The Fight Between Fossil Energy and Wind Energy: They Both Need Massive Lobbying Efforts (aka, bribes), Subsidies and Favorable Regulations to Compete

Wind energy vs. fossil fuels: Hurdles and hopes for a renewable future

The fossil fuel industry receives billions in taxpayer subsidies as the wind industry fights to take flight

By Michael Walsh  Yahoo News

In this Oct. 29, 2011, file photo, turbines spin as the sun rises at a wind farm near Toronto, S.D. Federal officials are moving to speed up their review of wind power projects across the Upper Great Plains in anticipation that the industry will continue growing, a situation that’s alarmed wildlife advocates who say many bird and bat species are being put at risk as wind turbines proliferate. The proposal would cover future wind farms in Montana, Iowa, Minnesota, Nebraska, North Dakota and South Dakota. (AP Photo/Dirk Lammers, File)

The colossal oil spill in Southern California last month spurred many to wonder why we have not abandoned fossil fuels for wind and other sources of renewable energy.  (This is a very naive comment by this Yahoo News writer, as you cannot possibly use wind to run the billions of vehicles on the road.  The overwhelming majority of oil is used to power the transportation industry.)

A busted pipeline spewed an estimated 101,000 gallons of crude oil onto a pristine stretch of the Santa Barbara coastline on May 19, creating a nine-mile-wide oil slick in the Pacific.

“We don’t have an estimate for [the duration of] this cleanup response, as we are still assessing the extent of the contamination,” U.S. Environmental Protection Agency spokesman Rusty Harris-Bishop told Yahoo News this week.

A worker removes oil from sand at Refugio State Beach, north of Goleta, Calif. (AP/Jae C. Hong)

Last year, roughly 67 percent of the nation’s electricity came from fossil fuels — such as coal, natural gas and petroleum — which release pollutants into the air.

Meanwhile, wind power, essentially a pollution-free, sustainable energy resource that the United States can harness domestically, supplied only 4.4 percent of the country’s electricity.

But Franklin (Lynn) Orr, the under secretary for science and energy at the Department of Energy (DOE), said the transition to clean energy is already underway — and expected to continue. 

“Four and a half percent of America’s total electricity. That is triple the share what it had six years ago. And it’s on track to double again in the next five years,” Orr said in an interview with Yahoo News.

Given the proper financial investment and political backing, wind could account for a much larger percentage of the nation’s electricity production than it currently does.

But, critics say, many corporations and politicians stand to profit from our continued reliance upon fossil fuels.

“There are still a lot of politicians that are really in the pocket of the fossil fuel industry and some that are ideologically committed to it,” Nathanael Greene, renewable energy policy director for the Natural Resources Defense Council (NRDC), said to Yahoo News.

Widespread support for wind energy

The United States is a world leader in wind power, having invested an average of $13 billion per year in wind plants from 2008 to 2013.

Kit Kennedy, director of the NRDC’s energy and transportation program, says the United States underwent a “quiet revolution” in renewable electricity in recent years.

Polls have consistently shown that Americans strongly support wind energy.

Conservative Texas has the most installed wind power capacity of any state, and the runner-up is liberal California.

An electricity pylon is seen next to wind turbines at a wind power plant in Hami, Xinjiang Uighur Autonomous Region

“It’s not a red state-blue state distinction. Wind is a powerhouse in states across the country. That means we are seeing bipartisan support for wind power, and that’s growing,” Kennedy said in an interview with Yahoo News.

Iowa and South Dakota power more than 25 percent of the electricity in their respective states using wind, she said.

And the United States is not alone. Global investment in wind power soared from $14 billion in 2004 to $80 billion in 2013, a 21 percent annual rate of growth. In 2014, Denmark set a world record by generating about 40 percent of its electricity from wind.

The DOE estimates that wind energy could supply the nation with 10 percent of its electricity by 2020, 20 percent by 2030 and 35 percent by 2050.

This would require cooperation and strategic planning: expanded development areas, increased economic value and reduced costs.

Federal policy: A stable environment for investors

The cost of wind power has dropped dramatically over the past decade.

Still, the initial investment needed to install wind turbines is greater than it is for traditional energy generators. Furthermore, the development of wind farms is not always the most financially lucrative use of land.

The American Wind Energy Association (AWEA), the national trade association for the wind industry, argues that investors need a “predictable, stable pro-growth tax policy” — the kind currently enjoyed by the fossil fuel industry.

The U.S. government provides the Production Tax Credit (PTC) for investors who financially support one of 12 renewable electricity sources.

But potential investors are scared away because Congress does not always extend the PTC, AWEA says.

In 2012, uncertainty over whether the incentives would be renewed resulted in a 92 percent drop in wind installations the following year, according to AWEA; as a result, the wind industry’s economy reportedly lost $23 billion and 30,000 jobs.

.

Wind turbines line a ridge on Stetson Mountain in Stetson, Maine. (AP Photo/Robert F. Bukaty)

“Despite the fact that we have been growing rapidly, there has been a boom-and-bust cycle due to unstable federal policy,” David Ward, director of strategic communications for AWEA, said in an interview with Yahoo News.

Investment in new wind industry projects rebounded after Congress extended the PTC with the American Taxpayer Relief Act, which became law in early 2013, but the damage for that year was already done.

The 2013 drop-off was the most drastic since the PTC was introduced in 1992, but it was not unusual. There had been similar drop-offs in 2000, 2002 and 2004.

“Other industries have permanent incentives in place that do not come and go,” Ward said. “This happens despite poll after poll showing that the overwhelming number of voters support policies supporting wind’s growth.”

State policy: Commitment to clean energy

Twenty-nine states have adopted policies to incentivize renewable energy called Renewable Portfolio Standards. These require state utilities to purchase a certain amount of renewable energy.

For instance, Hawaii recently adopted a policy pledging to use 100 percent renewable energy by 2045. Right now, Hawaii’s electricity is extremely expensive because it is primarily powered by diesel fuel, which is imported to the islands.

“Whenever you are importing oil, there is a possibility of spills,” Kennedy said. “Simply as a matter of economics, Hawaii has gotten religious on renewable energy.”

John Moore, executive director of the Hawaiian Sustainability Foundation, says that the state’s salt saturation can break wind turbines — especially if they are close to the water — but that is no reason to abandon clean energy.

“The majority of people that live in Hawaii see no reason why we can’t have all solar and some wind,” Moore told Yahoo News. “The solar is the real no-brainer because the sun’s always shining here.”

The costs of solar panels for consumers have dropped rapidly, as well.

By 2014, a typical rooftop solar panel cost about 1 percent of what it cost 35 years earlier, Orr explained; as a result, solar PV module installations last year were 25 times what they were in 2008.

“All these efforts are not a coincidence," he said. "They are the result of public and private investments in research and development."

California, another state with ambitious goals, is working toward using 50 percent renewable electricity by 2030.

“What you’re seeing is a large number of states — red and blue — adopting these renewable energy policies and a couple of states redoubling their efforts from one set of targets to a new set of targets. That’s incredibly exciting, too,” he said.

Subsidies for the fossil fuel industry

Scientists know that fossil fuels harm the environment, exacerbate climate change and cause respiratory ailments in humans.

So why does the U.S. government shell out billions of dollars to prop up fossil fuels while providing relatively sparse support for wind?

Oil Change International, an organization advocating against subsidies for fossil fuels, says the industry’s fingerprints can be seen on every barrier to a transition toward clean energy.

“We see the influence of the fossil fuel industry as hugely problematic and something that needs to change. We need to separate the influence of the oil, gas and coal industries from our politics,” David Turnbull, campaign director for the nonprofit, said in an interview with Yahoo News. “They spend millions upon millions of dollars to influence our democracy.”

.

The rotor blades of a wind turbine is lifted by a crane at a construction site of a wind power plant in Yiyang

Estimates for how much the U.S. government gives to the fossil fuel industry — not even including indirect costs — can vary from $10 million to more than $50 billion per year, according to Turnbull.

According to a Guardian investigation, the U.S. government awarded Shell, ExxonMobil and Marathon Petroleum significant taxpayer subsidies — worth $1.6 billion, $119 million and $78 million, respectively — thanks to politicians they helped elect by donating to their campaigns.

Greene says it is understandable that the subsidies were implemented long ago to bolster the American economy, but it is time to cut back — especially now that we have viable alternatives.

