Constraints to Upgrading of Wind Turbines

Transcription

1 Constraints to Upgrading of Wind Turbines The foremost limiting factors according to industry professionals and issues faced by ISPs in after-sales. Part 2 of 3: Description of constraints and owner OEM dynamics.

2 Summary The following document is a summary of the second deliverable in a project to evaluate quantitative methods to measure effects of power performance upgrades to wind turbines. The project is a Master Thesis in collaboration between the Royal Institute of Technology in Stockholm and Breeze. The project consists of three deliverables. 1. Map upgrades for increased power performance from wind turbines 2. Describe the dynamics between manufactures and owners of wind turbines 3. Evaluate methods for measuring power performance upgrading The purpose of this work is to incorporate methods of evaluating power performance upgrades into the Breeze Production wind farm management system. 2

3 Focus This document presents the principal constraints imposed on upgrades of operational wind farms, along with the foremost limiting factors according to industry professionals. The final chapter discuss issues in the after-sales market that surfaced during the interview process. The contents presented herein are mainly based upon a series of interviews with individuals in the wind power industry, spread across the major stakeholder groups of operational wind farms: Owners and investors Turbine manufacturers O&M Independent servicing organisations Consultants and 3rd party services / products The interviewees were asked about their difficulties working with wind turbine upgrades, the approach of OEMs, and issues in the after-sales market. This work focuses on the problem areas of upgrading, and the most common experiences and views. 3

4 Table of Contents Summary 2 Focus 3 Nomenclature 7 Upgrade - Idea to Implementation 8 Investor Interests 9 Debt Providers 9 Equity Shareholders 9 Permits & Regulations 9 Insurance Contracts 10 Warranty & Guarantee 10 Property Insurance 12 OEM Turbine Manufacturer 13 Top 5 Limiting Factors 14 OEM Warranty 14 OEM Approval and Support 15 Upgrade Consequences and Risks 16 Economics and Owner Interests 16 Issues in After-Sales 19 OEMs Inhibit Independent Actors 19 Limited Technical Documentation 20 4

5 Special Tools Necessary for Servicing 20 Limited Data Access 20 Spare Parts 21 Third Party Products 21 Industry Conservatism Obstructs Innovation 21 New Technologies Struggle to Break Ground 23 Condition Monitoring Obstructed by Conservative Insurance Policies 23 OEMs Capitalize on Knowledge Advantage 23 Issues Proving Upgrade Results 24 Relevance to Breeze 26 5

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7 Nomenclature OEM Original Equipment Manufacturer. In this specific document, generally implying the wind turbine manufacturer. ISP Independent Service Provider WTG Wind Turbine Generator EoW End of Warranty Upgrade Improvement to wind turbine with respect to operation, performance, power performance, availability, turbine health, life expectancy. Power performance Power performance is often visualized and represented by as the power curve, the electric power output at a specific wind speed. 7

8 Upgrade - Idea to Implementation The constraints presented in this study concerns performance related upgrades for operational wind turbines software improvements, optimizations component retrofits, and installations of new equipment. In this e-book an upgrade denote an improvement to wind turbine performance or operation in a general sense. In part 1 of 3 of the e-book series, the particular concept of power performance (power curve) is explained and upgrades for improving power performance are presented. For a proposed upgrade to be implemented in a wind farm, there are stakeholders that must agree to the upgrade. Each stakeholder has a set of constraints which must be addressed. From a practical point of view, the constraints are the similar regardless of the upgrade type and supplier. The constraints and factors limiting upgrades were identified through interviews and summarized in four main categories: Investor Interests, Permits & Law, Insurance Contracts and OEMs. 1. Investor interests Debt providers Equity owners 4. OEM Acceptance Cooperation Tech. support 3. Insurance Contracts Warranty Guarantee Property 2. Permits & Law Project permits National and international laws and regulation 8

