Caring for an Aging Fleet

As with any heavy asset, turbines are less productive the more they are used. That simple fact of aging is taking on new resonance in the North American wind industry, where the average age of fleets is estimated to rise from 7 years old in 2020 to 11 in 2025 and 14 in 2030.

With many operators now having expanded their installed capacity and conducting maintenance for the first time with service in-house, the management of aging turbines may come as an organizational first. OEMs, independent service providers, and many of the larger owner-operators have managed turbine performance decline before, but not like this new maintenance landscape ahead, with new turbine makes and advanced controls technology still untested by the usual wear and tear.

After accounting for the “teething” issues in years one and two because of site configuration and maintenance strategy adjustments, the Berkeley Lab found turbine performance decline to be linear in a survey of the North American fleet. This gradual loss of output productivity is consistent across turbine makes and models.

For pre-2008 sites, this annual decline in output equals about 0.53 percent. Newer turbines with a greater blade-to-generator ratio installed at post-2008 sites, by comparison, are holding up better so far. They’re losing on average about 0.17 percent in output each year.

These newer turbines are also contributing to the expectation of a longer turbine lifecycle, from around 20 years in the early 2000s to an expectation of 30 years today, according to a recent survey of wind executives.

Despite the improved lifespan and maintenance programs for repowered turbines and newer sites, the tenth year remains a critical point in the turbine life cycle. Between the tenth and eleventh years, the

Berkeley Lab found that output productivity slipped for older sites by about 3 percent. The extent of that drop off for newer sites is still uncertain, but ten and eleven year old sites have so far underdelivered on their productivity projections, suggesting that the drop off continues still.

Performance drops off for a few reasons around the tenth year — some of it attributable to technical and normal mechanical degradation, but much of it the result of market incentives and controlled wind farm operations.

1. Component Replacements: The replacement of key components like gearboxes (which alone explains about 30 percent of total performance decline) introduces some of the same teething problems around turbine and site configuration in year ten. After the second bout of component optimization which follows, turbines recover some productivity into their second decade before falling off once more. As many executives project operating turbines into a third decade, it is possible that another round of component replacements and a third set of teething issues may realize another drop off and slight recovery.

2. Expired OEM Warranties or Service Agreements: When operators bring service in-house, cost-effective maintenance — especially for underperformance — typically becomes less of a priority. As we’ve written before, the wind industry has historically treated downtime as more identifiable, measurable, and addressable, which accounts for why underperformance issues become more challenging to document, investigate, and fix as maintenance moves in-house.

Without due correction for underperformance, the revenue left on the table is significant. The Electric Power Research Institute estimates that just a 1 percent boost in productivity at a typical wind farm with 100 two-megawatt turbines would increase revenue by $250,000 - $500,000.

3. Productivity Goals Framed by Power Purchase Agreements: A power purchase agreement (PPA) often determines the span of peak productivity and the associated maintenance strategy at a park. Similar financial instruments to hedge risk in wind operations like Proxy Revenue Swap Financing, which exchanges the expected value of power generation for fixed payments from third parties, encourages more moderate approaches toward power performance.

Whether a PPA benchmarks on both availability or performance, hitting agreed-upon output without exhausting non-PPA productivity can see varying drop-offs depending upon the length of the PPA.

4. Slowdowns Incentivized by the Production Tax Credit (PTC): As sites lose eligibility for the PTC in their tenth year of operation, performance declines by about 3.6 percent. Losing the 1-2 cents per KwH writeoff encourages more moderated power performance becoming the norm in order to stretch out mechanical stress and pre-empt costly failures and subsequent replacements on turbines that have already been repowered.

In Europe, where a PTC equivalent is not available by kilowatt-hour, wind farms have operated with a more gradual linear rate of decline, without the sharp decrease in year ten. Similarly, upon expiration for the Treasury Department’s lump sum 1603 Grant, wind projects dropped off at 3.2 percent. Instead of pursuing vigilant maintenance on turbines at peak performance, projects took a more measured approach and saw a less steep decline in year ten.

Into the second decade of the turbine life cycle, when “teething” issues again subside, performance decline slows and averages about 1.23 percent annually for the rest of a turbine’s lifespan. By year seventeen, older turbines installed in the 1990s and early 2000s have averaged 87 percent of their peak productivity. Younger turbines now appear that they will age more gracefully, though to what extent remains to be seen.

Capitalizing on heavy investment in wind turbines requires cost-effective upkeep. Repowering initiatives are just one step in an O&M approach to stave off productivity declines. And as performance decline draws greater attention with the demand for carbon-free energy increasing, caring for an aging fleet through power performance will be fundamental to the long-term profitability of wind projects.

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