“The irony is that we are now subsidizing renewables as a way to overcome the subsidies we are paying to the fossil fuels industries,” Greene said. “It’s like subsidizing both sides of a war.”

In the coming decade, taxpayers are projected to give more than $135 billion to these corporations.

Vermont Sen. Bernie Sanders, who recently launched his campaign for the Democratic presidential nomination, and Minnesota Rep. Keith Ellison have introduced legislation that would end subsidies to the oil, gas and coal industries.

“At a time when scientists tell us we need to reduce carbon pollution to prevent catastrophic climate change, it is absurd to provide massive taxpayer subsidies that pad fossil-fuel companies’ already enormous profits,” Sanders said in a release. “At a time when fossil-fuel companies are racking up record profits, it is absurd to provide massive taxpayer subsidies to pad their already enormous earnings.”

ExxonMobil, Shell, Chevron, BP and ConocoPhilips — the five most profitable oil companies — raked in more than $1 trillion in profits over the past 10 years, according to the release.

In a report, the International Monetary Fund (IMF) says that post-tax global subsidies are significantly higher than previously thought and are expected to reach $5.4 trillion by the end of the year.

“The sustained interest in energy subsidy reform also reflects increasing recognition of the perverse environmental, fiscal, macroeconomic, and social consequences of energy subsidies,” the report reads.

In April, World Bank President Jim Yong Kim called for eliminating all subsidies for fossil fuels and implementing a carbon tax.

Similarly, Fatih Birol, the chief economist at the International Energy Agency, has said that fossil fuel subsidies are basically an incentive to pollute.

Fossil fuel industry's perspective

The American Petroleum Institute, the nation’s largest trade organization for the oil and natural gas industry, argues that fossil fuels are central to the country’s economic growth, energy security and overall security as the foundation for its “all-of-the-above energy approach.”

“We need to make sure that the small but vocal view of those who peddle the false choice between energy production and safe environmental stewardship do not prevail in their narrow view which is contradicted by the facts,” API president and CEO Jack Gerard said during his "State of American Energy" speech in January.

The API and similar organizations argue that not only should we persist in using fossil fuels to maintain our current lifestyles, but also we will have to use more of it in upcoming decades.

Two wind turbines are seen in an Iowa field. (Creative Commons/Theodore Scott)

Cape Wind

Wind power has occasionally been met with resistance — perhaps most famously in Massachusetts.

In 2010, the federal government approved the construction of a wind farm, called Cape Wind, off the coast of Cape Cod.

The proposed 130 wind turbines on Horseshoe Shoal in Nantucket Sound would generate 75 percent of the electricity for Cape Cod, Martha’s Vineyard and Nantucket, according to project organizers.

But there has been fierce opposition from some groups, most notably the Alliance to Protect Nantucket Sound, who say the wind turbines would ruin the ocean views of wealthy homeowners and decrease property values.

Although the Alliance presents itself as an “environmentalist” group, billionaire industrialist William I. Koch, who made a fortune in fossil fuels, is its chairman and a main financier.

The anti-wind campaign has succeeded in slowing construction of the wind farm. Ironically, the Cape and nearby islands would be among the top beneficiaries of wind power, since they are particularly vulnerable to the hazards of climate change.

The future

In March 2015, President Obama committed the U.S. to fighting climate change by setting a challenging, even unprecedented, goal: to reduce the nation's greenhouse gas emissions 26 to 28 percent below 2005 levels by 2025.

Orr, who was sworn in as the DOE’s under secretary for science and energy three months earlier, said, “We need all of the tools that are in our toolkit now to do this, plus some more that we need to invent.” 

Whereas Congress and state governments set the rules for Renewable Portfolio Standards and direct subsidies, the DOE focuses on advancing clean technologies and ensuring that fossil fuels are as clean as they can be.

“What we really need for the country is a well-diversified portfolio of energy,” Orr said. “Fossil energy has a big part in the system now. As we think about transitions, we have to do that in an orderly way that makes the whole system continue to operate.”

Source: Yahoo News

//////////----------------////

Caution in the Wind: Rush to Install NEW CAPACITY Poses Higher Loss Risks FOR WIND FARMS

http://metroforensics.blogspot.com/2014/10/caution-in-wind-rush-to-install-new.html

There is so much growth in the renewable energy and in the oil & gas businesses that provide huge growth opportunities for investors and insurers.  We provide this information to make sure that neither the investors nor the insurers take a financial bath as they pursue these endeavors.

Explosive Growth in Wind Farm Capacity in late 2013 and 2014

Installations of new capacity hit a record at about 13.1 gigawatts (GW) in 2012, but slumped to just 1.1 GW the following year, as developers rushed to bring their projects online in 2012 to qualify.  After great uncertainty at the end of that year, the producer tax credit was revived on New Year’s day 2013, for just one year.  However, the rules were changed so that any project that had started construction by then would qualify.

That led to a boom in development lasting into this year, and at the end of June about 14.6 GW of wind capacity was under construction – a record level according to the American Wind Energy Association (AWEA).  Currently, the cumulative U.S. wind energy capacity stands at about 80 GW.

Caution in the Wind: Rush to Install Poses Higher Loss Risks

We believe that the rush to install the new capacity to take advantage of the production tax credit should raise red flags for investors or insurers who would invest or insure these installations.  The wind farms have been plagued with numerous failures the last twenty years: design, construction, components failures, lack of proper operation & maintenance (O&M) and so on.  We believe that the wind farms installed the last 18 months will have even higher failure loss ratios.  Historical losses show that every time projects are rushed to design and construction, failures occur at much higher rate.  The system reliability also is reduced significantly due to components failing at a much higher rate.  Significantly, the catastrophic failures (or very high failures) typically increase when projects are rushed.

For example, as we reported here https://sites.google.com/site/metropolitanforensics/cause-and-contributing-factors-of-failure-of-wind-turbines

this year, Siemens, a main manufacturer of wind turbines, reported a charge of 48 million Euros for inspecting and replacing defective main bearings in some onshore wind turbines.  In addition, just few days ago, the new head of Siemens’ global energy business said that the wind energy still needs the wind production credit to be competitive with fossil fuels.  The production tax credit for wind, in its most recent form, allowed a tax reduction of 2.3 cents for every kilowatt hour generated.  It was first created in 1992, and has been allowed to expire five times since 1998, creating a rollercoaster boom and bust cycle for the US industry.

This high loss ratio was the experience of several wind turbine manufacturers during the early 1990s that were unable to maintain adequate quality controls during a period of very high demand.  Examples of massive recalls involved the NEG Micon gearboxes and the Suzlon wind blades; not to mention many others.

Wind Blade Failures

Another troubling issue for the states is that these industrial wind facilities are seeing higher failure rates than predicted.  A recent study found that there are about 3,800 wind blade failures a year with costs as high as $1 million.  Wind manufacturers are under increasing pressure to deliver cost competitive technology resulting in larger turbines with minimum unscheduled downtime and longer, lighter rotor blades. The frequency and severity of blade failures varies from country to country, and they result from lightning damage, manufacturing defects, and human error.

Following Another Blade Failures, GE Identifies 'Suspect Population' In Turbine Fleet

Following a thorough investigation, GE says a "spar cap manufacturing anomaly" is to blame for the recent blade breaks at the Orangeville Wind Farm in New York and Echo Wind Park in Michigan.  The company has identified other customers whose turbines are subject to the anomaly and is working to perform blade replacements.  A spar cap is a key structural element within the blade that carries the bending load of the blade.

Oil leaking from a wind turbine in New York

Wind turbine system reliability is a critical factor in the success of a wind energy project.  Poor reliability directly affects both the project’s revenue stream through increased operation and maintenance (O&M) costs and reduced availability to generate power due to turbine downtime.  Annual O&M costs include maintenance, overhead, replacement parts, local taxes and fees, wages, and similar expenses.  Indirectly, the acceptance of wind-generated power by the financial and developer communities as a viable enterprise is influenced by the risk associated with the capital equipment reliability; increased risk, or at least the perception of increased risk, is generally accompanied by increased financing fees or interest rates or increased insurance rates.

Wind Farms have been plagued by Numerous Defects

GCube, a provider of renewable energy insurance services has published a report summarizing the most common wind energy insurance claims made in the United States.  The data based on 2012 US reported claims, shows that blade damage and gearbox failure account for the greatest number of losses – accounting for 41.4% and 35.1% of the total claims reported.  Although the majority of wind turbine blade damage can be attributed to lightning strikes, delamination and improper handling during the construction and installation phase are also frequent and need to be addressed.

