Will Wind Power Be the Future’s Clean Energy ?

Overview

A rise in the middle class segment, particularly in developing economies, results in energy demand growing faster than overall global population growth.  In general, developing countries are highly dependent upon imported oil and other fossil fuels.  However, as these economies mature, there will be a transition to cleaner sources of energy.  Unstable oil prices, economic uncertainty, and geopolitical conflicts make it necessary for many countries to seek energy independence by creating a matrix of energy sources comprised of photovoltaic solar, wind power, nuclear, natural gas, and biofuels. 

Recent ARC Advisory Group market research on wind turbine control (WTC) systems reveals that the critical need to reduce global CO2 emissions, combined with the continuous decline in the cost of wind power-per-megawatt generated, will spur growth in the wind power segment in the coming years.  These cost reductions for wind power are largely the result of reduced cost of WTC sub-systems, streamlined designs, higher capacity wind turbines, new disruptive technologies, and generally attractive governmental policies.

Investments and Future Plans in Renewables 

According to International Energy Agency (IEA), investments in clean energy grew by 4 percent between 2014 and 2015 with an increase of 140 GW of renewable energy capacity installed in 2015, approximately, 43 percent from wind power alone.  In addition, at a December 2015 “Conference of the Parties” in Paris, 186 governments worldwide agreed to protect the climate for future generations through green energy generation technologies such as renewables.

Global Installed Wind Power Capacity

According to the Global Wind Energy Council, the installed wind power capacity all over the world increased at a record high of over 63 GW in 2015, exceeding the record set in 2014 of over 51 GW. Estimates indicate that the increase in wind power during 2014 and 2015 accounted for nearly half of the growth in capacity for the worldwide electric power.  

In 2015, Asia accounted for the largest addition of wind power capacity, followed by Europe and North America. For every year since 2010 (with the exception of 2012), the majority of wind power installations were outside the Organization for Economic Cooperation and Development (OECD). This trend is expected to continue in the coming years.

China, the largest overall market for wind power capacity since 2009, retained the top position in 2015.  In 2015, China invested over $100 billion in renewables, installing over 30 GW of wind capacity alone. China has more than 145 GW of cumulative wind power capacity, which is slightly less than the wind power capacity of the European Union.

India surpassed Spain and moved to fourth position in terms of global cumulative installed capacity.  Brazil, Canada, Mexico, and South Africa also grew in 2015.  The first commercial wind farms were installed in Jordan, Guatemala, and Serbia. 

In 2015, over 26 countries had more than 1,000 MW installed capacity: 17 in Europe; four in Asia-Pacific (China, India, Japan, and Australia); two in North America (Canada and US); two in Latin America (Mexico and Brazil); and one in South Africa.  Eight countries had more than 10,000 MW of installed capacity by the end of the year 2015. These include China (145,362 MW), the US (74,471 MW), Germany (44,947 MW), India (25,088 MW), Spain (23,025 MW), UK (13,603 MW), Canada (11,205 MW), and France (10,358 MW).

Larger Wind Turbines Help Levelize Cost of Wind Energy

Levelized cost of electricity (LCOE) is used to compare the relative competiveness of different generating technologies. According to the EIA, LCOE “…represents the per-kilowatt-hour cost (in real dollars) of building and operating a generating plant over an assumed financial life and duty cycle. Key inputs to calculating LCOE include capital costs, fuel costs, fixed and variable operations and maintenance (O&M) costs, financing costs, and an assumed utilization rate for each plant type.”

The levelized cost of electricity (LCOE) of wind energy varies with respect to the wind resource, initial capital investment, operation & maintenance costs, and technology improvements. The need to reduce the LCOE for wind power, has driven the industry to employ increasingly larger capacity turbines.

Larger wind turbines with higher hub heights and larger rotor diameters offer increased energy capture potential to help counterbalance the investment costs. In some wind farms in Brazil and the US where larger turbines were installed, the LCOE is less than $50/MWh. Today, technology options are available for low wind speeds using tall, long-bladed turbines with greater swept area per MW to improve LCOE across a range of wind speeds. Consequently, while the average size of the wind turbines today is about 4 MW, this is likely to increase. A few wind turbine manufacturers have built and are testing prototype models up to 8 MW.  Larger turbines offer significant benefits, but are also more challenging with respect to aerodynamics, structures, and mounting the critical electrical/electronic equipment and components.

Digital Wind Farms

Several WTC suppliers offer digital wind farm solutions. The digital wind farm is a virtual model that assesses the wind resource at the wind farm site and unit level using intelligent software algorithms and enhanced aerodynamic options to create a simulated model of the farm. This virtual model allows project developers and owner-operators to define the best turbine configuration and site layout, and increases the annual energy production at site, generating more power and more revenue for owner-operators. A unique turbine configuration is identified for every pad based on the wind conditions and economics identified. This is accomplished by varying the parameters such as tower height, rotor diameter, nameplate, and others.

In the last few years, we’ve seen significant changes in wind turbines with new technologies and control systems.  In addition to larger turbines that help improve LCOE, wind turbines have become much more intelligent, employing Industrial Internet of Things (IIoT)-connected smart sensors and cloud-based analytic solutions to help improve availability and overall asset performance.

Monetize Curtailed Generation

In most regions, wind generation companies must curtail wind power generation at certain times, both to balance supply and demand under contractual obligations with the Independent Systems Operator (ISO), and help ensure safe operation.  Renewables companies can be compensated for lost generation if they can accurately calculate, document, and report the monetary value of what they would have put on the grid during these curtailment periods. Inability to do so can lead to lost revenues.  Hence, the adoption of new technology solutions has become vital to wind farm owner-operators to help prevent such losses.  A recent ARC Insight for our Advisory Service clients provides a case study on this type of solution.

The new technology solution features may include:

• Ability to find key points in the data and to examine large amounts of data from multiple sources such as wind turbines and other operational assets, plus weather systems, pricing systems, market data systems, and others
• Facility to isolate incidents in the data that would have taken exponentially longer using Excel alone or other tools
• Provision to transform industrial process data into useful information and actionable intelligence
• Facilitate the user to expand the time frame and quickly adjust the queries for other wind farms once an event has been isolated
• Significantly reduce the time required to investigate and gain the needed insights and analysis (from months or even years, to hours)

• Accelerating time to discovery

Recommendations

ARC believes that wind power will become one of the major sources of electric power globally in the near future.  The improving LCOE of wind power generation relative to fossil fuels and particularly relative to other forms of renewable generation, combined with declining total cost of ownership of wind turbines precipitated by streamlined designs offers good growth opportunities for owner-operators and technology suppliers alike.

For more information on the recent ARC market research on wind turbines, readers can visit the appropriate page on www.arcweb.com .

If you would like to buy this report or obtain information about how to become a client, please Contact Us.

Keywords: Wind Power, Wind Turbine Control Systems, Blade Pitch, Yaw Control, Main Controller System, Power Converter, Condition Monitoring, ARC Advisory Group.