9 Investor Interests Getting in line with investor interests is the first step towards implementation of a performance upgrade. Whether financiers of a project set any legal restraints on the owner and management of the wind farm depends on the financial structure and contractual agreements. A very conservative approach is taken in upgrade evaluations, and even more so than owners, investors and debt providers in the wind power industry tend to be risk-averse. Much focus lies on the wind turbine condition and long term operation, rather than improving power performance as this is commonly associated with risks affecting turbine life expectancy. Unlocking potential performance through optimization, tuning or retrofits introduces certain risks which may cause conflicts of interest. Debt Providers The general view is that debt providers are not imposing any considerable restraints to upgrades. Technical matters are generally handled through the use of consultants in any major event such change of service provider or wind farm modernisation. Small-scale owners generally experience no interference as long as finances are kept in check. Larger scale projects may expect lenders to keep a closer eye on the investment and more frequently evaluate the current situation. Changes considered to increase the risk of the project, may be countered by adjusting the interest. Equity Shareholders Part owners and equity investors in wind power often have certain veto rights to decisions made in the wind farm. Less technically versed investors may have advisors raising concerns to specific upgrades, which need to be addressed. Investors have a closer relationship to upgrades than banks, as the wind farm s performance directly affects their profits. Permits & Regulations There are laws and regulations on wind power that can limit upgrading possibilities, on an international, national and local level. 9

10 Project permits are issued for a specific wind project plan, involving several constraints for being in line with a range of interests: environmental, social and municipal, national, radar, aviation and telecommunications. Major changes such as modernization projects may not fit the original project permits, calling for project permit reapplications and extending agreements with landowners. Projects permits often set rather specific requirements on the wind turbines and constraints on the maximum power output. Further, there might be constraints set by the grid operator, due to transmission line limitations for example. Upgrades with an impact on wind turbine visual or acoustic characteristics may raise questions and issues. Aerodynamic blade add-ons are prone to change the noise characteristics, although often for the better. National regulations might affect upgrading possibilities considerably in some cases. Safety regulations in particular have had impact on the feasible solutions of de-icing systems. One example is the requirement of a wind turbine to come to a complete standstill before de-icing the blades to avoid ice throw risk. Consequently a range of deicing solutions are not feasible. Insurance Contracts On the contractual side, different forms of insurance pose the largest obstacle to what upgrades may be performed. Warranty and guarantee contracts restrain upgrading possibilities considerably, imposing major constraints on what may be modified. Property insurance policies do not usually impose major constraints. Warranty & Guarantee Several interviewees list the OEM warranty as the foremost limiting factor to what they can do with their wind turbines. Often lasting ten years or longer, the warranty grants the turbine manufacturer full control of servicing and upgrading of the wind turbines. With the warranty contract, OEMs have the first and final say in any upgrading matter since any unauthorized changes to the turbine operation break the agreement. At the end of the warranty period, owners once again have a chance to renegotiate terms of their new servicing contracts. Powerful owners might opt for in-house servicing, 10

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12 but most owners choose between extending the servicing contract with the OEM or continuing with an ISP. Third party providers also sell warranty contracts, which can often be wrapped around the turbine supply agreement to continue the coverage supplied by the OEM at the end of warranty. In many ways terms and conditions are inherited from the original contracts, however third party insurance underwriters are considered more open minded regarding independent products and services. During the full length of a warranty or guarantee contract, the guarantor is essentially standing for all O&M associated costs, as well as any underperformance with regard to the provided availability or production guarantees. This makes them unwilling to make any upgrades which may introduce any risk to the operation. Third party installations make the troubleshooting and liability issues more difficult for the service organisation, an issues also reflected by ISPs. Implementing independent products is in conflict with several OEM interests. Property Insurance An additional insurance policy is often required for supplementing the warranty and guarantee contracts. Property insurance is needed both during construction and operation phase of a wind farm. Wind farms often have an operational all-risk coverage for external factors and damage not covered by the warranty. At the end of warranty, this needs to be adjusted for the new settings. It is imperative to be aware of what restrictions the insurance sets on upgrades and cost of failures can be substantial. For less experienced owners, the risks regarding insurance liability and third party products is often very intimidating and pose a major obstacle to upgrades. Practically, insurance contracts are not a major constraint to upgrades, they merely set requirements on turbine components, upgrades, and proper O&M. Many insurance underwriters demand a certified service provider and will do regular inspections to 12