The wind farm facilities may not be as reliable and durable as producers claim. Indeed, with thousands of mishaps, breakdowns and accidents having been reported in recent years, the difficulties seem to be mounting.  Gearboxes hiding inside the casings perched on top of the towering masts have short shelf lives, often failing before even five years is up.  Many wind turbines in the United States now approach the five year critical interval.  In some cases, fractures form along the rotors, or even in the foundation, after only limited operation.  Short circuits or overheated propellers have been known to cause fires.  All this despite manufacturers' promises that the turbines would last at least 20 years.

Gearboxes have already had to be replaced in large numbers, the German Insurance Association is now complaining.  In addition to generators and gearboxes, rotor blades also often display defects.  The insurance companies are complaining of problems ranging from those caused by improper storage to dangerous cracks and fractures.

One major insurer who insured about 40 percent of the wind power generating capacity in 2007, end up losing 70 percent of its wind business because of the adjustment in its pricing/terms due to its experience with losses.  The majority of the losses were associated with Extra Business expense.  The market rates for operational risks used by this insurer were 0.20-0.30/100 for all risk property damage policies and 0.30-0.50/100 for all risk Loss of Profits/Business Interruption insurance.  Extra Business was approximately 50% of those rates.  That insurer reported the cause of loss to lightning (16%), breakdown (13%), wind damage (5%), unknown (25%).  By component, the losses were caused by the failure of gearbox (27%), blade (22%), generator (12%), and transformer (4%).  From a severity standpoint, large claims have been Property Damage related (such as, damage due to fire, lightning strikes, structural collapse), while the frequency of the losses has been Extra Business expenses (as we indicated earlier, the wind turbines operate about 30 percent of the time and they are down 70 percent of the time).  This operational frequency is lower or at the lower end of the ranges than the ones advertised by the producers.

Many times the replacement parts, both large and small, are not readily available to deliver and install.  Parts for older models are not available because the technology is obsolete.  The time to perform the repairs is long because the locations of the turbines are remote, the roads are not in good condition or not properly maintained and the repair crane may not be readily available.  Often times we see a supply chain interruption, due to the global nature of this business where components are manufactured in different parts of the world.  This idling of the turbine means loss of business/profits.  Currently we estimate that turbines are operational about 30 percent of the time.  This is based on evaluation of tens of thousands of loss records over the last twenty years both in the US and abroad.

Meanwhile, damage to generators (10.2%) and transformers (5.1%) ranked third and fourth, with damage to foundations coming in fifth.

Commensurately, the top two most frequently reported causes of loss were cited as poor maintenance (24.5%) and lightning strikes (23.4%).  Design defect (11.5%), wear and tear (9.3%) and mechanical defect (6.2%) featured in third, fourth and fifth when it came to assessing and understanding the reason cited for the initial claim.

Even among insurers, who raced into the new market in the 1990s, wind power is now considered a risky sector.  Industry giant Allianz was faced with around a thousand damage claims in 2006 alone.  According to this insurer, an operator has to expect damage to his facility every four years on average, not including malfunctions and uninsured breakdowns. 

Many manufacturers elected to build even larger rotor blades to increase the capacity, but the strains they are subject to are even harder to control.  Even the technically basic concrete foundations are suffering from those strains.  Vibrations and load changes cause fractures, water seeps into the cracks, and the rebar begins to rust.  Repairs are difficult, as it is no use just sealing the concrete cracks from above.  These stresses are even more obvious in the US, where the winds are even stronger and more variable than the European winds.

Many constructors of such offshore facilities in other countries have run into difficulties. Danish company and world market leader Vestas, for example, had to remove the turbines from an entire wind park along Denmark's western coast in 2004 because the turbines were not sufficiently resilient to withstand the local sea and weather conditions. Similar problems were encountered off the British coast in 2005.

Many insurance companies have learned their lessons and are now writing maintenance and monitoring requirements -- requiring owners/operators of wind farms to replace vulnerable components such as gearboxes every five years -- directly into their contracts and to monitor the operation on a continuous basis.  But a gearbox replacement can cost up to 10 percent of the original construction price tag, enough to cut deep into anticipated profits. Indeed, many investors may be in for a nasty surprise.  Several thousand older facilities are currently due for new insurance policies.

Measuring the Wind Turbine Reliability – The ReliaWind Project

Few years ago, the ReliaWind project performed an evaluation of the failure modes of the turbines and their associated downtimes.  The results showed that at least a quarter of the time the root cause of the downtime cannot be determined.  The main failure events are associated with the generators (the frequency converter, the generator assembly, the LV and the MV switchgear, and the transformer being the most frequently failed components), the rotor module (the pitch system, the blades and the hub being the most frequently failed components), the power control (sensors, communication system, and safety chain being the most frequently failed components), the nacelle (the yaw system being the most frequently failed component), the drive train (the gearbox assembly being the most frequently failed component), structural module (the tower being the most frequently failed component)and the auxiliary equipment (electrical protection and safety, and the hydraulic system being the most frequently failed components). 

Gearbox: The majority of the wind turbine gearbox problems that cause outages are due to bearing spall and/or gear pitting.  Annual oil sampling of gearbox oil and bearing grease can be employed.  Installing an oil debris sensor in the gearbox lube oil system makes detecting bearing and gear damage at the early stage easier and serves as a warning that additional borescope inspections are necessary.  Borescopes are commonly used to document the condition of gear teeth and bearings within the gearbox and should be used to inspect all gearboxes.

Blades: There are common failure modes and four consistent areas where cracks may occur: the root, leading edge, trailing edge, and tip.  These can be monitored by checking blade conditions, through inspection programs, and through visual inspections, which should be done at least annually.

Generators: Electrical and mechanical components subject to failure may include bearings, rotor winding, stator, core insulation, slip ring, or commutator, to name a few.  Root causes are various and include poor design, improper installation, inadequate maintenance, overload, over speed, excessive temperature, or excessive dielectric stress.  Electrical current, flux, and power monitoring techniques have been well developed and are now successfully used to monitor wind turbine generators.

Substation Transformers: Using dissolved gas analysis to check the breakdown of the insulation system is the most cost-effective way to monitor transformer health. Various concentrations of gases such as acetylene, methane, and ethane will indicate fault[s].  Analyzing the gases is effective for identifying the root causes of problems and enables technicians to take corrective actions before catastrophic failure.

Cables: Electric cable systems can fail for a number of reasons. Low-voltage (less than 1kV ) cable systems, commonly fail at the connectors due to overheating.  One of the most effective tests for low-voltage cable systems is the infrared assessment.  A common practice is to minimize the number of underground joints and use above-ground junction boxes.  The junction boxes are a common failure point and can be monitored using an infrared (IR) camera.  In addition, junction boxes are perfect points for fault indicators and predictive off-line insulation testing.

Condition Monitoring and Testing

All machines will deteriorate over time and fail.  It is just a question of when and to what degree the failure impacts operations and/or project financials.  Condition monitoring of wind turbines should be comprehensive and include drive trains, electrical, and power electronic components.

Monitoring systems can play a vital role in highly reliable maintenance forecasting, which is essential for improving turbine reliability and availability.  A supervisory control and data acquisition (SCADA) system can be used to monitor systems and provide data for all the parameters measured within the nacelle.  The unit’s operational variables, operating parameters, and safety protection are connected to this system, enabling the operator to dial in via modem and connect to the system for remote operation.

The following items can be routinely subject to condition monitoring and testing:

Temperature Monitoring: Temperature is an age-old indicator of equipment health and can be used to diagnose component wear prior to unexpected failure.

Vibration Monitoring: Sensors are mounted on a turbine’s main shaft bearings, generator, and gearbox. A gearbox with a planetary first stage and parallel shaft second and third stages, requires a minimum of four accelerometers.

Oil & Grease Analysis: Oil analysis is effective for measuring gearbox health and provides evidence of moisture, viscosity breakdown, or presence of metallic particles in the lubricate that will cause bearing or gear wear. Proper grease sampling methods are crucial for comparing samples from one turbine to another or for trending samples from the same turbine.

Generator: Electrical testing of the generator will detect problems in the winding insulation. The condition of generator cable terminations may also be inspected and signs of previous arcing identified during testing.

Electronic controllers: Monitor voltage and frequency of AC current in the grid. Any changes outside set variables will allow the turbine to trip offline by functioning of protective electrical devices for over/under current and over/under voltage.

