New Ofgem guidance opens door to wind turbine re-powering
Almost a decade has passed from the heyday of Feed-in Tariff scale wind, a time when hundreds of small to medium scale wind turbines sprouted from the Scottish agricultural landscape. With a proposed design life of 20 years, most of the owners of these turbines probably consigned any decision around trading in their current model for a newer ‘upgrade’ to the early 2030s.
Fast forward to the current day and we are facing seismic shifts in the energy landscape. We desperately need more affordable, home-grown, clean energy. Ofgem have recognised this and issued clarification around the replacement of generating equipment to owners of FiT generation equipment. The outcome of this? The case for considering early re-powering is becoming more compelling.
Many FiT scale turbine models were based on technology developed in the 1980s when the wind industry began to emerge in Denmark and northern Germany. Smaller scale turbines of 100-500kW were the first products to come to market. As such, the designs of many FiT turbines erected in the UK over 2012-2015 were typically based on technology from a previous era. This resulted in limitations both in terms of output capacity and overall performance.
In addition to many turbines being more basic in design, the limited demand for smaller scale machines outside of the UK market meant that the demise of the UK FiT was also catastrophic for most of these smaller turbine manufacturers and their delivery partners. Many have since gone out of business, while others moved up the value chain to focus on larger scale turbine models.
These combined factors mean that many owners have faced a distinctly rocky relationship with their turbines over the last 8 or 9 years. The demise of many suppliers in the UK industry has led to challenges trying to trouble-shoot problems and track down replacement parts. Faults with generators and gear boxes have topped the list of downtime events causing unexpectedly high unscheduled maintenance costs and reduced levels of annual generation. This issue has, in some cases, been further compounded by insurance underwriters losing confidence in some models and withdrawing their ‘loss of income’ cover.
Instead of on-going investment to keep an unreliable turbine operational, there is now a viable and potentially appealing alternative. Owners can consider replacing their turbine with a new, modern, more efficient model, a process known as ‘re-powering’. Until recently owners have been extremely reluctant to consider this for fear of compromising their Feed-in Tariff accreditation.
However recent changes in Ofgem regulations provide owners with the confidence to replace their turbines without losing their ability to claim the Feed-in Tariff at currently agreed levels. Indeed, the regulations indicate that the replacement turbine can even have a higher capacity output thereby increasing their generation capacity with a ‘pro rata’ calculation used to calculate their FiT payment.
Ofgem’s New Wind Turbine Repowering Guidance
Ofgem’s revised guidance for turbine owners accredited under the FiT scheme, who are considering swapping generation equipment or full asset replacement, is published publicly here:
A key paragraph states:
“The act of replacing generating equipment does not, in itself, result in decommissioning and therefore, in the withdrawal of accreditation. This will allow generators to replace and temporarily remove generating equipment and retain an installation’s accreditation, subject to the conditions in the other decision areas.”
Clause 6.15 states “You may repair or replace all or some generating equipment without affecting the compliance of an accredited installation, provided that the installation continues to meet the scheme rules.”
Ofgem also state that, where there is an increase in capacity of a FiT accredited installation, payments will be prorated accordingly. Simply put, an installation that was originally accredited by Ofgem at 500kW capacity but has subsequently been re-powered based on a turbine with 1MW capacity, should continue to receive FiT payments for 50% of the generation they export. The additional generation can be used on site or sold via a PPA, an attractive option in the current market.
So Why Re-Power Wind Turbines Early?
Many owners may feel it is premature to consider re-powering. But early re-powering can make excellent financial sense especially if your turbine is not performing optimally. Owners can gain a significant increase in output from a modern turbine not just from its improved efficiency but also its greater reliability and therefore reduced downtime. They can also benefit from a turbine that is highly bankable and offers a 25-year lifetime, extending a project to the 2040s.
A re-powered site can utilise all or some of the existing infrastructure, such as the crane pad area, access roads and existing substation, thereby reducing the cost and impact associated with its construction. Potentially two 250kW turbines could be replaced with a single modern, 500kW machine.
Inevitably a re-powering process is likely to have planning implications that require a planning variation or, indeed, a new application. Owners considering this option will need to accept this risk. However, should it fail there remains the option of continuing to operate your existing turbine.
Locogen CEO, Andy Lyle comments:
“Recent electricity price rises leave us in no doubt how important it is to maximise our UK production capacity. The combined capacity of all the Feed-in Tariff turbines installed in agricultural settings across Britain could be considerably higher with greater adoption of modern, medium scale wind technology. The decision by Ofgem on replacement of generating equipment gives owners renewed confidence to boost their generation through early re-powering. It will also significantly extend the generating life of these sites providing a greater security of supply into the 2040s.”
Locogen’s End-To-End Wind Repowering Service
First Pass Assessment Of Opportunity
Check latest wind planning policy of local authority and potential planning constraints to check viability for increasing turbine size.
Economic Feasibility Study
Assess the return on investment for your site, specifically considering the FIT rate, wind speed, CapEx (inc planning, BOP costs, etc) and OpEx.
Undertake the planning work for the larger turbine and grid application where needed.
Full Project Management
Once consented, we can manage your project all the way through to commissioning.