In this series, we’re discussing common pitfalls that can impact renewable energy developments, as seen first hand by our Due Diligence Team Lead, Steven Buckley.
Locogen provides technical due diligence services to clients looking to acquire solar, wind and battery energy storage system (BESS) projects. As you might expect, the approach to the level of design and the quality of the projects can vary significantly across different technologies and developers, and it is important to review each project in detail to identify and understand the project-specific risks.
Whilst the significant risk around grid connections is well known and frequently discussed, in this series we are sharing other lessons learned from some of the many projects where we have provided technical due diligence services, shining a light on each technology in turn. This article looks at onshore wind.
At Locogen, on transactions where we have been carrying out the technical due diligence for ‘Ready to Build’ (RtB) projects, we have come across risks relating to many aspects of wind farm project design, planning and development, including: grid connection, energy yield, transportation/access problems, radar issues, geotechnical issues, and poor layout/design assumptions.
Putting aside grid connection-related issues for now, the three most common risks we have observed fall into the following three categories:
- Layouts – heavily constrained layouts and the unavailability of original candidate turbine which can restrict procurement options, lead to operational restrictions and impact ability to amend layouts.
- Access – abnormal load assessments not updated for larger turbine options and full agreements not in place for areas of oversail/overrun, which can delay the project.
- Ground conditions – ground investigations not complete and significant remaining uncertainty over balance of plant costs.
Layouts
The number of constraints that can impact wind farm layouts is extensive and includes, for example, residential receptors, overhead lines, underground infrastructure, ecology, rights of way etc. Most of these constraints rely on a fixed buffer or offset. However, the pressure to maximise installed capacity, or to redesign layouts to accommodate larger turbines due to unavailability of the original candidate turbine, can sometimes lead to some of these constraints being encroached upon, or limit the ability to amend layouts. This results in in turbines being located closer together than ideal, especially if, for example, rotor diameters have increased but turbine locations have not moved.
While evolving designs need to be considered in relation to factors such as noise, shadow flicker or ecological curtailment, the need to maintain separation between turbines for operational reasons is also important. Wind turbine manufacturers typically require a minimum separation between turbines and locating turbines at lesser distances can impact the project in a couple of ways; the first being increased wake losses, and the second being potential constraints on operation by the manufacturers for reasons related to turbine design certification/lifetime. Due to the potential for curtailment of output in certain wind conditions, detailed modelling is required to be undertaken by manufacturers to evaluate the impact of such constraints on energy yield and this modelling may not yet have been carried out, which creates an uncertainty with regards to the subsequent energy yield.
Access
In respect of access, wind turbines have grown in size over time but, for projects often located in remote locations, rural roads simply weren’t designed with the transport of 60m+ blades or heavy gearboxes and generators in mind. Getting large components to site is a crucial requirement for any new or repowering project and this can necessitate detailed initial studies and the potential for extensive offsite access works.
We have come across projects where these studies may have been carried out for an initial candidate wind turbine at the EIA stage, but the final turbine choice differs, which can introduce an uncertainty if, for example, blade lengths or component weights are greater than initially assumed. This, in turn, requires an update to the studies to make sure the access assumptions haven’t changed.
In addition, we will often see assessment completed where the blade, as the longest indivisible load, is assessed but increasingly issues have arisen around other component deliveries; particularly in relation to horizontal and vertical clearances as tower bases are getting wider and nacelles are larger. Given how important access at pinch points is to successful execution of a project, the need to establish suitable agreements with landowners is paramount, yet we have seen projects where the offsite access related agreements are much less developed than the site landowner agreements, which risks delaying project progress.
Ground conditions
Ground conditions are another area of uncertainty on projects we have assessed. Whilst projects may well have taken peat depth into account in determining the layout and location of infrastructure, a detailed understanding of the underlying geology and ground conditions is also vital for evaluating turbine foundation designs and foundations for other infrastructure, without which, there can be a significant uncertainty on civil balance of plant pricing. On some RtB projects, we have seen developers progressing to offers without site-specific geotechnical studies and, understandably, the balance of plant contractors will not take ground risk in the absence of such studies, which in turn leads to uncertainty on project costs – particularly for projects located in areas where there are known geotechnical risks such as former mining.
In addition, we often find that initial site ground investigation works that may have been undertaken proves insufficient and further surveys are then required to address outstanding uncertainties which can lead to delays.
If your company is looking to acquire an onshore wind project, make sure the layout, access and ground conditions are thoroughly reviewed to avoid delays and impacts to financial assumptions.
At Locogen, we deliver due diligence that supports action. If your team is assessing new opportunities or looking to manage risk within a portfolio, please contact us today.