End-of-Warranty Inspections

A typical wind turbine warranty covers the first two to five years of the turbine’s 20-year useful design life.  Final inspection reports should be planned in advance to address issues well before the warranty expires.  A visual inspection of the complete turbine is recommended to document safety issues, the general turbine condition, and component failures.  A common checklist should be developed with input from the operations and maintenance staff.  Checklists provided by the OEM for regular maintenance can be a useful start.

Risk History

The early 1980's brought tax law changes in the United States, and in California in particular, which were designed to encourage development of wind generated energy and reduce our dependence upon foreign petroleum products and potentially dangerous nuclear energy. These tax "incentives", in the form individual investment tax credits, required only that wind turbines be installed on a site and connected to the utility grid – there was no requirement that the equipment produce electricity, an omission in the legislation which turned out to be nearly fatal to the industry.

The attractiveness of these tax incentives, and the relatively short time period in which they were available, caused a rash of untested wind turbine designs to be installed on haphazardly developed wind farms. This resulted in a number of spectacular serial equipment failures, and many multimillion-dollar insurance claims were paid. The individual tax credits ceased to be available in 1986 as called for in the legislation.

Available technology at the time of this initial development, usually referred to as "first generation" equipment, consisted of smaller (65 kW or lower) capacity machines. Many of these turbines were designed and built in Europe for their more constant and gentle winds. Others were designed by US aerospace firms convinced that smaller, lighter designs were the answer. Installation of many of these turbine designs in the California wind resource areas, where winds can average 35 mph and up, and can peak at over 80 mph during the wind season (May through October) proved to be disastrous.

The rotors, blades, yaw systems, braking systems, shafts and gear boxes of a number of turbine designs simply could not withstand the demand placed upon them, resulting in large quantities of malfunctioning or broken machines.

Wind operators at the time looked to the manufacturer's warranty, product efficacy, or their Property and Boiler & Machinery insurance coverages for relief. The result was heavy losses sustained by nearly all of the risk bearing insurance companies involved.

Wind Turbine Insurance Coverage Available

·         Contractual Liability

·         Products Defect

·         Serial Defect

·         Power Curve

·         Faulty Workmanship

·         Parts & Labor Backstop

·         SIR Aggregate Cap

·         Earth movement as a result of underground seismic activity

·         Difference in Conditions (DIC)

·         Wind Turbine Insurance Highlights

·         Risk sharing or Fully Insured Programs Available

·         Serial losses covered by “step-down” method vs. traditional “coverage suspensions”

·         Coverage tailored to support the Turbine Supply Agreement

·         Coverage tailored to support the Manufacturer’s Warranty

·         Terms and limits can be tailored to virtually any risk

Current Industry Status

A wind turbine’s reliability is dependent largely on the particular machine model, how well it is designed, and the quality of manufacture.  Reliability also varies with operating environment, as it is the machine’s reaction to the wind environment that determines the loading imposed on the components.  The variety of potential component failures - gearbox bearings, generator bearings and windings, turbine blades, power electronics, gearbox torque arms, pitch drive electronics – indicate that the operating conditions and load conditions for a large wind turbine and not completely understood.

Installed Capital Costs

Cost of energy (COE) is a key project evaluation metric, both in commercial applications and in the U.S. federal wind energy program.  To reflect this commercial reality, the wind energy research community has adopted COE as a decision-making and technology evaluation metric.

The 2011 NREL Cost of Wind report estimated average installed capital costs of $2,098 per kW of wind power capacity, with a range of $1,400 to $2,900 per kW.  This cost figure represents the costs of the wind turbines and towers including transportation and installation, balance of plant wiring and equipment, design and engineering costs, financing, and other costs necessary to develop and build a wind power facility.

Assuming a 38 percent capacity factor and a discount rate of 8 percent, NREL calculated an average installed capital cost per MWh of power output of $61.  NREL’s 38 percent capacity factor may be reasonable for a new power project built in a location with a high quality wind resource (which is the kind of facility their “reference project” is intended to represent), but it certainly appears high relative to data reported in the 2012 Wind Tech Report for existing commercial projects.  The Berkeley Lab’s latest calculations of average capacity factors ranged from a low near 28 percent in 1999 to a high of about 34 percent in 2007.  Since 2008, average capacity factors nationwide have ranged from 31.1 to 33.5 percent.

Annual Operating Expenses

The 2011 NREL Cost of Wind Energy Review employed an $11 per MWh estimate for annual operating expense, with possible values ranging from $9 to $20 per MWh.  Carrying over the adjustment in capacity factor from 38 percent to 33 percent but keeping other assumptions the same results in a slight increase in the estimates operations and maintenance cost, from $11 per MWh to $22 per MWh.  Changes in the discount rate do not affect annual operating expenses. The estimate of $11/MWh may also be biased downward. The most recent Wind Tech Report indicated a $10 per MWh average cost for annual operating expenses for projects built since 2000, but it added that this estimate is likely below actual average operation and maintenance costs.  The Wind Tech Report stated that most wind power operators consider operating and maintenance cost data information to be commercially sensitive and prefer not to disclose it. As a result, the annual operating cost estimates reflect only one-fifth of the capacity included in the installed capacity cost calculation.

While expenses faced by wind project developers are an important element of the overall cost of wind power, addition of wind power to the power grid involves a number of other costs.  If a more reasonable estimate of the installed cost of capital is $88 per MWh and operating costs are $21 per MWh, we can estimate a reasonable LCOE for wind power near $109 per MWh rather than NREL’s estimate of $72 — a more than 50 percent increase.  Such costs include the expense of transmission expansions needed to develop wind power, other grid integration expenses, and added grid reliability expenses.

Based on the above figures, the O&M costs can account for 10% to 20% of the total COE for a wind project.  The O&M costs of the older units are greater than the ones for the newer units.   Because there is significant uncertainty in future O&M costs, when projects are financed, sensitivities are frequently done on O&M costs.  The difference between typical low and high estimates can impact the COE and after tax return on investment approximately 10%.  At present, the tax benefits associated with wind energy contribute significantly to a project’s economics.  As these benefits reduce over time, the significance of uncertainty in O&M will increase. For example, while the difference between low and high O&M estimates impacts after tax return approximately 10%, it impacts pretax returns on the order of 20%. Thus, the uncertainly in O&M costs will become more important to the industry as the tax credits available to the commercial industry decline. From the research community’s perspective, confidence in the O&M costs numbers is desirable to ensure that the COE metrics being used to evaluate technology are appropriate.

Fires are major cause of wind farm failure

Main Wind Turbine Risk Drivers include:

·         Technology continually pushed to larger outputs

·         Global Economy – Supply Chain – Lead Times

·         Repair times impacted by remote locations, road conditions, & crane availability

·         Manufacturers are no longer in business

·         Parts for older models not available (obsolete)

·         Repairs/replacement parts

·         Losses can involve the entire nacelle

·         High wind speeds

·         Icing

·         Fire

·         Lightning

·         Vandalism and theft

Worldwide, fire is the second leading cause of accidents in wind turbines, after blade failure, according to insurance companies.  As we wrote earlier, in the US the gearbox failure is the leading cause of failure.  The failure modes depend on the manufacturer of the turbine and the other components of the wind farm and on the contractor installing and operating/monitoring the farm.

Wind turbines catch fire because highly flammable materials such as hydraulic oil and plastics are in close proximity to machinery and electrical wires.  These can ignite a fire if they overheat or are faulty.  Lots of oxygen, in the form of high winds, can quickly fan a fire inside a turbine.  Once ignited, the chances of fighting the blaze are slim due to the height of the wind turbine and the remote locations that they are often in.

Since the 1980s, when wind farms were first constructed, the team found that fire has accounted for 10 to 30 per cent of reported turbine accidents.  In 90 per cent of the cases, the fire either leads to substantial downtime or a total loss of the wind turbine, resulting in economic losses.

The researchers also outline the main causes of fire ignition in wind turbines in the study.  They are, in decreasing order of importance: lightning strike, electrical or electronic malfunction, mechanical failure, and errors with maintenance.

The number of wind turbines installed grew three-fold between 2007-2013 and the instances of reported fires in wind farms are increasing, say the researchers.  However, the ratio of fire accidents per turbine installed has decreased significantly since 2002.

According to the researchers, the true extent of these fires has been hard to assess because of the poor statistical records of wind turbine fires.  In an effort to get a clearer picture about the true extent of fires in wind farms, the team carried out an extensive analysis of data from a wide range of sources. This included Government reports, data from anti- wind farm lobbyists and information gathered by major newspaper investigations.

