WWEA bulletin issue 3

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From The Editor

W

elcome to the third edition of WWEA's Quarterly Bulletin!

This edition has a special focus on the outcomes of the 11th World

Wind Energy Conference which took place at beginning of July in Bonn. 500 participants from more than 40 countries on all continents gather together to discuss in particular the main theme of the conference "Community Power -

Citizens' Power".

- The WWEC2012 Resolution was adopted by the conference delegates and identified the main

points of discussion, the main barriers for community power and recommends which action to take in order to implement more such approaches. - A group of WWEC2012 summarized the outcomes of the WWEC2012 from their viewpoint and has developed very interesting proposals. - During the IRENA workshop, the main focus was on wind power costs and on business models, in particular related to wind power in developing countries. - The World Wind Energy Award 2012 went to the Hepburn Community Wind Farm, the first of its kind on the Australian continent. - The US wind markets has been suffering since long time from the insecurity regarding future support schemes. This situation has also a very detrimental impact on community wind farms which so far represent only a rather small share of the installed wind capacity in the USA. - The Hepburn Community Wind Farm in Australia has become a pilot project for many similar projects on the continent. - Also in Japan, pioneer projects play a very important role in the dissemination of community wind and renewable energy in general. Especially after the Fukushima accident a new social movement can be observed, strongly opposing nuclear energy and supporting renewable energy. - Finally, another article reflects the importance of operation & maintenance, in particular related to the cost structure of wind power. Again I wish that this new edition of the WWEA Quarterly Bulletin may be interesting for you to read and also useful for your work! With best wishes Stefan Gs채nger Secretary General of WWEA

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Contents ISSUE 3 September 2012

Published by World Wind Energy Association (WWEA) Produced by Chinese Wind Energy Association (CWEA)

Editorial Committee Editor-in-Chief: Stefan Gsänger Associate Editor-in-Chief: Shi Pengfei     Paul Gipe     Jami Hossain Editors: Frank Rehmet Yu Guiyong Visual Design: Jing Ying

Contact

01  From the Editor

News Analysis 04  WWEC2012 CONFERENCE RESOLUTION 06  WWEC2012: A BIRD’S - EYE VIEW OF    COMMUNITY RENEWABLE ENERGY ACROSS

Frank Rehmet

THE WORLD

fr@wwindea.org

12  IRENA’S SIDE-EVENT AT THE WWEC2012:

Tel. +49-228-369 40-80

WIND POWER ECONOMICS AND BUSINESS

Fax +49-228-369 40-84

MODELS

WWEA Head Office

16  WORLD WIND ENERGY AWARD 2012 GOES

Charles-de-Gaulle-Str. 5, 53113 Bonn, Germany

TO THE HEPBURN COMMUNITY WIND FARM

A detailed supplier listing and

IN AUSTRALIA

other information can be found at

Regional Focus

www.wwindea.org

18  COMMUNITY WIND IN THE UNITED STATES

Yu Guiyong yugy@cwea.org.cn Tel. +86-10-5979 6665

22  COMMUNITY WIND: THE AUSTRALIAN CONTEXT 26  ENERGY POLICY REFORM AND COMMUNITY    POWER IN JAPAN

Fax +86-10-6422 8215

O&M

CWEA Secretariat

30  WWEA BACKGROUND PAPER: OPERATIONS

28 N. 3rd Ring Road E., Beijing, P. R. China

AND MAINTENANCE FOR ONSHORE WIND

A detailed supplier listing and

ENERGY SYSTEMS

other information can be found at www.cwea.org.cn

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News Analysis

ISSUE 3 September 2012

WWEC2012 CONFERENCE RESOLUTION 11th WORLD WIND ENERGY CONFERENCE “COMMUNITY POWER – CITIZENS’ POWER” BONN, Germany, 3-5 JULY 2012

T

he World Wind Energy Association and the German Wind Energy Association welcome the presence of those 500 participants from 45 countries attending this conference, from wind and all other renewable energy technologies. The conference took place at a time which has brought “Energiewende” – the

transformation of the energy system towards renewable energy – on the top of the

political agenda and in the focus of public attention.

The conference covered all aspects of wind utilisation, related policies, manufacturing,

development, operation as well as economic and social issues, with a special focus on how to involve citizens in renewable energy and mobilise them as active beneficiaries.

The conference underlines that the “Energiewende” has actually started on the community

level more than two decades ago, in countries such as Denmark or Germany.

