Energy production assessment: capturing the value of accurate power curve predictions
Elizabeth Benedict Christensen,
Lead Commercial Enablement Specialist at Vestas
Published on 20th of March 2020
An interview with Michael Pram Nielsen, Value Capture Senior Specialist at Vestas Power Solutions. Michael explains why accurate energy production estimates are crucial for project planning and shares some best practices for developers, investors, and consultants in the wind industry here, as well as in the recently published Energy Production Assessment whitepaper
Why are energy production assessments so important for our customers?
Energy production is an essential part of our customer’s business case calculations, especially because they are investing in a power plant for 20 – 30 years. Customers of course have the costs of the assets, but they also have the electricity produced and the price that they can get for that electricity. This is an important pillar.
How is the certainty of a wind park investment assessed?
In the industry, most customers or developers hire a 3rd party consultant, who then assesses the Annual Energy Production (AEP) estimated from the power curves provided by the turbine OEM and the site-specific uncertainty based on their models. Additionally, banks either have their own analysis methodology, or they hire a 3rd party consultancy to make an assessment on AEP uncertainty. For example, to benefit from the Production Tax Credit (PTC) in the US, customers require tax equity finances—which banks normally only approve after a 3rd party assessment of energy production estimates. Some customers conduct the energy production estimates themselves, depending on their capabilities, the project, and the power curve warranted level.
What is the connection between the estimated energy production of a wind turbine and its power curve?
To estimate the energy production of a turbine or an entire wind park, you need the power curve of every turbine involved. To assess energy production at a specific site, the power curve is calculated together with the wind distribution and also takes climatic conditions such as turbulence and system losses like grid losses, environmental losses, or wake losses into account.
What is the biggest “power curve” issue that the wind industry should be taking more seriously?
One of the biggest issues is that power curve performance is assessed in many different ways in the wind industry, so it is challenging for investors to make informed decisions on accurate energy production assessments. Getting alignment is crucial. A power curve is both a technical and commercial vehicle, which is why this is so challenging at times. Let’s take the example of calculating loss factors: this should be a scientific question to be answered. I believe we have incredibly talented people in the wind industry to calculate loss factors, but if the transparency is not there, we end up comparing on different terms. With a lack of consistency, this becomes a “commercial curve” rather than a technical curve.
What recommendations do you have for other industry players?
Firstly: transparency. Secondly: Standardization. We should work in a standardized way, which means creating a common methodology that enables us to accurately include the same kind of assumptions across the industry. Having a transparent and standardized methodology allows all industry players to participate on the same level. We will then be able to compare and facilitate competitive growth in the industry, including the development of new technology that supports higher performance.
We are all a part of this connected value chain, and these changes will allow everyone to make more decisions—and therefore benefit the entire wind industry. From OEMs selling equipment, to the developers buying and operating wind farms, to the consultants assisting in the power curve assessment process, we all have a mutual interest in doing this together.
What is Vestas doing to promote the certainty of energy production assessments?
We are participating in international industry standardizations groups to address topics like energy assessment, loss factor, and uncertainties. In addition, we have published the Energy Production Assessment paper, which is based on industry data and third-party validations to increase awareness of the current state of energy production assessments, and to encourage transparency, standardization, and knowledge-sharing. This piece is relevant for all industry players and markets, including developers, consultants and financing partners, among others.