United States

United States

'Useful' project lifetime on the up - survey

The length of time a typical wind project is being seen as viable has increased from roughly 20 years at the start of the century to 30 years now, according to a new survey.

The length of time wind projects are expected to be economically viable is increasing among the industry
The length of time wind projects are expected to be economically viable is increasing among the industry

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Lawrence Berkeley National Laboratory’s Electricity Markets and Policy Group said a "more mature and robust technology, coupled with improved understanding of performance, wear-and-tear, and O&M practices have been key enablers of longer assumed project lives".

LBNL’s research also found the levelised cost of energy (LCoE) from wind projects fell the longer a project was operating for.

Assuming a 20-year project life, wind projects built in 2018 would have an estimated LCoE of $40.4/MWh.

However, extend the life to 30-years, and the LCoE is estimated at $33.5MWh.

This falls to $30.3/MWh if the project can operate for 40 years without a significant increase in O&M costs.

"Project lifetime is not as impactful as installed costs and annual electricity production for determining the overall levelised cost of wind energy. Nonetheless, if O&M costs can be contained, project life is one of several levers (that also include financing and O&M) that helps reduce the levelised cost of wind energy," according to the report.

This will be welcome research for GE Renewable Energy after it launched a 40-year design certification for its 2.7-116 and 2.7-127 turbines, which its claims would benefit project economics further.

Post PPAs

LBNL’s survey also showed that project operators wanted or needed to earn more value in the projects beyond the initial 10- or 20-year power purchase agreements.

"The extent of this post-PPA (and post-PTC) ‘merchant’ value is often an item of wide disagreement within the industry, and depends on the trajectory of both power prices and O&M costs," LBNL’s paper said.

"Two respondents noted that today’s low wholesale power prices were generally not anticipated a decade ago, challenging post-PPA project economics for older projects.

"Nonetheless, especially as PPA terms have tended to shorten over time and competition for those PPAs has strengthened — resulting in lower PPA-derived revenue — an increasing number of projects need to demonstrate some post-PPA value in order for the project to pencil out from an overall return-on-investment perspective.

"These trends have pushed the industry to more fully investigate longer useful lives," LBNL added.

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