The researchers suggest a number of measures that can be put in place to prevent fires from happening. These include "passive" fire protection measures such as installing comprehensive lightning protection systems.

Other measures include using non-combustible hydraulic and lubricant oils and building heat barriers to protect combustible materials.  Manufacturers are also advised to avoid using combustible insulating materials and apply new monitoring systems to constantly check the condition of machinery so that maintenance work can be carried out in a timely manner.

The researchers also suggest a number of "active" fire protection measures that can be used to stop a fire before it takes hold or gets out of control.  These include smoke alarm systems inside the turbine, so that fire safety authorities can be alerted rapidly.  The team also suggests suppression systems that quickly douse the flames in water or foam.

Wind Farm Monitoring

Wind-turbine failures carry hefty claims costs so monitoring a wind turbine’s health can reduce future risks, extend its life and increase reliability.

Wind-power projects represent significant capital investments of many millions considering that a wind farm can have tens of turbines with the cost per installed turbine of $2.5 million per KWh.  So it’s no surprise that, average claims for wind-turbine failures run between $200,000 and $600,000.  With such hefty claim costs, it is important for insurers to understand the root cause of failures to reduce future risks.  To fully understand the loss-adjustment process, METROPOLITAN has been hired by insureds, investors and insurers to conduct forensic investigations of turbine failures.  The forensic investigation helps shed light on what contributes to a turbine’s overall health, and what extends its life and increases reliability.

We have participated in all phases of wind farm project development and financing, from inception to the cost of lost electricity production.  With claims carrying the large payouts cited, the companies needed an in-depth investigator to accurately settle claims. We are a good fit after identifying its independent technical capability, and its understanding of forensics and design issues.  METROPOLITAN also understands and shares similar visions with our clients for the proactive mitigation of risk through health-monitoring solutions to optimize risk management strategies.  METROPOLITAN does not just investigates and repairs or replaces parts, but gets a better understanding of what causes failures.  METROPOLITAN also offers an unbiased, objective view of the forensic investigation because we work for  all clients: insureds, insurers, investors, governments, or individuals.

METROPOLITAN believes monitoring turbine health plays a large role in managing risks and reducing the cost of failures.  Although the monitoring software is not currently considered an industry standard in wind turbines, the insurance company encourages clients to invest in it.  Monitoring turbine health lets insurers manage problems in advance rather than being caught flat-footed in response to unexpected failures.  We are looking at incentives to promote the use of health monitoring software.

The insurance company says a significant factor influencing operational performance and risk tends to be environmental conditions.  For example, the company is occasionally approached at an early stage of project development to advice on the insurance implications of turbine selection.  An assessment includes advising on the risk profile for a given turbine in a particular location.  This usually occurs when a new turbine OEM is looking to enter the market, or a project developer needs advice on the impact of the new equipment on premiums and deductibles.  The arrangement lets the insurance company examine complex technical issues and helps clients make informed decisions.

Case Study of Failure Analysis

The failure analysis of the high-strength bolt at root position of a wind turbine blade was conducted to find the cause of fracture.  Detailed investigations using several characterization techniques such as stress calculation, chemical composition test, mechanical property test, metallurgical investigation, and fractography analysis were performed to identify the cause of the bolt failure.  Based on the theoretical calculation and failure analysis, it could be concluded that the bolt failed by fatigue accelerated by stress concentration while under low temperature.  Practical suggestions were also given to avoid similar failures.

Case Study of Failure Analysis: GE Reveals Root Cause Of Recent Blade Failures

Following a thorough investigation, GE says a "spar cap manufacturing anomaly" is to blame for the recent blade breaks at the Orangeville Wind Farm in New York and Echo Wind Park in Michigan. The company has identified other customers whose turbines are subject to the anomaly and is working to perform blade replacements.  A spar cap is a key structural element within the blade that carries the bending load of the blade.

Case Study of failure analysis of a wind turbine generator step-up transformer

Transformers also fail frequently at wind farms.  Metropolitan performed an investigation into the recurring failures of pad-mounted generator step-up transformers that have been experienced by an energy firm at a wind farm in the United States.  Observations indicate that the transformer failures are typically a result of contaminated oil due to arcing within the transformer expulsion fuse tube.  To determine the underlying cause of these phenomena, Metropolitan installed digital monitoring equipment to capture electrical and thermal data at a pad-mounted generator step-up transformer over a four-month period.  Electrical data was also captured at the point of interconnect between the wind farm and the local utility.  The data captured in this time frame revealed that high-current surges and current cycling frequently occurred due to the WTG cycling on and off from the highly variable wind speeds in the area.  High-current surges and current cycling places thermo mechanical stress on the transformer and expulsion fuse links, which may ultimately lead to the types of failures experienced at this location.

The Silence of the Bats

According to citizens’ complaints, wind farms are certified bird and bat slaughterhouses, where millions are clobbered, sliced and diced every year.   Bats may be lured to their deaths at wind farms because they think turbines are trees in which they can find shelter, food and sex, according to new research.  About 600,000 bats are estimated to have been killed by wind farms in the US in 2012.  Bats may not have the cognitive ability to differentiate wind turbines or other tree-like structures from real trees either at a distance or at close range, the researchers at the USGS say.

The turbines also kill many birds, including bold eagles.  In a settlement announced Friday, Nov. 22, 2013 Duke Energy will pay $1 million for killing 14 golden eagles over the past three years at two Wyoming wind farms.  The company says it pleaded guilty to misdemeanor charges under the Migratory Bird Treaty Act.  We know that the wind farm owners are trying to develop ways of preventing the bats and birds from coming close to the turbines, including the installation of flashing lights.  Nobody wants this slaughtering to continue in the name of green energy.

INSURANCE PROGRAMS

WARRANTY INSURANCE

A wind farm must avoid the gap between property coverage and warranty coverage. A property policy does not provide warranty coverage.  A wind farm should purchase a separate warranty policy.

By way of summary, a property policy provides coverage for mechanical and electrical breakdowns, subject to the policy’s exclusions and limitations, which may include:

·         Defects or faults in material, workmanship, or design

·         Wear and tear

·         Gradual deterioration

·         Inherent vice (e.g., hidden defects in the equipment or material that cause deterioration)

·         Latent defects

·         Serial losses

Warranty policies, on the other hand, provide coverage for product defects that lead to losses. Warranty policies typically offer coverage for: five years with a “toolbox” approach; product defect, serial defect, noise, power curve, and availability; parts and labor “backstop”; self-insured retention/deductible buy-down options; and warranty and loss control.

A wind farmer can purchase an extended warranty policy from the original equipment manufacturer (OEM). OEM warranties are sold on a per-turbine, per-year basis and cover the full value of the turbine with little to no deductible. Or a wind farmer may opt to purchase a third-party warranty policy that can be wrapped around the turbine supply agreement to continue coverage supplied by the OEM. The third-party warranty product can cover additional risks or modify the risks covered in the original turbine supply agreement. The third-party warranty covers serial defect, product defect, availability, parts, and labor. Optional coverage for power curve and noise are also available and can be added by endorsement. This is usually sold in “blocks” of limits that are usable for a five-year period. The third-party warranty has an annual deductible structure.

Once a wind turbine warranty expires, the operator may decide to assume responsibility for 100 percent of the costs and losses resulting from warranty-related incidents. In other words, the operator decides to pay out-of-pocket for costs to secure the effected turbine, obtain and ship replacement parts, hire and transport the repair equipment, provide the labor for repairs, and assume lost income and production tax credits. Or an operator may rely on the property insurance to cover costs, which does not provide warranty coverage.

INSURANCE PRODUCTS TO CONSIDER

A wind farm operator should discuss the available insurance products with a broker who specializes in wind farms and has the expertise to determine which products best suit the project. The products available include:

Original equipment manufacturer warranty

Extended warranty

Wind availability insurance products

Builder’s risk

Transit/ocean cargo

Property all-risk insurance, including business interruption

Equipment breakdown

Engineering and loss control

Project performance

Supply bonds

Performance bonds

Professional liability

General and umbrella liability

Workers’ compensation

National resource damage (environmental/pollution)

Principal Coverages

Insurers provide a seamless policy for construction and operational phases. The key risks begin at the construction phase, including transit of the equipment to site, erection and testing, delay in start-up and finally operational property damage and business interruption. The provide seamless, complete cover designed to avoid any gaps or overlaps between the different phases of the project.