The conference appreciates the support of the governments and governmental organisations,

especially of the City of Bonn, the Government of North Rhine-Westphalia including the Ministries for Climate Protection, Environment, Agriculture, Nature Conservation and Consumer Protection, as well as for Federal Affairs, Europe and the Media, the German Federal Ministry for the

Environment, Nature Conservation & Nuclear Safety, the German Federal Ministry for Economic Cooperation and Development, the European Union, GIZ, the Foundation for International

Dialogue of the Savings Bank in Bonn, the International Renewable Energy Alliance, REN21 and all organisations and individuals enhancing the Conference. 4


ISSUE 3 September 2012

News Analysis

The conference welcomes in particular the strong commitment and important contributions of the International

Renewable Energy Agency IRENA to the event.

The conference applauds the scientifically substantiated statements made that a 100 % renewable energy supply can

be reached worldwide in the foreseeable future, and specifically welcomes the decision by the German state of RhinelandPalatinate to achieve a 100 % renewable electricity supply by the year 2020.

The Conference appreciates that the Hepburn Community Wind Farm (Victoria, Australia) and its initiators have been

awarded with the World Wind Energy Award 2012 for establishing the first and groundbreaking community initiative in Australia that led to a community owned wind farm, an excellent answer in particular in order to increase social understanding, distribution of benefits and acceptance of wind power.

The Conference urges especially the German Government and the European Union to continue the successful policy

frameworks like in particular the feed-in legislation and to develop a comprehensive long-term strategy that includes

community power and local integration of renewable energies as key components. Recent decisions have lead to uncertainty amongst potential investors, and may have detrimental impact especially on community based investments.

The Conference welcomes that the concept of Community Power receives more and more common support worldwide,

as also reflected in the very broad participation in this conference, by communities from all over the world. The conference

encourages communities around the world to become renewable energy champions by harvesting the renewable energies in their environment. Governments are called upon to support these communities with dedicated policies.

The conference recognises that training and education have to be key elements of a strategy that aims at mainstreaming

community power.

In addition the Conference supports the following objectives, policies and actions to:

1. remove gradually all subsidies and introduce the internalisation of all externalities to achieve a level playing field; 2. pursue compensatory regulatory frameworks such as sufficient and effective feed-in tariffs that encourage

renewable energy developments until this is achieved, and that provide sufficient financial security to promote long-term investment, especially for smaller and community based investors;

3. focus on the integration of wind power into existing power systems also on the local and community level, create

smart grids and enhance decentralised synergies between the various renewable energy solutions in order to achieve an integrated 100 % renewable energy supply in the foreseeable future;

4. intensify the close cooperation with IRENA on the implementation of its work programme and contribute to its

further refinement;

5. raise the political and social awareness on all levels of society and in particular amongst local communities and

enable them to obtain access to the necessary knowledge and technologies;

6. create a stronger focus on community power in existing governmental, international, education, research and

financial institutions;

7. reduce overall costs for energy supply by an increasing share of renewable energy power and by a stronger focus

on least-cost decentralised options for 100 % renewable energy;

8. develop and expand national, regional and international financing mechanisms for renewable energy, especially

making use of funds provided as part of the international climate change negotiations, and ensure that the Global Green Climate Fund gives priority to renewable energy and community based projects;

9. support communities especially in developing countries in obtaining easier access to technology and finance;

10. encourage all wind energy stakeholders to participate in the next World Wind Energy Conference which will be

held in Havana, Cuba, 3 to 5 June 2013.

Bonn, 5 July 2012 5


News Analysis

ISSUE 3 September 2012

WWEC2012 A BIRD’S - EYE VIEW OF COMMUNITY RENEWABLE ENERGY ACROSS THE WORLD ■ Anna Harnmeijer / SCENE, Scotland ■ Judith Lipp / TREC, Canada ■ Holle Linnea Wlokas / Energy Research Centre, South Africa ■ Jarra Hicks / Community Power Agency, Australia ■ Tore Wizelius / Vindform AB, Sweden ■ Hans Soerensen / Spok ApS Consult, Denmark

T

he World Wind Energy

energy sector is broadly on the rise, with

an impressive blend of

state of community power. In many countries,

Conference 2012 in

Bonn brought together

organizations and people, with

presentation topics ranging from futuristic wind machines to wind development at

extreme altitudes. The focus and presentations on community power suggested that support and investment in the community renewable 6

representatives from no less than twenty one countries across the world presenting on the

these organizations are still relatively isolated in their mission to make the community

renewable energy sector a significant player in local and national energy markets. There was

therefore a sense of surprise that this is indeed a worldwide movement; that one could find