13 ensure the quality of the maintenance work. Certain upgrades may render component or type certificates of the wind turbine invalid, if they lack the approval from the OEM or otherwise have a professional assessment that the upgrade will not affect turbine safety and long term operation. If owners lack valid turbine certificates or otherwise breach their contractual obligations, any damage might be completely on their expense. OEM Turbine Manufacturer Aside from setting the terms and conditions during warranty, OEMs have influence on what is feasible to machines after the end of warranty (EoW). Owners often seek the approval of OEMs to make sure upgrades and spare parts are compatible and that they will work with the wind turbine as a unit. It is important for actors to have the installation sanctioned by the OEM for assurance that there will not be any issues with operation or contractual liability, such as insurance. Besides OEM acceptance and approval of third party products, active cooperation and support may be required in many cases. This is largely because the OEM keeps technical documentation inhouse, restricting access to key technical information, blueprints, control software and systems. Whether wind turbines are serviced by an independent company or not, cooperation and support from the OEM may be needed for certain upgrades and O&M related jobs. This is because in-depth technical details and documentation of newer wind turbine is considered intellectual property of the OEMs, rendering third party actors very dependent on the collaboration of OEMs. 13

14 Key Limiting Factors Key constraints experienced by people in the industry were assembled from actors involved in operational wind farms: OEMs and ISPs, small and large-scale owner groups, consultancies, and third party product providers. Interviewees were all asked what they considered to be the foremost limiting factor for upgrading wind turbines. These are the results. Top 5 Limiting Factors Among all limitations and constraints, some factors were mentioned more frequently than others. The issues most commonly pointed out were condensed into the following top five items: 1. Warranty contracts 2. OEM approval and support 3. Upgrade consequences and risks 4. Owner economic position and upgrade costs 5. Investor interest and proof of returns OEM Warranty The OEM warranty contract is frequently brought up as the foremost limiting factor. In general OEMs are very reluctant to involve third party products in their turbines and wind turbines under warranty are practically bound to the OEM product portfolio. To a large extent, performance related upgrades are bound to the control systems and the OEM. There are a few upgrade types that have been implemented in warranty wind turbines, according to individual interviewees: Vortex generators Safety related equipment Condition monitoring systems 14

15 Lubrication and filtering systems Yaw misalignment corrections Getting approval for third party installations on wind turbines under OEM warranty is described as very difficult and next to impossible for completely new machines. Certain types of equipment may be up for negotiation, if the client makes a very strong case for the upgrade. These aspects were said to improve the chances of getting approval: Customer authority and importance, likelihood to make new investments Stand-alone equipment solutions, with minimal impact on the wind turbine operation That the product has good track record, from a trusted and well-known manufacturer That the upgrade is of evident importance to the customer Involving the OEM at an early stage, transparency and explaining the upgrade impact Especially for suppliers of independent products and services, the warranty is a major issue as it excludes a major owner group from their business, essentially all owners of new machines. There is little that can be done, as the OEMs have the final say during warranty. Many interviewees tend to show a certain understanding towards this policy due to the issues with having several companies involved in the machine. Owners see it as a known trade-off when choosing the OEM as service provider. OEM Approval and Support It is a common perception that the OEMs do not provide sufficient support in events of installing third party equipment. Cooperation and support are often necessary for installations, as OEMs hold back on technical documentation and limit many aspects of controls and software access. Opinions on OEM approach and helpfulness differ and are very case-specific, usually depending on turbine brand. The interviews imply that the OEM support is lacking throughout the whole collaboration process with independent products and services. These factors were brought up: 15