Material Damage

Construction and erection

This cover protects the insured, financiers, all contractors and sub-contractors and professional consultants in respect of all risks of loss, destruction or damage to the permanent or temporary works, materials, goods, plant machinery and equipment used in connection with the design, construction, erection, commissioning and testing of the project.

Property

This cover indemnifies the insured and financiers against all risks of loss, destruction or damage to the property and other assets owned by or the responsibility of the insured.

Property forms do not provide warranty coverage and can be ambiguous with exclusions or limitations so losses are subject to underwriter’s acceptance or left for attorneys to litigate. There are too many “gray areas” that leave projects exposed and put lenders and investors at risk.

Property forms provide coverage for the peril of mechanical and electrical breakdown if the failure is sudden and accidental and subject to exclusions & limitations:

Defects or faults in material, workmanship, or design:

Example - your blades are cracking due to faulty materials or your bolts are not fastened properly during construction and nacelle falls off tower. COVERAGE IS EXCLUDED UNDER A PROPERTY POLICY!!

Wear and Tear:

Example - Your cable brackets are failing due to a repetitive movement over a long period of time and the cables are splitting and arcing. COVERAGE IS EXCLUDED UNDER A PROPERTY POLICY

Gradual Deterioration:

Example - Your bearings are grinding over a long period of time which causes your gearboxes to fail. COVERAGE IS EXCLUDED UNDER A PROPERTY POLICY

Inherent Vice:

Example - There are hidden defects in the equipment or materials that cause deterioration and / or damage. COVERAGE IS EXCLUDED UNDER A PROPERTY POLICY

Latent Defects:

Example – There are hidden defects in material and/or workmanship not discoverable through general inspection. COVERAGE IS EXCLUDED UNDER A PROPERTY POLICY

Serial Losses:

Example – Development of a defect in equipment indemnity would be: 1st item 100%; 2nd item 75%; 3rd item 50%; 4th item 25%; subsequent 0%. COVERAGE IS LIMITED UNDER A PROPERTY POLICY

Warranties have a positive impact on insurance premiums as they indemnify the equipment system owner in the event a product defect that leads to losses. This was the experience of several wind turbine manufacturers during the early 1990s that were unable to maintain adequate quality controls during a period of very high demand.  Examples of massive recalls involved the NEG Micon gearboxes and the Suzlon wind blades; not to mention many others.

Financial

Advance Loss Of Profits

This section of the cover protects the insured and financiers against additional costs, expenses, finance charges and loss of anticipated income following delays in completion as a result of loss, destruction or damage to property insured under the Construction and Transit cover.

Business Interruption

Business Interruption indemnifies the insureds and financiers against additional costs, expenses, finance charges and loss of income following interruption to the insured business as a result of loss, destruction or damage to property insured under the Property cover.

Legal liability

Public and Products Liability

This cover indemnifies the insured and financiers (and where appropriate all contractors, sub-contractors and professional consultants) against all sums for which they may become legally liable (including claimants’ costs and expenses) in respect of:

Death or bodily injury to or disease contracted by any person

Loss of or damage to property

Interference to property or the enjoyment of use by obstruction, trespass, loss of amenities, nuisance or any like cause; arising out of the insured projects and operations

Additional covers

In addition to the cover shown above, there are a number of other important insurance products available including:

Construction plant and equipment

It is possible to extend the project insurance program to include loss, destruction or damage to construction plant and equipment, tools, personal effects of employees and temporary buildings and contents used during the project. Such items are normally the responsibility of the contractor and are either owned by him or hired in specifically to undertake the project work.

Marine transit

Marine transit insurance protects the insured and financiers against all risks of physical loss, destruction or damage to materials, goods, plant and equipment intended for use in connection with the project whilst in ocean or land transit (including temporary off-site storage) within agreed territorial limits. Transits are often for parts manufactured globally that are transported and assembled locally. The cover is in force from the time the goods leave the manufacturer’s premises until the time of arrival at the project site, including any storage during the normal course of transit. If any intentional storage coverage is required, this can be accommodated subject to material information being supplied. The policy is normally designed to dovetail with the Construction Insurance to ensure that there are no gaps in cover during the transit operations.

Financial

Marine consequential loss

If Marine transit coverage is required, it would be necessary to combine it with cover for delay in start-up (DSU) against additional costs, expenses, finance charges and loss of anticipated income following delay in completion as a result of loss, destruction or damage to items during transit. An indemnity period representing the maximum probable delay to the EPC Contract as a result of damage to or loss of such items will need to be selected. With the increasing role of project finance, this coverage is particularly important for banks.

Legal Liability

Professional indemnity

Contractors and consultants normally fulfil the requirement for Professional Indemnity insurance protection by way of annual renewable insurance programs. Although there are alternative ways of procuring this cover, such as within a project specific program covering all parties with a design responsibility, we would not recommend this approach Rather, we advise to utilize the existing insurances of the contractor and consultants, but require them to effect an agreed level of Professional Indemnity cover and maintain it for a specified period.

Employer’s liability and workmen’s compensation

Most owners and operators will need this insurance to cover the workforce who maintains the turbines. There are particular risks here relating to employees working at height and the obvious risks of maintaining offshore facilities.

Key risks

We have identified the following key risk areas that you will need to consider as part of your wind energy program:

Start-up delays

Delay to the scheduled date of commencement as a result of damage to equipment while in transit or installation damage.

Construction site access

Developments in remote or mountainous areas require careful preparation of roadways. For example, we can assess gradients and access routes to prevent accidents and delays during delivery of nacelles and blades.

Cable laying

The method and preparation for laying cable around turbines and to substations will influence the cost and the level of cover required. Most cables are laid underground in well prepared trenches.

Wind force disruption

During the construction phase and also repair work, the impact of high wind conditions requires careful evaluation. Clients need to ensure that they adhere to the specific regulations relating to the use of cranes during high winds.

Lightning damage

This is the most common exposure for operating turbines. We require proof that blades and towers have good quality lightning protection. Working with a major blade supplier, our team has measured and quantified blade strikes, helping to develop strategies that mitigate damage levels.

Natural catastrophe

When tailoring protection, a thorough evaluation of the local topography is needed. CNA Europe’s experience is supplemented by studies of complex earthquake activity worldwide. This enables us to produce comprehensive loss assessments and post-loss procedures to help wind farm clients minimize expected loss cost and therefore premiums.

Ground and soil conditions

Knowledge of the soil and geological surveys is a requisite for insurers when evaluating the risks associated with piling for tower constructions or laying cable.

Technology

Whereas cover for machinery breakdown is standard, series type losses are often excluded (i.e. identical failures on multiple units). Proposed turbines with limited operating experience may be considered as prototype. As a result, cover can be restricted, affecting a project’s creditability and stakeholder investment. For risk transfer, CNA Europe can help project owners demonstrate both to investors and the markets that there is a robust risk management strategy in place. We also assist developers review manufacturers’ guarantees, sourcing cover to complement and avoid gaps in protection.

Substations and power delivery

Time element losses from the malfunction of the wind farm or substation down-time can become disproportionately high. We work with our clients to reduce loss potential by analyzing transformer and generator down time and the replacement of parts. This research is already delivering beneficial and cost-effective solutions.

The aim is to provide a holistic approach to the wind energy sector by combining multiple lines of coverage within a single offering. We understand the complexities of new and emerging technology and aim to provide tailor-made structures to support the insurance needs of our wind energy clients.

Due Diligence for Wind Energy Projects

Project developers, financial institutions, investors in or purchasers of a wind technology company, turbine manufacturers – all stakeholders have a vested interest in a technical due diligence review of a specific wind turbine model.  METROPOLITAN brings extensive expertise and experience to bear in providing a wide variety of turbine consulting services, the nature of which is customized to a specific client’s needs.

Clients call on these services for a variety of reasons.  Some require an overview of the turbine market to help them decide which turbine models to include in their wind farm development plans; others want to purchase turbines for a specific project.  There are also clients that are planning the acquisition or financing of a wind farm project, or thinking of taking over a turbine manufacturer.  Whatever the client’s motive, and this list is not definitive, the main aim of the turbine consulting work is to provide an overview of the technical risks associated with the technology and/or the business transaction in question as well as an understanding of the possible mitigation measures.