News Analysis

ISSUE 3 September 2012

and exchange experiences with organizations

energy sector (Germany, Denmark, Sweden).

of the world.

resistance from existing institutional and

that share this mission and implement virtually analogous solutions operating at the other side The community power sector adopts a

colourful array of legal and project finance

models both within and between countries, making creative use of country-specific

institutional forms, capital sources and tax

regulations to provide local communities, local government and interest groups with a stake in electricity generation. A case in point is

the Yansa Group (Mexico) directed by Sergio Oceransky, who negotiates subordinate debt

and bank loans for investment in a subsidiary owned by the Yansa Ixtepec Community 1

Interest Company . Profits remaining after

debt servicing are divided on a 50 percent

basis between local social community-based development, and the promotion of further

wind farm projects under the same scheme in other communities2. The foundation advises

the communities on the use of earnings from wind energy sales, with a view to empower

the community to build-up long-term assets that remain after the end of the project.

In the prior, community organizations involved in wind developments tend to face broad

governance frameworks, and must overcome issues such as public anti-wind sentiment,

wind veto’s at all levels of government and

disproportionate planning and EIA legislation (see presentations by Meunsterman, Lane,

Lipp and Daniels 5,6,7,8). With set-backs of 2km,

Australian wind energy policy was shown to be the most hostile environment for community wind development on all counts, underlining the significance of the work carried out by

Embark, Hepburn Wind and the Community Power Agency.

Recent policy changes in Spain and the

USA have caused a slump in world demand for turbines and show how dependent the wind

sector is on a favourable political framework. As demonstrated by Hans Soerensen’s

observations on the effects of changes in Danish ownership regulations in 1995 (and again

in 2008), the community sector is especially

vulnerable to policy changes associated with

wind development9. One can clearly distinguish

Similar schemes are brokered by Just Energy

an axis of evolution for the community power

most commonly implemented association is

game changers such as the Fukushima disaster.

(South Africa) and Sustainable Community 3,4

Energy Network (UK) . On the whole, the

undoubtedly the co-operative, used to channel revenues to mutually defined social, economic and cultural benefits. However, the legal

definition of co-operatives varies per country and in some countries community interest companies or charitable private limited companies fulfil equivalent roles.

The maturity of the community power

sector varies per country, ranging from being a seemingly politically contentious form of activism (Canada, Australia, USA) to being

a serious and widely accepted player in the

sector, framed and shaped by not only the

political and financial landscape, but also by

While unique pilot renewable energy projects

existed in Japan prior to Fukushima, the nuclear disaster has spurred dozens of community power initiatives10.

The degree to which communities

collaborate with local municipalities, local

energy companies, and developers as long-term partners in joint ventures to split capital costs and revenues varies on a case by case basis.

However, pioneer organizations have tended to copy - paste tested models which has in

several countries resulted in the existence of ‘a 7


News Analysis

ISSUE 3 September 2012

predominant business model’ for community-

In the UK, after a decade in which the private

wind developments is a fully community-owned

and communities are gradually on the rise19.

based projects. In Sweden for instance, the

predominant business model for community consumer co-operative, spurred by a policy

that provides consumer co-ops with 100% tax 11

returns . Germany has experimented with a

wide range of business models in which local

government often has a more prominent role, while public organizations have generally not

engaged in joint ventures with communities in Scotland. The correlation between ownership

and public acceptance for wind power appears to apply across the globe, and it is not unlikely that a vibrant community-based wind power

sector is a prerequisite for high levels of wind power penetration

12,13,14,15,16,17,18

.

Communities seem to enjoy a love-hate

relationship with commercial wind developers.

8

sector has dominated the wind sector, joint ventures between commercial developers

Community organizations located far from

manufacturing hubs, such as those in Canada and the USA appear to be experiencing a

degree of supply chain dependence: they are dependent on the existence of a commercial

sector for supply of small requisitions of small to medium-scale turbines20.

The challenges of securing local benefits

from commercial wind ventures were

particularly prominent in Holle Wlokas’ presentation on the interface between

local communities and private sector wind

development in South Africa21. Commercial developers bidding in the South African

Independent Power Producer Procurement


News Analysis

ISSUE 3 September 2012

Programme (IPPPP) are evaluated against

There little guidance for developers in

criteria for local content (for instance, local

communities are set to be eligible for multiple

their contribution to economic development

(30%) as well as against price (70%). Next to manufacturing) and job creation, developers are also obliged to commit between 1.5% to 2.1% of their total revenue towards socioeconomic and enterprise development in

communities within 40km radius around the

project site. To the envy of our North American and British counterparts, renewable energy

project developers in South Africa are required to prepare a socio-economic development plan in which they assess the needs of communities surrounding the proposed project site and develop strategies to address these needs.