16 OEM acceptance / approval of a particular upgrade OEM cooperation and support OEM compete in after-sales counteracting interests and actions thereby OEM unwilling to service third party equipment owner needs additional service contracts Upgrade Consequences and Risks One of the most important factors holding back owners from investing in third party products is the fear a negative impact on the wind turbine. Risks that the upgrade will introduce faults and stops to the wind turbine and impact the stability of operation are of major concern, as well as risks of causing physical damage or affecting life expectancy. WTGs are already considered to be carefully optimized, thus the fear of downtime weighs heavier than potential benefits. Aside of malfunction risks, there are concerns with how third party installations may affect contractual agreements and insurance liability of the machines. Small-scale owners tend to choose the safest route and stick to OEM products to avoid these kinds of issues. Contractual impact appears to be a grey zone for many larger actors as well. Introducing additional equipment in a wind turbine aggravates fault liability allocation. If the new equipment may potentially affect the wind turbine operation, the inherent risks must be properly defined and priced. These must be agreed upon by all involved parties. Every new installation can potentially add another counterparty for the service provider to negotiate with in events of failure. This is one of the main concerns with installing third party equipment for service providers, ISPs and OEMs alike. Economics and Owner Interests The economic situation of the owners and investors are major constraints to upgrading. Generally, this goes hand in hand with the economic climate of wind power in the region, governed much by the national electricity price and regulations. Tougher finances of owners force an even more conservative investment strategy than what is already a fact in many sectors of the industry. 16

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18 Owner and investor conservatism is considered a constraint from product and service providers points of view and correspondingly owners view costs and proof of return as limiting factors. One investor explained their interest in upgrading to depend decisively on site-specific proof for the upgrade to work as advertised. Unless that was available, they would propose doing an on-site evaluation pre- and post upgrading using a test turbine. Regardless of any professional and independent product assessment, they would demand proof, for their specific site, beyond all reasonable doubt that: The upgrade will make a difference and perform according to promises The upgrade will not impact the turbine s performance or condition over its lifetime Since many actors are under great pressure to increase their revenue stream and OEMs depend heavily on the after-sales, there is a lack of trust related to promises of results and benefits. This is a major hold-back for investing in upgrades for turbine health, availability and power performance. It can be difficult proving the benefits in advance and quantifying the results in retrospect. For the same reasons, sharing yield improvements of upgrades are criticized for being complicated and hard to calculate. 18

19 Issues in After-Sales O&M and after-sales for operational wind farms are crucial for the wind turbine manufacturers business. The margins on turbine sales are tight, and many manufacturers have set their hopes on the O&M and after-sales markets, in which margins are significantly better. However in recent years OEMs have lost ground on the wind farm O&M market, as independent service providers are offering alternatives for the owners, and experienced large-scale power producers are seeking in-house solutions. In response, many manufacturers are working with incorporating extensive servicing and warranty policies in connection with turbine sales. These long contractual agreements tie the customers to the OEM, effectively securing control of servicing, spare parts supply chain and upgrades. OEM servicing and warranty contracts are often 10 years long with 5 and 10 year extension options, at which time the customer completely relies on the OEM and gradually builds up dependency. There are other results as well. One view is that the ISP alternatives on the market motivate OEMs toward a more transparent and accommodating approach to customers through reporting, personal contacts and a more open dialogue. Small-scale owners experience a better approach with regards to small-scale sales offers, as well as improvements on the service side. Improving service is important for the OEMs to keep the customers within their aftersales machine, which can be their primary cash cow. Whole fleets of wind turbines can be managed by centralized operation and service centers. The OEMs can reach through to thousands of owners with new products, services, and upgrade packages, by utilizing their base of thousands of turbines. OEMs Inhibit Independent Actors The service business is often pointed to as a keystone to the turbine manufacturers business survival, and naturally the independent competitors are not freely invited in. Several interviewees experience the turbine manufacturers to be actively blocking out ISPs from the market, by making it difficult to service their wind turbines and obstructing new actors from entering the market. Others reflect a more neutral view. Third party companies report difficulties getting their products accepted and implemented in OEM managed wind farms. The turbine manufacturers have different approaches 19