METROPOLITAN’s turbine consulting service is made up of three basic elements.  The first is a wind turbine market overview, including a review of a particular manufacturer's market share and of specific turbine models available worldwide or by region.  This is usually supported by a turbine manufacturer overview with comments on the manufacturer’s capability to manufacture, install and service wind turbines compared to industry standards, previous performance and willingness to support products.  Finally, a more detailed technical review covers comments on the turbine technology compared to industry standards, detailed component discussion, turbine design verification status according to IEC standards or the like, previous performance, a technical risk summary and classification of the turbine model as proven or unproven technology according to pre-determined criteria.  If a specific project site is identified, METROPOLITAN can also comment on the suitability of a specific turbine model for installation on that site.

Reviews of the terms and conditions associated with the same turbines, or operational warranties associated with performance, are typically provided as part of a due diligence study, but can also be performed as part of a turbine review.

Construction Oversight

METROPOLITAN provides an objective analysis of a project's progress.

An independent analysis of what progress has been made in construction of a renewable energy project is vital – not only to check if work is going to schedule but also to verify the validity of requests for payment from the construction company or sub-suppliers. METROPOLITAN provides a third-party construction monitoring service that puts clients in the picture when it comes to a project’s progress.

The main aims of construction monitoring are to: review progress of construction work against the project schedule, identify possible delays or cost variances, review quality of work undertaken, verify milestone completion and certify progress payments. 

Generally speaking, construction monitoring is conducted through periodic visits to the construction site, usually on a monthly basis.  More intensive monitoring may be required during periods such as foundation construction or project completion.  Clients may also request visits to other locations such as manufacturing plants or ports to verify the availability or delivery of components or equipment.

Construction monitoring typically involves provision of regular reports summarizing the findings of inspections and reviews and certification of main contract costs or project milestones.  The construction-monitoring client will typically be an organization financing a project or the owner of a wind farm under construction.  In the latter case, the service is normally part of a project due diligence.  METROPOLITAN has performed construction monitoring for a wide variety of clients, in many locations around the world and can support new markets as they develop. 

 

Interconnection of Wind Farm Components

METROPOLITAN offers a holistic solution for interconnection based on a detailed understanding of each required element.

The electrical design of a windfarm is a critical element in delivering electrical power to the grid resulting in revenue for the project.  METROPOLITAN can offer investors and lenders detailed assessments on all the electrical aspects of an onshore wind farm based upon extensive experience and expertise.  Our engineers would typically undertake assessments on projects including:

·            Suitability of the grid connection

·            Review of technical aspects of connection agreement and any power purchase agreement

·            Grid code review

·            Wind farm electrical design assessment of the electrical plant

·            Electrical Loss Assessments

·            Technical review of equipment contracts

·            Electrical aspects of turbine selection

The scope and nature of the work depends on the development stage of the project, from concept through consent and development through to operation.  Interconnection can be offered as part of a package or be electrical specific.

Failure investigation and root cause failure analysis

Premature wear and failure of wind turbine components is widespread.  The root cause of failures must be completely understood in order to take appropriate corrective action.  Our engineering expertise, processes, and knowledge help to uncover root causes and assist operators in making the right decisions to optimize project operations.  We have conducted, and provided independent review of, failure investigations ranging from full turbine collapse to detailed inspection of internal gearbox components.

Careful and thorough observations lead to evidence, and knowledge and experience lead to insight.  We combine our skills at gathering evidence with our engineering insight to diagnose failures and recommend appropriate corrective actions.  We work with owners, operators, and equipment manufacturers to determine failure mechanisms, assess the probability of recurrence of the failure and associated risk exposure, and to develop efficient and effective corrective action.

Our failure investigation services include:

·       On-site inspection

·       Laboratory analysis, including chemical analysis and metallography

·       Mechanical testing, including loads and vibration measurement

·       Data analysis, including statistical analysis

 

Inspections and audits

METROPOLITAN provides independent assessment services at all stages of the project lifecycle.

Whenever a wind turbine and its components are inspected – at any stage from fabrication to periodic monitoring on site or investigation of damage – the key benefit for project developers, wind farm owners or investors is the objectivity of an independent evaluation and the information the inspection report reveals. METROPOLITAN employs highly qualified inspectors with all the wind turbine expertise and experience to put clients in the picture.

Inspections may be carried out at almost any stage in a project lifecycle.  At a vendor’s premises equipment can be inspected during or after fabrication, as it leaves the premises or on delivery to a wind farm site.  A number of inspections are commonly performed on construction completion or during the operation of a wind farm, e.g. rotor, nacelle, tower, foundation and electrical system. Here, the main focus is on safety and structural integrity. Other inspections may include offline condition monitoring (vibration measurements), evaluation of lightning protection measures, an oil analysis or video endoscopy.

Periodic monitoring of all the turbines at a wind farm is recommended every two or four years. This provides a client with a thorough review of each turbine’s technical condition – information that can be useful in improving performance or obtaining an independent opinion of a turbine’s condition prior to a key commercial milestone (e.g. end of warranty of period). Inspections may also be necessary to fulfill regulatory or insurance requirements. 

If something goes wrong, a damage investigation can be most helpful in identifying the extent and type of the damage incurred and, crucially, in determining the root cause of the problem.  

An independent damage investigation report is important in finding a technical remedy to the problem, establishing responsibility for funding any repair work and putting in an insurance claim. These investigations may also be crucial in preventing further damage to other existing turbines.

End-of-warranty inspections

A large number of wind turbines will have their warranty expiring soon.  METROPOLITAN's hands-on approach helps owners and operators obtain an independent assessment of the condition of the wind turbines at end of warranty or in conjunction with extended service contract negotiations.  This information has proved vital to inform business and contract discussions.

We conduct end-of-warranty inspections for wind project owners to assess the condition of their wind turbine equipment prior to the expiration of warranties or in conjunction with extended-service contract negotiations.

Our investigations include overall visual inspections and can include specialized assessments such as:

·            Gearbox videoscope inspection

·            Drive-train vibration analysis

·            Detailed blade inspection and imaging

·            Oil and grease analysis

·            Corrosion assessment

·            Operational record analysis

·            SCADA data analysis

·            Safety analysis

·            Arc flash hazard analysis

Setting the industry standard through detailed engineering analysis and correlation of assessment data, our comprehensive, independent reports maximize customer return on investment in the assessment.

In the event of warranty claims, we provide follow-up assessments to assist project owners track warranty remediation.

Vendor inspection

METROPOLITAN offers a flexible inspection service based on client needs. This includes inspection of complete structures or individual components.

METROPOLITAN can perform inspection of equipment at Vendor's facilities.  The inspected equipment may be complete wind turbines but are commonly major components including blades, gearboxes and towers.  METROPOLITAN employs inspectors located in all areas of the world with major turbine and component manufacturing activities.  This includes Europe, Asia and the Americas.

The level of inspection varies, depending on the Client's requirements, and ranges from detailed quality inspection to more general work for expediting or payment certification purposes.  METROPOLITAN provides Vendor Inspection services to Purchasers, Lenders, Insurers and Investors and, in some cases, to turbine manufacturers for independent verification purposes.

 

Performance & condition assessment

METROPOLITAN provides advice to boost a wind farm’s bottom line.

Wind farm owners, operators and lenders naturally want to know how their asset is performing – and how to maintain and optimize its performance.  METROPOLITAN provides the answers by periodically assessing the performance and condition of a wind farm’s turbines in terms of availability, key performance metrics, power curve and wind speed against budgeted levels or expected trends. Through interpreting and validating the results of power curve and availability warranty tests METROPOLITAN can also help turbine manufacturers meet the performance obligations set out in the turbine supply agreement.

The monitoring service METROPOLITAN provides includes a review of operating reports and other relevant information to reveal potential issues, and an in-depth analysis of the high-resolution SCADA data to identify and investigate specific phenomena such as underperformance or turbine malfunction. Specialist tools and processes are used to qualify and quantify any production losses and identify the root cause of a fault. METROPOLITAN can then advise the asset manager on remedial solutions, including on-site guidance.

Operational wind farm databases are compiled to establish availability and performance trends and to get a clearer picture of any long-term risks. An objective assessment of production, performance, reliability and availability statistics allows an asset manager to benchmark the asset’s performance against the industry standard. This facilitates the process of optimizing performance, minimizing downtime and efficiently planning maintenance and spare part supply planning.

