Continued operation, repowering or dismantling? EEG compensation for wind turbines that were put into operation in year 2000 or earlier will expire by the end of 2020. Thus, operators have to take a decision regarding possible follow-up solutions.
It is with the end of the year 2020 (i.e. 31.12.2020) that all wind turbines that have been set into action in year 2000 or before lose EEG compensation. An estimated number of 6000 wind turbines will be affected.
Operators are basically left with the following three options:
- continued operation
- repowering
- dismantling
The decision on what the best approach might be is a highly individual matter as it depends upon a series of rather complex legal and economic factors. Hence why it is important to establish a valuable basis for decision-making early on.
Repowering holds the highest economic potential. However, unlike its term may suggest, there is more to repowering than simply renovating. In fact, it usually involves the dismantling of old turbines, using the available area to set up fewer, yet clearly higher (hub height) and more efficient wind turbines. As a result, production can be increased many times over.
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In general, only little of the existing data can be reused in re-projecting. Consequently, repowering involves rather high investment costs. However, finances are not the only risk of failure. There are legal issues to the planning as well; namely, a new BImSchG authorization. Most commonly though it is planning regulations that hinder the repowering process the most.
In case repowering is not an option…
If repowering happens to not be an option, why not opt for continued use of existing wind farms? What it requires is a new revenue model, for which power purchase agreements or regional renewable energy marketing are considered potential solutions. At the same time, costs need to be assessed, i.e. proven if and how they can be reduced. Possibly, the economic modeling including all revenue and cost factors will result in a satisfying margin.
However, it is important that project margins are examined thoroughly. As a matter of age, continued operation does involve a certain risk of default for both, supplier and customer. As a way of taking account of those risks, diversification within a bigger wind-portfolio may be an option; potentially in cooperation with partners.
In addition, there are legal requirements to be met in order for continued operation to be successful. Thus, if either (a) proven remaining useful life is low, (b) wind turbines are not in line with current regulations of the German Institute for Structural Engineering (Deutsches Institut für Bautechnik), (c) BImSchG authorization is only temporary or (4) landlease agreements are to expire and cannot be renewed, then it’s time to consider the third alternative: dismantling.
The graph illustrates possible ways of action and decision-making regarding wind turbines that have reached a lifetime of 20 years or more. It is a complex process that does not only require early-on planing, but just as well might profit from professional, external support.
If all of this sounds way too complex…
Those wanting to avoid the effort and complexity of this decision-making process should consider selling. In this case it may be advisable to charge a third party with the task of valuation.
A first and easy step to take in the process of valueing investments and identifying future prospects is Financial Modeling; as offered by greenmatch.
Would you like to know how to model a repowering project in greenmatch?
We have created an example project which shows the economic efficiency of repowering compared to continued operation.
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Authors
Sterr-Kölln & Partner mbB has been assisting developers and operators of wind turbines in all legal, economic and tax matters for more than 20 years – including repowering and further operation. More information on both topics can be found in our presentation at the Hamburg Wind Fair or directly from the authors: info@sterr-koelln.com.
Steffen Kölln, Consultant, Sterr-Kölln & Partner mbB
Felix Kuske, Consultant, Sterr-Kölln & Partner mbB
