent feed-in-tariff, and directed state agencies to facilitate land procurement and relax micro-siting criteria for all repowering projects.
However, the industry fears there may be hurdles in the implementation of the policy. At many old sites, the transmission capacity of the substation and related infrastructure is barely adequate now.
Some developers consider the interest rate rebate an insufficient incentive, although most industry experts believe the policy is a good start. Development will happen gradually on a case-by-case basis, but each project will help establish repowering as a commercially viable option.
Official estimates assess the total repowering potential to be at least 3GW, with about 2GW in Tamil Nadu alone, but the actual potential could be more like 4.5GW if all turbines rated below 1MW are considered.
While regions such as Kethanur and Pazhavur in Tamil Nadu offer the biggest repowering potential, there are opportunities in other states, including Andhra Pradesh and Gujarat. The onus now is on industry players like Suzlon, Vestas and RRB Energy, which have considerable control over these old sites, to make the most of them.
BOOM TIME IN AMERICA — 80/20 RULE FUELS REPOWERING RUSH
No firm is pursuing repowering more avidly in the US than NextEra Energy Resources, one of the world's largest generators of wind energy. The company is planning to repower a massive 1.6GW by 2020, which it describes as a $2-2.5 billion opportunity.
The Florida-based utility had previously announced 1.3GW of repowering to be completed in 2017-2018, an investment of some $875 million. "Earnings from the projects are expected to be comparable to similar new-build opportunities, with significantly less capital investment," said John Ketchum, NextEra's chief financial officer.
The repowering boom in the US is being driven by the so-called 80/20 rule, under which a repowered wind turbine may qualify for a new ten-year period of the production tax credit (PTC) if the cost of the new equipment incorporated into the turbine is at least 80% of the turbine's total market value. The $0.023/kWh PTC, for the first time with an 80/20 rule, was extended in 2015.
Prior to the extended PTC, a wind project had to be fully repowered to qualify. To date, around 15 projects, about 600MW, have undergone repowering, mostly in California, according to the American Wind Energy Association. They have mostly been full repowerings, where the entire project was dismantled and rebuilt, thereby qualifying for the tax credit prior to 2015.
"Retrofitting or repowering generally wouldn't be supported by power prices alone," says BNEF wind analyst Alex Morgan. The timing of 80/20 repowering is important, analysts point out.
If it takes place before the expiration of the original project's first ten years of operation, the project would sacrifice some of its original round of PTC support. And the PTC is now being ramped down, to 80% in 2017, 60% in 2018, and 40% in 2019.
Manufacturers are vying for this vast 80/20 repowering market. GE has been at the forefront in offering products for repowering, says Dan Shreve, a partner at Make Consulting.
More than 4.5GW of turbines installed 10-20 years ago are GE models, including Zond machines through its acquisition of Enron Wind Systems in 2002. A further 3.1GW are Vestas machines, according to Bloomberg New Energy Finance.
NextEra is well-placed to benefit from the 80/20 rule. It owns 3.4GW of the almost 10GW of wind that was commissioned 10-20 years ago. It repowered two projects in Texas last year.
The company is currently repowering the second phase of Golden Hills in the Altamont Pass in northern California. The project consists of replacing 1,625 Kenetech KCS 56-100s turbines with GE 1.7MW turbines.
This, however, is not a simple 80/20 repowering project. It is being repowered subsequent to a legally binding settlement reached in 2010 because of high numbers of bird kills by old turbines on several projects in the Altamont Pass.
The repowered project will not be subject to the settlement because newer larger turbines kill far fewer birds.