Managing increasingly diverse wind portfolios

One of the most common challenges faced by wind-farm portfolio owners in today's market is that of asset diversity. Diversity takes many forms within a portfolio -- asset age, wind-farm size, turbine technology, IT systems, service provision model, wind climate and location among them.

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As the wind industry has developed over the past three decades, wind-farm portfolios have grown in complexity and diversity.

In the early years of commercial wind-power development, portfolios often had limited geographical spread.

Turbine hardware was from a limited number of platforms, all of a similar age and generating capacity. Projects were typically managed by small in-house teams with hands-on knowledge of the projects.

Many owners now operate internationally distributed portfolios, with substantial geographical spread across the Americas, Europe and Asia.

Large portfolios typically contain both old and new assets, as well as wind turbines from a wide stable of suppliers, and include sites ranging from small sub-20MW wind farms to large offshore projects of 500MW or more.

It is not uncommon for owners to have small projects with sub-1MW turbine hardware that are nearly 20 years old, while operating 3MW-plus turbines that are less than five years old in the same portfolio.

Such diversity also leads to a range of approaches to day-to-day site management, with many elements of the operational management being sub-contracted to local suppliers.  

Added complexity

As portfolios have often been assembled through a mix of greenfield development and acquisition, it is common to see a wide range of approaches to asset management within a portfolio, including differences in operational systems and the technology deployed.

The presence of diversity within portfolios is often desirable in that it serves to balance the risk of overexposure to any particular market, wind regime, technology or supplier.

However, market forces and portfolio growth are driving an awareness of the opportunity to optimise asset value through consolidation, streamlining and improvement, including changes in management approach, systems and technology upgrades. This is challenging to achieve at a portfolio level where substantial complexity exists.

A rigorous approach is required in order to put decisions at site and portfolio level in a consistent financial framework, and to ensure that all changes are made in the long-term interest of project value.

Establishing the project baseline is key; understanding and mapping the operational system and defining the project net present value allow strategic decisions to be made within a robust framework.

There is a wide range of opportunities to add value to wind-farm portfolios; from turbine-technology upgrades to changing service provider to investing in improved data collection and analytics. All of these choices have impacts on capital budgets, management time, risks and revenues.

Having a robust decision-making framework in place allows clear choices to be made in the financial interests of the project.

Seeing the bigger picture

Operational teams have a demanding day job, keeping on top of the ongoing challenges of operating a wind portfolio. It can be a challenge for organisations to take a step back and form an independent view.

Owners often require support to implement change at both a portfolio and project level, from facilitating strategic decision-making processes and identifying opportunities for improvement through to developing and managing implementation strategies.

It is crucial that this is performed through the lens of project value, using tried-and-tested economic modelling approaches.

Owners embarking on this process of change will apply a framework definition of industry best practices in terms of processes, levels of performance, technology and team capability.

This allows them to systematically appraise where their own assets, operations and systems rank in terms of competence and functionality against this benchmark.

It also allows owners to optimise their ongoing operations and to prepare for significant milestones and events, such as end of warranty, end of service contract, repowering and life-extension.

By applying tried-and-tested business analysis tools, allied with deep technical knowledge and experience of wind-farm operations, and bringing in expert external help, owners will be able to optimise asset management strategies while keeping day-to-day operations going.

Neil Douglas is a director at BVG Associates

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