Changing power industry landscape: Performance and reliability matter more than ever

With rising demands on renewable energy, there is going to be increasing focus on the wind power sector. In the last couple of years wind has become the preferred source of renewable power. While low capacity factor and power quality issues continue to be a challenge for operators, wind has become more competitive getting them a step closer to be commercially viable without incentives. This is mainly driven by huge growth in volume and entry of new OEMs, especially from China.

At the end of 2009 there were close to 80 wind turbine OEMs in China with a capacity much more than what the market can absorb leading to overcapacity and significant fall in turbine prices. A quick analysis of some of the recent contracts awarded in China (to local Chinese OEMs) indicates that prices have dropped to as low as Yuan 4,700/KW. This is about 21% less than the prices that was prevailing about 13 months ago making it difficult for any foreign OEM to win contracts in China. Most of the Chinese OEMs are increasingly looking for export opportunities as their home base is getting crowded. United States will be their main target market and their expansion strategy hinges on price backed up by attractive financing.

Excluding the above macro-economic forces, the three key trends likely to influence wind turbine technology are harsh weather conditions for new wind farms, strict grid code requirements and overall efficiency & availability.

Location challenges
It is estimated that new wind farms, both onshore and offshore, will increasingly be located in areas with harsh weather conditions and poor access. Offshore wind capacity is growing fast, with 13,500 MW of new capacity expected to be installed globally between 2010 and 2014. The current generation of offshore wind turbines are already faced with strong wind conditions and waves one meter high or more. As the number of offshore wind farms grows, they are likely to be located in deeper waters and further from shore.

A similar trend will apply to onshore wind farms, with new wind farms increasingly being located in remote locations with harsh climatic conditions. China, for example, has declared its intention to create seven wind power bases with a capacity of at least 10 GW each by 2020. Two of these are in Eastern and Western Inner Mongolia. Inner Mongolia is bitterly cold, with long winters during which temperatures can drop as low as -23°C. Blizzards are common in winter and there are frequent sand storms during the short summer.

Impact on Grid
Companies have been exploring ways to utilize wind power for base load by smoothing out the ups and downs of wind energy. New innovative techniques such as using wind power to compress the air and using it later with conventional sources such as gas are currently being researched.

The International Energy Agency (IEA) in its reference scenario, which assumes that there are no major changes in energy policy, expects the share of wind power to increase from 0.9% in 2007 to 3.7% in 2020 and 4.5% in 2030 of total electricity generated globally. Under its 450 scenario which assumes that countries take coordinated action to control green-house gas emissions, the share of wind increases to 5.1% in 2020 and 9.3% in 2030.

As wind’s share of total power generation rises, satisfaction of grid code requirements will become a key issue for operators.

Increasing Role of Utilities
The top 15 wind farm operators accounted for 35% of total wind power capacity in 2008 versus 23% in 2003. 9 of the top 15 operators are utilities. The growing role of utilities is also leading to a greater focus on efficiency & availability.

These trends are likely to change the factors that wind farm operators manage and measure and, therefore, the attributes they look for in the wind turbines they purchase:
• The growing size of wind turbines requires increasing capital outlay by wind farm operators and exposes them to greater losses in the event of failure. Hence the primary concern of operators will be turbine reliability & availability.
• The growth in turbine size, offshore installations, and harsh locations will likely increase use of condition monitoring systems.
• Pitch control systems are likely to grow in importance as they can play a role in meeting grid code requirements, improving turbine efficiency & availability, and managing loads as turbines grow larger. Adoption of individual pitch control is likely to increase for the same reasons.

Addressing these issues, while maintaining rapid growth, will be challenging. Wind turbine builders will need to nurture mutually beneficial relationships with key sub-system suppliers in order to improve performance while increasing production volume and expanding their geographical scope.