More wind companies looking to overhaul old US projects, GE says
New wind farms get the attention, but upgrading old wind farms with new equipment has become a big business for turbine OEMs in the US
Big deals are coming this year in the US wind repowering market, says Kevin Walsh, head of renewables at GE Energy Financial Services (EFS), broadening the market beyond the still-small group of operators choosing to upgrade their ageing wind farms.
“You’ll be seeing some big announcements in 2019, I’m confident of that,” Walsh tells Recharge.
Repowering has become a significant – if somewhat under-the-radar – part of the US wind market in recent years, totalling 3.5GW in 2017-18, according to data from the American Wind Energy Association.
That’s all the more impressive considering the market has been concentrated around just a handful of operators – notably NextEra, Leeward Renewable Energy and MidAmerican Energy, all owners of older-vintage wind farms.
NextEra in particular has been investing huge sums in repowering, upgrading 900MW in 2018 alone to take advantage of the fading production tax credit (PTC).
Developers can requalify an existing project for another 10 years of the federal subsidy if they invest 80% of the project’s value in a partial repowering, enhancing existing infrastructure like towers and foundations with new equipment like blades and nacelles.
NextEra has been an “early adopter” of the PTC's so-called 80/20 repowering rule, Walsh says, “but this has broad appeal”.
“Stay tuned, there’s a lot more coming," he says, declining to predict the market's size.
Although repowering remains a relatively low-profile segment of the wind market, the investments going into such projects have become substantial, amounting to a big new business for turbine OEMs.
GE Renewable Energy has been the leading supplier of equipment to repowered US wind projects during the recent PTC-fueled boom, but Siemens Gamesa has also done well, and Vestas won several big deals in late 2018. Among the turbines being replaced these days are old machines made by Bonus, Enron and Clipper, all now defunct or subsumed into other companies.
Walsh expects repowering projects to proceed at lower PTC levels as the tax credit phases out, and for the market to continue beyond the subsidy into the 2020s as the American wind fleet ages.
The difference will be that the 80/20 rule will no longer matter, so projects will come in more shapes and sizes, from full repowerings – effectively ripping out everything and starting over with all new equipment – to more modest investments, perhaps replacing just the blades.
“We’ll move away from an approach dependent on the PTC towards one of smartly replacing the components to get more life out of existing wind farms.”
Industry veteran set to retire
Walsh, a widely known and admired figure in the US renewables industry, is set to retire in the next few weeks – having led the renewables unit within EFS since its inception in 2006, just a few years after GE bought Enron's wind manufacturing business.
During that time he’s overseen more than $15bn of investment in renewables around the world, much of it in the US wind market. EFS is GE's energy project financing arm, often investing to help the company sell turbines.
GE EFS sells $1bn portfolio to Apollo but remains active in REWhile major changes are afoot across General Electric, including a greatly slimmed-down Capital division, current plans call for EFS to continue investing in renewables projects.
Even with the PTC phasing down and uncertain years ahead, Walsh feels he’s leaving the wind industry in a good place.
“I don’t buy the proposition that solar has more runway on [levelised cost of energy reduction] than wind,” he says. “I think wind has really proven it can hold its own from an LCOE standpoint.”
“Utility-scale solar is consumptive of the land it uses,” he notes. “Whereas with wind, you can build a project on ranch land and continue to do what you were doing – people overlook that sometimes.”
Gaurav Raniwala will replace Walsh as the renewables chief at EFS.
“My legacy, if there is one, is in good hands with these guys,” Walsh says.
“I’d like to stay involved in the industry in some fashion but probably at a different pace – perhaps an advisory or board role. That is, after I take some personal time to travel and relax a bit.”
