The California “turbine rush” started in Altamont Pass in 1981 and ended abruptly a few years later, but not until thousands of machines filled high-wind areas of California's deserts and mountain passes.
From 1985 to 2003, when the Danish firm Vestas introduced the V90-3.0MW turbine, the wind industry decreased its cost of energy – Capital Expenditure (Capex) plus Operating Expenditure (Opex) divided by Energy Production – by more than 50%, or 4.1% per year compounded.
The most important factor in lowering cost was the growth in sheer size: generator size increased by a factor of 100 times, that is, 10,000%. Moreover, annual energy production, aided by higher hub heights and improved aerodynamic, mechanical and electrical efficiency, grew by a factor of more than 300 times, that is, 30,000%.
This was a remarkable achievement, and saw wind power brought into mainstream power generation.
By 2004, wind had reached “grid parity” in the USA, meaning that wholesale wind power prices were at or below what utilities were paying for blocks of power.
Wind developers were seeing attractive, double-digit returns on investment, and orders boomed for the new Megawatt-class machines. Manufacturers like Vestas, Gamesa, and GE Wind grew quickly.
But then in 2005-2008, steel, copper, oil, and other commodity prices soared. Producers passed along these price increases and more, bulking up their margins at the expense of customers. Component suppliers could not keep up with demand, and it became difficult to obtain a certain gearbox or bearing. Leading manufacturers could pick and choose the projects they wanted to supply; they received large cash prepayments, sometimes 12- to 18-months in advance, just for the privilege of securing turbine supply. In short, it was a classic seller's market.
As a result, the cost of wind energy, which had gone down steadily for 25 years – hitting the bottom in 2004 to 05 – started to rise. In fact by 2009, it had increased by 20% or more.
Wind technologists' first reaction to the rising costs was to say what they had always said: “Let's make a bigger one.”
But not many sites on land can really make good use of a generator beyond 3.0 MW – there are not enough super-windy hours in the year to justify the additional cost of a 4.0MW or 4.5MW generator. The wind “S-curve,” driven as it was by ever-larger generators, was coming to an end.
To compound this, a series of further shocks hit during 2008-2010:
- Market entry: New entrants, attracted by the returns of the boom period and in some cases supported by Asian Governments, started offering cheap turbines, mostly of European or American design;
- Slack electricity demand: Recession reduced electricity demand dramatically – even among consumers, which was unprecedented;
- Shale gas: Natural gas prices dropped sharply from US$10-US$12/mmBTU to US$3-US$4/mmBTU, driven by new shale finds, further depressing power prices;
- Market support in key markets, i.e. no national legislation in the USA: Despite the election of President Barack Obama, no Federal Renewable Electricity Standard (RES) or carbon legislation has been enacted (although significant gains have been made at the State level, for example in California).
|By enabling faster and more distributed aerodynamic load control, innovations in turbine blades will enable greater energy capture…
What is the situation today?
From the US “grid parity” of 2004-2007, we are now looking at key markets suffering major problems. For example, in the U.S., wholesale energy prices in the vast majority of States do not justify wind investments. The US market for wind turbines was expected to fall by about 50% in 2010, from 10,000 MW in 2009 to about 5,000 MW.
The situation in Europe is not quite as bleak, in large part because Governments are committed to decarbonising the grid by 2050.
And developing nations like Brazil, India and South Africa are also expanding wind development rapidly.
And then there is China.
China, already the number 1 wind market in the world in 2009 has continued to grow, and will surpass the USA in 2010 as the largest installed base. For 2011, industry forecasts show that China will account for more than half of the global market. Essentially all the turbines used in Chinese projects are made in-country; the vast majority of those are made by a cadre of relatively new Chinese firms such as Goldwind, Sinovel, and Dongfang Electric Corporation.
This situation is in one sense “very Chinese.” The wind industry is Government-stimulated and Government-backed; most projects are (formally or informally) “off-limits” for foreign competitors. The industry creates hundreds of thousands of jobs in China, and transfers important technology from West to East. At the same time, the wind sector is very un-Chinese in that it produces almost no exports. At least not yet.
A new generation of innovation
Based on the above market summary, it is easy to reach two conclusions, namely:
- Now that wind turbine technology is “mature,” the global market will be increasingly dominated by a set of existing European designs produced “on-the-cheap” in Chinese factories;
- Wind energy in the important market of the US will be stuck in the doldrums for the foreseeable future, held in check by a lack of political support, lack of innovation and low power prices.
However, both these conclusions miss a crucial point. Competition and innovation will significantly reduce the cost of energy derived from wind. A new “S” curve is upon us, and a new generation of wind turbines is on its way that will help get the industry moving again.