20 and the issues pointed out below should be regarded as specific cases and individual experiences, rather than universal facts. Limited Technical Documentation As direct competitors, ISPs face an array of disadvantages compared to the OEM. Limited access to technical documentation necessary for certain service jobs is one of the key issues ISPs face. This is especially an issue for new models, and it often takes at least a few years to get ahold of proper servicing documentation. Certain O&M jobs are simply not possible to do without the proper documentation, as these can cause damage the machine. According to interviewees, restricting certain information that compromise the service personnel s safety, may be in conflict with the norms of the EU Machinery Directive. Special Tools Necessary for Servicing Some OEMs have introduced special servicing equipment that is necessary for servicing the machines, such as communication devices for checking turbine condition or special tools for making servicing easier. Special servicing equipment is either very expensive or not for sale at all. The corresponding repair job may instead be sold as an OEM service. Custom-making these special tools through other manufacturers, may cost considerably more than the associated components. Limited Data Access Another aspect is the restraint to data, software, and control systems access. Getting software updates which are commonly installed in the wind turbines can be difficult. The OEMs are considered very reserved and the service provider needs good relations and contacts at the OEM. ISPs struggle to get ahold of software and appropriate access for properly managing the wind turbines. However, this is a delicate issue, because of intellectual property and the fact that data and software spreads easily. In-depth control 20

21 access reaching actors with insufficient understanding of the wind turbines, can have severe consequences. Spare Parts Another aspect limiting ISPs is the access to spare parts. Among different turbine manufacturers, the supply chain philosophy and suppliers relationship varies. The situation may look very different for turbines based heavily on standardized products versus turbines using many customized components. Some OEMs are making it difficult for their sub suppliers to sell components to third parties, while others are moving in the opposite direction. Third Party Products Besides the usual conservatism regarding innovative products, there are examples in which OEMs are simply not willing to cooperate at all. Regarding yaw alignment optimization, OEMs show very different approaches. Often the measurement data and proposed corrections are simply double checked and adjusted for, but in certain cases OEMs are not willing to adjust any parameters based on third party proposition. What should be an easy fix is simply denied while the turbine is within warranty and the OEM will not compromise. There are also cases in which technology is declared erratic to owners, lacking proper support. Industry Conservatism Obstructs Innovation In many ways the wind power industry is a withdrawn and conservative industry. In fierce competition, many actors are still seeking to find their place in the maturing industry, causing tension in communication and distribution of information. Some view the wind industry as too inflexible and square, tending to be reinventing the wheel. 21

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23 New Technologies Struggle to Break Ground New and innovative technology can have a hard time breaking through in the wind power industry. There is also a widespread conservative attitude towards innovative technology new solutions are simply not trusted in the risk-averse industry and investors are worried how it may affect other turbine functions. Key attributes looked for by investors are whether it is a proven technology, and if it has a long track record. For new and innovative technology, the answer is of course no, and especially smaller players struggle breaking through the barrier to establish an initial track record. As a result to the general careful approach to new technology, much time and effort must be put into proving new technologies. Some companies pour considerable amounts of resources into getting their technology assessed by independent actors for verifying the technology and gaining support that the solutions are reliable. Condition Monitoring Obstructed by Conservative Insurance Policies Another example is condition monitoring systems (CMS). Many insurance companies work in the way that only direct failures and component breakdowns are covered by their policy. Preventive maintenance is mostly not covered by insurances, meaning that fixing components which are not completely worn out and in need of reconditioning or replacement are not covered. Consequently, to some owners mitigating breakdowns is not actually beneficial to the business. Improving preventive maintenance through, for example, CMS can benefit all involved parties, provided that the underwriters are open for negotiation. OEMs Capitalize on Knowledge Advantage One of the key competitive advantages of the OEM is knowledge. Aside from protecting important technical information and intellectual property, the control of information has several advantages. It is a beneficial position for the OEM, in which both after-sales competitors and owners become very dependent on them. The knowledge high ground is a critical advantage against the ISPs in the servicing market, as jobs without the proper technical documentation is impossible. It is a direct benefit to keep the information in-house, as this means they alone have the full technical details of the machines for servicing and developing new products. For independent actors this 23