While this all sounds like a good idea and an opportunity for livelihood improvement, in practice it brings with it several problems.

earmarking funds for achieving local

benefits, nor in demonstrating impacts. Some

benefit obligations, while others are eligible for none, such that there is potential for conflict

as well as migration to more favourable wind areas (‘wind nomads’).

We have learnt much, and there is no

doubt that WWEC2012 was a massive success.

It is interesting though, that there were broadly two streams of people at this conference

which by and large did not converse. The

first were the engineers, project developers,

manufacturers and industry representatives,

the second the social scientists, not-for-profits,

umbrella groups and community organizations. Less than a handful of people seemed to be

active in both these streams; a couple of strays,

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News Analysis

ISSUE 3 September 2012

some academics and project developers such as Ostwind with a strong emphasis on civil

participation. Our hope for WWEC2013 is that

these two streams begin to take interest in each other’s issues and engage in serious dialogue. Here we come Cuba. References

1. Oceransky S. (2012). Yansa’s Ixtepec Community Wind Farm in Mexico: nurturing commons and stopping land grabs, WWEC (2012). 2. Ashoka - Innovators for the public, https://www.ashoka.org/ node/5878 3. Just Energy, http://just-energy.org/ 4. Sustainable Community Energy Network, http://scenetwork. co.uk/ensuring-project-success 5. Lane T (2012). The Australian context; Community Power = Community Development, WWEC 2012. 6. Meunstermann I. (2012). Wind Farming in Australia versus the‘Big Carbon’s Plan: Mine coal, sell coal, repeat until rich’, WWEC 2012. 7. Lipp J. (2012). The Untapped Potential of Community Power in Canada: Addressing the challenges, WWEC 2012. 8. Daniels L. (2012). Local, national and regional policies, barriers, incentives to community power in the USA, WWEC 2012. 9. Soerensen H. (2012). Experience from the Danish law about forced involvement of locals in wind projects, WWEC 2012.

Thermal Energy Storage as the Least-cost Retail Energy Option, WWEC 2012 13. Koch HJ (2012). In: Mainstreaming Community Power: Strategies and policies, WWEC 2012. 14. van Uexkull J. (2012). In: Mainstreaming Community Power: Strategies and policies, WWEC 2012. 15. Pesch J (2012). Paradigm shift: on flat and round energy concepts, WWEC 2012. 16. Hvelplund F (2012). Black or green windpower, WWEC 2012. 17. Barteld H.(2012). Example Dardesheim (Germany), communities realizing 100% renewable energy solutions, WWEC 2012. 18. Cowell R. (2012). Promoting Community Renewable Energy in a Corporate Energy World: New policy developments in the UK, WWEC 2012. 19. Harnmeijer A. (2012). The current state of community renewable energy in Scotland, WWEC 2012. 20. LaDuke W. (2012). Native Wind for the Future of our mother Earth, WWEC 2012.

10. Furuya S. et al (2012). Making Community Power Happen:

21. Wlokas H. (2012). How can national mitigation actions foster

The progress report and findings on Japanese Community

community development? The case of low-carbon community

Power, WWEC 2012.

development around wind farm projects in South Africa,

11. Wizelius T. (2012). Windpower ownership models - escape

10

from the market, WWEC 2012. 12. Maegard P. (2012). Green RE-Heat: Integrating Wind Power and

WWEC2012.


ISSUE 3 September 2012

News Analysis

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ISSUE 3 September 2012

IRENA’S SIDE-EVENT AT THE WWEC2012

WIND POWER ECONOMICS AND BUSINESS MODELS By Michael Taylor / IRENA Innovation and Technology Centre

O th

n 3 July 2012, IRENA’s

and the corresponding rapid decline in costs,

onWind Power Economics

bodies looking to diversify energy sources,

Innovation and Technology Centre held a side-event and Business Models at

the 11 World Wind Energy Conference and Exhibition that was organised by the World

Wind Energy Association in Bonn Germany. The event examined aspects of wind power

↑Michael Taylor.

economics and recent IRENA analysis of

renewable power generation, the role of small wind turbines in mini-grids and islands, and

business models for wind power development in developing countries.