Some of these are already visible in the marketplace, and this greater competition among wind turbine manufacturers has already been pressing prices downward – firms have shed jobs, cut costs, and lowered margin expectations. And declines of 10% to 20% in turbine prices have already been reported.
Several new machines have been launched within the past year that will significantly alter the economics of wind. To take two examples, the Siemens SWT101-3.0MW (direct drive/permanent magnet generator) and the Vestas V112-3.0MW (geared/permanent magnet generator) are game-changers.
The Siemens machine, launched in April 2010, is expected to greatly improve reliability (radically fewer parts, no gearbox to replace); the new Vestas turbine, launched in September 2010, features a swept area that is 55% greater than the V90, enabling it to extract much more energy from today's low-to-medium wind sites.
Aside from these well-publicised releases, what is not yet visible is a raft of other innovations, many of them emerging from US universities and start-ups, which are innovating in the key areas of Aerodynamics; Drive Train and Intelligent Operation.
|“All new offshore wind turbines and most utility-scale onshore wind turbines will be direct drive by 2015…”
|Sandy Butterfield, Boulder Wind Power
Compared with their cousins in aircraft, wind turbine blades have been fairly simple in their design. Airplane wings and wind turbine blades use various passive flow control devices such as stall strips, vortex generators and fences. However, the former also use active type devices such as slats, flaps, spoilers, ailerons and at times, pneumatic jets.
“Except for active blade pitch, wind turbine blades have been very passive compared to lifting surfaces (wings and blades) in other industries,” according to C.P. ‘Case’ van Dam, Professor and Chair, Mechanical & Aerospace Engineering, at UC Davis in the USA: However, “based on recent research, development & demonstration results in Europe and the US, this may be about to change.”
By enabling faster and more distributed aerodynamic load control, innovations in turbine blades will enable greater energy capture.
FlexSys Wind Energy in Ann Arbor, MI, for example, provides an adaptive trailing edge to its blades, enabling the turbine blades to respond to incoming wind through continuous sense-and-control.
Another major issue is that blades are generally made in one piece. Segmented blades will enable more efficient and flexible production, and easier transportation of the blades to the project site, among other benefits. Spanish and German firms Gamesa and Enercon have already introduced segmented blades on their jumbo turbines.
Gamesa's Innoblade for example has been designed for medium class IIA winds. It can be transported in two pieces, then assembled and installed on site. The company claims it produces an output power of 4.5MW, using a blade length of 62.5 metres. It is also equipped with a lighting protection system and has strength sensors.
The company also says that it has improved its G97-2.0 MW blade's curve performance by 8% since its first design in the late 1990's – the final design also takes the three-dimensional effects experienced at the root and tip of the blade into consideration.
How has it achieved this 8% improvement? “The advanced aerodynamics obtained are a result of finding the best compromise between reducing blade-load levels and noise levels while maximising total annual energy production,” a source explained. “We apply 3D CFD techniques, our own wind-turbine experience and state-of-the-art technologies and methods to develop airfoil efficiency.” Gamesa also maintains that validation is carried out in wind tunnels to verify the measurements of the advanced aerodynamics as a result of the new design.
Modular Wind Energy based in Huntington Beach, CA, is also focusing on this area.
The drive train, traditionally consisting of the main shaft; gearbox; generator; and power electronics; is the heart of the machine. The cost of the drive train is roughly equal to the rotor cost, but in many respects is far more complicated, with many more moving parts. A large proportion of Operations and Maintenance (O&M) costs are driven by drive train component failures.
This leads many to conclude that Direct Drive is the way of the future.
“All new offshore wind turbines and most utility-scale onshore wind turbines will be direct drive by 2015,” believes Sandy Butterfield, CEO of Boulder Wind Power and Former Chief Engineer at NREL.
Several companies have introduced Direct Drive models already, including Enercon, Siemens and Goldwind. Next-generation drive trains are now on their way too, enabled by innovations from venture-backed U.S. companies such as Boulder Wind Power, Danotek Motion Technologies, and Northern Power.
Northern Power Systems for example has over 30 years' experience in developing advanced, innovative wind turbines.
The company says its technology is based on a vastly simplified architecture that uses a “unique” combination of a permanent magnet generator and direct-drive design: “This approach delivers higher energy capture, eliminates drive-train noise, and reduces operation, maintenance and downtime costs, as evidenced by our 98-99% fleet-wide availability,” says John Ciempa.
The company currently manufactures the Northern Power 100 turbine, designed specifically for community wind or distributed power generation applications such as schools/universities, businesses, commercial farms, municipalities and remote locations.
In the near future, the company says it plans to launch a 2.2 MW wind turbine into the utility-scale marketplace for wind farm applications.
