11.05.2016

Big economic challenges ahead for wind turbine owners

The current electricity pricing of 0.02-0.03 EUR (average EEX, Nordpool) is causing enormous challenges for wind turbine owners, and if the electricity pricing continues at such low levels, it can turn into an economical disaster. 

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economic challenges ahead for wind turbine owners

Economic Challenges Ahead

The current electricity pricing of 0.02-0.03 EUR (average EEX, Nordpool) is causing enormous challenges for wind turbine owners, and if the electricity pricing continues at such low levels, it can turn into an economical disaster. Many wind turbine owners profit from fixed, high electricity prices through national subsidies. However, as soon as the subsidies expire they have to settle for the market price, which at present is painting a somber picture of the future.

The low market price reduces the profitability of new projects, and existing projects will be considered for abolition even before the lifespan of the turbines expire. In other words, it simply isn’t profitable to continue operations if the price remains at the current low levels.

Operations and Maintenance

At Momentum Gruppen A/S in Roskilde we manage wind turbines with an installed capacity of more than 360 MW spread over 290 turbines in Germany, Denmark, and Sweden.

In Denmark and Sweden turbines older than 15 years are already affected by the low electricity prices. In Germany the first turbines will expire from the German EEG scheme around 2018, and the owners will have to prepare for a potential decrease in profit that will drop from 0.095 EUR to perhaps 0.02 EUR – a decline of 80%!

It requires an extremely keen focus on the turbines’ operations to prevent this, both in regards to the optimization of profit and output (production) but certainly also to the costs of operation and maintenance.

economic challenges ahead for wind turbine owners-solution

Failing to optimise can be expensive

Momentum Gruppen A/S has made a calculation showing that if e.g. a Vestas V80 2MW turbine’s cost level is not optimized from the beginning, it can cost the owner more than 300,000 EUR over the span of 20 years; money that could otherwise have been used as a safety measure against falling electricity pricing, or spent on further investments and asset optimization.

At Momentum Gruppen A/S we try to prevent this potential loss by analyzing all variables in a turbine project and turning all the financial knobs that can be turned. We are thus able to create substantial cost reductions for our customers regarding service and maintenance, spare parts, insurance, accountancy, etc.

Furthermore, together with our partners we are constantly challenging the turbine’s technical setup

in order to maximize the turbine’s output, including testing with Windar Photonics’ LiDAR system, comparing with data from our other turbines, and being in a continuous dialogue with the operation managers about the optimal turbine settings.

Asset Management

In regards to profit we are working daily to secure the best electricity prices for our customers, and

if we can procure just 0.001 DKK/kWt (0,000134 EUR/kWt) more for the owner it will correspond to an improvement of profit of almost 7%! That is indeed noteworthy.

The most optimal re-powering alternative is found in Germany, i.e. taking down an existing turbine and setting up a new and bigger turbine with a new 20-years settling period. Still, the options in Germany are also under pressure, mainly because the distance requirements have been increased, and the local support for wind turbines is declining.

Unfortunately, in our experience not everyone has this keen focus on all parameters, which is why a lot of money is lost daily on operations. A management agreement with Momentum Gruppen A/S guarantees the turbine owner 100% attention on the day-to-day operations, and perhaps this can help to navigate around the icebergs that we see on the horizon so that the owners will make it safely through their investment in wind turbines.