METROPOLITAN offers the following specific services:

·       SCADA data management and archiving

·       Wind farm performance and condition trend analysis

·       Fault analysis and diagnostics

·       Reliability, MTBF and availability benchmarking

·       Warranty and liquidated damages calculations

·       Analysis in preparation for end-of-warranty or periodic inspections

·       Root cause failure analyses and remediation support

We are actively researching new applications for condition monitoring and we are a regular contributor to organization’s developing industry best practices.

 

Due diligence services

METROPOLITAN's due diligence experts have advised on more global wind farm development than any other company.

Understanding the risks and mitigation measures associated with the wind industry is vital for lenders and investors in wind farms. METROPOLITAN has unrivalled experience and expertise in providing independent assessments for lenders and investors in renewable energy projects and has acted in this capacity for more operational wind farms than any other company.

METROPOLITAN has been supporting investors in wind farms for nearly three decades. The detailed technical understanding of its experts provides a solid basis for informing intelligent decisions, regardless of the scale of the project or investment or the lifecycle stage.

Project/portfolio due diligence

METROPOLITAN provides a solid underpinning of transactions based on years of experience.

Construction loan financing, conversion of construction loans to term loans, financing and refinancing of existing projects, equipment investment, portfolio debt and equity investment, mergers and acquisitions: the wind industry is heavily dependent on the financial community. Without financial support from banks or investors, very few wind farm projects would ever be implemented.

The financial community, for its part, is dependent on independent assessments of the potential risks involved in wind farm projects. By identifying potential risks and demonstrating ways of mitigating them, independent engineering consultants can help a bank or investor to assess the commercial viability of a project’s finance targets.

METROPOLITAN’s project and portfolio due diligence service covers all of the technical aspects of a wind farm project. Acting as an independent engineer or client’s technical adviser, METROPOLITAN brings extensive expertise and experience to bear in identifying potential areas of risk, searching for possible means of technical and commercial mitigation, and working with the finance targets to agree on the implementation of acceptable mitigations. In this way, the financial community benefits from materially improved targets and reduced risk.

METROPOLITAN reviews all project-related reports, contracts, technical specifications and financial models as well as the detailed design of certain features, for example the turbine, turbine foundation and electrical network. Normally, due diligence will be concluded by a report identifying potential risks and offering suggestions for possible mitigations actions. If required, construction progress can also be monitored and drawdown certification prepared.

Company due diligence

METROPOLITAN provides solid advice to inform smart investment decisions.

Technical due diligence is a vital prerequisite for an informed decision on whether to acquire or invest in all or part of a company. METROPOLITAN has the experience and expertise required to perform technical due diligence on a wide range of companies in the renewable energy field. This provides clients with the information they need to take a sound decision on whether or not to invest, as well as assess what price to pay.

The companies for which METROPOLITAN has the necessary technical due diligence skills are primarily technology designers and manufacturers (e.g. turbine manufacturers), sub-suppliers (e.g. blade manufacturers) and developers or owners of renewable energy projects. Work for companies in the latter category is usually similar to that performed on project due diligence.

The methods used and the scope of the work will naturally depend on the client’s brief. Generally speaking, technical due diligence may include a market study, background information on the target company and its market position, technology and technological capability review (design team, etc.), intellectual property review, analysis of competitors, facility review and SWOT analysis.

Mechanical & structural design

METROPOLITAN offers a range of mechanical and structural design services for wind turbine components from concept, through analysis, to preparation of design documentation, specifications and certification-friendly deliverables.

METROPOLITAN experts operate at the leading edge of developments in the strength analysis of complex structural components which involve bearings, gears and bolts. They are able to analyse all major components including rotor hubs, nacelle mainframes, shafts and towers. For offshore structures, this includes foundations and substation platforms. Analysis is conducted using rigorous yet rapid methods that are well adapted to the design and development process.

Typical activities result in the design and /or specification of the systems and components below. The output includes 3D CAD drawings, technical specifications and finite element modelling of components to provide strength calculations:

·                     Blade specification

·                     Hub

·                     Pitch mechanical system specification

·                     Main bearing system specification (including housings)

·                     Main shaft

·                     Main frame including auxiliary frame

·                     Gearbox specification, including main shaft coupling

·                     High speed shaft and mechanical brake specification

·                     Hydraulic system specification

·                     Yaw system specification

·                     Tower with foundation insert

·                     Rotor lock specification.

Control system design

METROPOLITAN is the industry leader for the design of classical and multivariable control algorithms which alleviate turbine structural loads and optimize energy capture.

METROPOLITAN’s turbine simulation and analysis experience helps to provide its clients with control solutions that are both underpinned with a unique understanding of up-to-date technology, and integrated into the overall turbine design process. The algorithm designs it develops maximise energy capture and tailor the dynamic response of the turbine structure in order to reduce rotor, drive train and tower fatigue loading. All controller algorithms are delivered with ‘certification ready’ algorithm design documentation.

Implementation services include provision of fully functional turbine controllers which run on either PLC or industrial PC platforms, and deliver a range of field bus protocols and low level I/O hardware options. The implementation of prototype controllers is conducted in close collaboration with clients, and includes significant technology transfer and training wherever appropriate, so that the client is able to take the controller into series production following commissioning and verification of the prototype. Specification documents that cover the entire implementation process, including hardware processing, comms and I/O, HMI & SCADA interfaces, supervisory control states and alarm logic are always provided.

Performance & load calculations

METROPOLITAN delivers effective performance and load calculations to mitigate adverse loads, optimise design and meet certification requirements.

Using Bladed, the industry standard package developed in house over many years, METROPOLITAN carries out comprehensive analysis of wind turbine performance and loading.

METROPOLITAN provides a robust and reliable performance and load calculation service based on in-depth knowledge of all relevant design standard and certification rules.

Blade aerodynamic design

METROPOLITAN offers advanced aerodynamic design to optimise overall turbine design.

METROPOLITAN has many years experience of establishing blade aerodynamic designs for maximum energy yield across a broad range of turbine concepts and sizes.

Our service delivers clients with a considered aerodynamic design solution that also integrates controller algorithm optimisation, load calculation and cost of energy optimisation.

Design is tailored to accommodate client-specific requirements so that individual goals and constraints are addressed. The design process takes into consideration client requirements related to the following areas:

·       Maximum chord length

·       Radial position of the maximum chord length

·       Maximum twist of the blade

·       Preferences for aerofoils

·       Structural loading and dynamics

·       Maximum deflection

·       Absolute or relative thickness distribution

Proposed design solutions are always subject to detailed sensitivity analysis in order to ensure their robustness.

 Concept Design

METROPOLITAN offers advanced design which includes delivery of 3D CAD models.

METROPOLITAN’s turbine design experts are highly experienced at assisting clients through the Concept Design phase. They will help to establish a clients main design requirements, key parameter values (rotor diameter, hub height, rated power etc), and overall layout of a turbine and, where possible, they will also select major component sizes and ratings and, in certain key areas, the actual component supplier and model.

The output of the concept design phase includes a turbine concept layout in CAD form, as well as all the necessary information required for the following Preliminary Design phase.

The concept design process typically commences with a kick-off meeting to formalise the concept requirements. Development of the control and safety concept is followed by the creation of a preliminary Bladed model of the wind turbine which establishes baseline loading information for selection of critical components. The concept is then developed by considering the system layout and reviewing the availability and capability of key design driving components. A Concept Design Specification document is prepared which typically includes:

·       Basic design parameters

·       Required design standard, certification rules and wind class

·       Definition of control and safety concept

·       Bladed model and baseline loads

·       Key component and sub-system selection and definition

·       Power train arrangement

·       Layout and general outline of all major structures and bearings

·       Dimensions and mass estimates of major components

·       CAD model of design concept.

Metropolitan Engineering, Consulting & Forensics (MECF)

Providing Competent, Expert and Objective Investigative Engineering and Consulting Services

P.O. Box 520

Tenafly, NJ 07670-0520

Tel.: (973) 897-8162

Fax: (973) 810-0440

E-mail: metroforensics@gmail.com

Web pages: https://sites.google.com/site/metropolitanforensics/

https://sites.google.com/site/metropolitanenvironmental/

https://sites.google.com/site/metroforensics3/

http://metroforensics.blogspot.com/

We are happy to announce the launch of our twitter account. Please make sure to follow us at @MetropForensics or @metroforensics1

Metropolitan appreciates your business.

Feel free to recommend our services to your friends and colleagues.

To unsubscribe from future technical blogs and announcements, please reply to this email with the word “unsubscribe” in the subject line.