Northern Power Systems is a fully integrated company that designs, manufactures, sells and services wind turbines into the global marketplace from its headquarters in Vermont with offices in Massachusetts and Michigan, USA, as well as Switzerland, UK and Italy.
Another area where there is scope for innovation in wind farms is in how they are operated. The wind industry came of age during the 1990s, before fibreoptics were common, and before preventative maintenance tools and techniques were refined. As a result, most wind turbines have primitive Supervisory Control and Data Acquisition (SCADA) systems that report few metrics to owner/operators, and do so in ten-minute averages.
Condition Monitoring Systems (CMS) that measure, for example, vibrations in the drive train, exist, but are rare in most markets (outside of Germany).
But as wind turbine owner/operators have grown (most are now huge international corporations like Iberdrola Renewables, NextEra Energy, EDP Renewables and EDF Energy), wind power plant operations are becoming more sophisticated.
“One of the most exciting emergent areas in the wind space is what is now being named ‘Smart Wind’ – that is, the addition of digital intelligence to the blades, power train and turbine control systems,” says – John Leggate of Vantage Point Venture Partners: “Smart Wind will reduce the unit cost of power production by driving a step change in uptime, and a big push down on operating cost – and also a significant reduction in the frequency of failure of blades and major power train components.”
|The new model is called Condition-Based Operation (CBO) and…will enable operators to not only measure what’s going on better and faster, [but] also link cause-and-effect, providing the basis for smarter operation.
The new model is called Condition-Based Operation (CBO) and these systems will enable operators to not only measure what's going on better and faster, they will also link cause-and-effect, providing the basis for smarter operation.
The new systems will help owner/operators answer questions such as:
- Is there a build up of grit in the oil that is reaching a dangerous level for the gearbox?;
- Should I curtail the last turbine on the right when wind speeds exceed a certain threshold from a specific direction, to protect its components from turbulence?;
- Should I push my older turbines harder on cold days to capture more energy?
Manufacturers are working on these next-generation systems, as are third-parties like the German DMT and Swedish SKF. The result will be failure-prevention, greater energy capture, and lower cost of energy.
Another source of trouble has been the inability of the turbine's control system to anticipate turbulence, gusts, and sudden shifts in wind direction. Many machines have excellent sensors mounted in blades and on the nacelle, but everything measured – pressure, windspeed and direction – is somewhat “after the fact.”
Laser sensors (also called LIDAR, for Light Detection and Ranging), developed for military aircraft, may be about to change that. By measuring air velocity and direction more than one-hundred metres upwind, LIDAR will enable the control system to make much more intelligent decisions.
Tests recently completed at NREL (F. Dunne et al., AIAA, 2010) show that LIDAR “feed-forward” (as opposed to feedback) control can reduce structural loading without reducing power production. The reduction of these loads may lead to reduced component wear, lighter turbines and/or greater energy capture – combining for a notably lower cost of energy.
LIDAR is still expensive (>US$100,000 per unit), but these units have been coming down in price continually, and are expected to become commercially viable for feed-forward control within the next couple of years.
Several specialised companies are addressing the potential of LIDAR in the wind energy sector, including Catch the Wind and OptoAtmospherics.
Potential for cost reduction
In many respects, wind power is not the mature industry that many people think it is, and a panoply of venture-backed start-ups are pursuing innovations in many areas. These will combine to form a new “S” curve for the wind industry in the coming years.
But how large an effect will all this have on the cost of wind energy?
This brief tour of some of the latest work being done in wind turbine R&D shows that the wind industry has the potential to resume its downward cost trajectory, and 3%-4% reduction per year for the coming decade should be an achievable goal, assuming that other factors (i.e. commodity prices and general inflation) do not change radically over the period.
By way of a concrete example, looking at a Class II wind (100 MW) park in the U.S. – without subsidies – the innovations discussed here have the potential to bring the cost of wind energy generated from 7.7 US cents/kWh to 3.9 US cents/kWh, nearly a 50% reduction. This development will put the cost of wind energy below that of coal and natural gas by the end of the decade – even if these two technologies stay at today's historically-low levels.
This finding is strengthened by the recent report from the DOE's Energy Information Administration that predicts natural gas prices will rise sharply in the coming years – recovering to US$6/mmBTU by 2014.
Ultimately, whatever happens to the price of gas, wind power manufacturing businesses continue to drive down costs over time. They do this through more efficient designs; economies of scale; automation; improved materials and sourcing; and higher levels of quality throughout the supply chain.
Chris Varrone is a former McKinsey consultant who specialises in wind energy technology. His firm, Riverview Consulting, advises on topics including product/market strategy and financing.
Renewable Energy Focus, Volume 12, Issue 1, January-February 2011, Pages 26-30