24 means a continuous struggle and a major competitive disadvantage versus the OEMs, as they lack proper documentation for newly introduced wind turbine models. Owners lack of information makes them very dependent on the turbine manufacturers, who have established themselves as the principal hub for information. Owners recognize their lack of knowledge compared to the OEM as an issue. The one-sided information leads to: Primarily OEM solutions are presented, and feasible alternatives are not always known. Information on wind farm performance is only seen filtered through the scope of the OEMs programs and software. Many owners lack the tools for accessing unbiased information on their wind farm operational data, turbine health condition, and performance is only available through the OEM. SCADA data and system access are often limited and only reluctantly provided at the EoW. To be able to maintain wind farms independently after the EoW, all necessary software and data access must often be negotiated into the agreement right at the start, in the initial sales contracts. A common view among the interviewees is that the OEMs are not particularly fond of disclosing information on their wind turbines. It is of great concern that any sensitive data would be distributed. Many consider the OEMs to be particularly concerned with data and information which may reveal any issues or shortages with the machines, by condition monitoring and SCADA data. Issues Proving Upgrade Results One of the primary issues with upgrading is that it is often hard to demonstrate results with regard to turbine condition and performance. Unless the expected results can be proved in advance of the installation, many investors will back out if there is no hard proof that they will get returns on their investments. For example, one cannot easily prove the case-specific life span impact of lubrication or filtering systems or that condition monitoring prevented a particularly costly breakdown. Statistically, one can surely see and prove improvements, but in specific cases there is no way to quantifying the actual result. 24

25 Likewise, disputes can arise in retrospect when verifying and quantifying the resulting performance gain. One typical problem area is proving power performance the power output at a certain wind speed. Even though the power curve is easily accessed by any owner from their SCADA data, this representation is flawed. The turbine anemometer is mounted on the nacelle in the wake of the blades which makes the accuracy of the readings unreliable. No matter how precise and accurate the anemometer is, the positioning introduces major uncertainty. Due to the high uncertainty, the standard turbine anemometer readings cannot be used for proving any underperformance in a legal process. A proper overview of evaluating power performance will be presented in the third part of the MSc thesis work and e-book series. Viable methods for measuring power performance will be presented, along with the basics of the current IEC standard. 25

26 Breeze - A Modern System for Data Collection and Wind Farm Optimization With more turbines comes more data and a universal need to capture and understand this data. Collecting, managing and analyzing data are challenges for owners and operators with expanding, diverse portfolios. For many years, software solutions for the wind energy industry were lacking or immature. Created specifically for the wind energy industry, Breeze is a modern scalable wind farm management system used by active owners and operators to increase energy production. A key task in increasing power performance is to identify under performing wind turbines and to discuss what actions can be taken to increase power performance of individual wind turbines or the wind farm as a whole. Breeze has the capabilities to measure and verify the effects of actions and expenditures intended to improve performance. By quantification of the ROI, the owner will know if actions make financial sense to implement on other wind turbines. This is an exciting field that will become more and more important and widespread as turbines are managed under production based availability contracts and as turbines come out of warranty. Breeze intends to maintain a leadership role in this field. To learn more about Breeze, visit 26

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