Cost of Wind Power While leading wind experts and

economists discussed issues ranging from

costing and competitiveness of wind power,

small wind turbines for mini-grids and islands, wind costs and deployment in Central and

South America and business models for minigrids and large wind project development in developing countries a single theme

permeated the event: a renewable revolution is underway. Due to the rapid deployment of 12

renewable power generation technologies

renewable energy has become an economically viable option for both private and government

meet energy and climate goals, accelerate rural electrification and reduce the costs of running isolated grids. Wind turbine prices appear

to have peaked and the installed cost wind is

expected to fall in 2012 and, in all probability,

out to 2015. The rest of this article will discuss the core messages explored at the side-event. Thanks to data collected by IRENA over

the course of 2011 several conclusions were

highlighted and expanded on during the event. The first and perhaps most significant is

that almost half of all new power generation

capacity additions are from renewable sources. This share has doubled in the last five years. Renewable power generation systems are

today the most economically viable solution for off-grid electrification, mini-grids and

many grid extension projects in developing

countries. IRENA has estimated that if current

trends continue, by 2030 half of total installed generation capacity could be renewable.

The event opened with the question of

whether the recent decline in wind costs was likely to be sustained in the coming years.


News Analysis

ISSUE 3 September 2012

Conclusions drawn at the conference suggested

and certification in order to accelerate

increasingly competitive and has attained

Wind Power in the Developing World

that this trend was likely to continue due

in part to increased competition. PV is also

grid-parity against residential tariffs where

installed costs are competitive and resources

deployment and reduce barriers.

Having addressed the role of wind

good. Supporting this downward trend is the

energy in the developed world the conference

costs are falling quickly, but the growth in

around the competitiveness of wind today in

effect low-cost manufacturers are having on equipment prices. In the solar PV market,

market share of low-cost manufacturers has resulted in even more rapid cost reductions having important implications for the costs of hybrid PV-wind mini-grids. If this trend

of emerging market manufacturers pushing

down prices in established markets, similar to

experience in PV, eventuates for wind turbines, then costs could fall significantly. Finally, the

trend towards larger wind turbines is allowing

capacity factors to increase and is reducing the

Levelized Cost Of Electricity (LCOE) from wind.

The Future of Small Wind Having discussed the competitive

position of wind, the side-event moved on to discuss the role of small wind turbines in the future energy market and asked

how policy may be improved. Participants agreed that small (<100 kW) and medium sized (100-500 kW) wind turbines are

playing an increasing role in markets where large wind turbines are less suited, such as in energy access projects and on islands.

However, China’s strong presence in the wind industry, with 0.5 million small-scale wind turbines in operation in Inner Mongolia, demonstrates that small wind energy is

also becoming a mainstream technology. As wind turbine technology becomes cheaper

IRENA emphasised the need to deepen our knowledge of cost and quality of turbines

and develop harmonised technical standards

turned to the role of wind technology in the

developing world. Issues addressed revolved Central and South America, the outlook for wind turbine and total installed costs and

current wind project development barriers. Wind is receiving increasing attention in

Central and South America; however, despite

an improving competitive position relative to

hydropower and shorter significantly shorter lead times significant barriers have slowed

wind deployment on the continent below its undoubted potential.

Business Models for Minigrides The conference turned to the economists

to address the critical questions of how to

develop business models for wind based mini-

grids or hybrid mini-grids. In all cases, the need for a viable business model was emphasized but differences drawn based on project size.

For mini-grids a community based approach

was highlighted as often best to gain local buy-

in to ensure the success of the project (reliable

payments and continued O&M). The economics and viability of projects is closely tied to

issues of ownership, electricity price setting, recuperation of dues, costs for transmission (if applicable), distribution and connection.

Critically, various types of financing models, including microfinance, require attention if wind in mini-grids is to see rapid growth.

Similarly, creative payment models are often

required, as although the willingness to pay for

electricity can be high, consumers in developing 13


News Analysis

ISSUE 3 September 2012

countries are often constrained to making very

costs still vary greatly between projects and

irregular basis.

of wind will increase. This is an emerging issue

small, sometimes irregular payments as income is often only earned daily or weekly on an

Examples of small wind turbine projects

in Fiji, New Caledonia, Guadeloupe, Martinique, Mauritius and Dongfushan Island were

presented demonstrating the suitability of

micro-grids and hybrid grids for islands. Under these circumstances the technical solutions to manage micro-grids are available and

often the major hurdle is overcoming the pre-

conceived ideas of existing grid operators and

familiarising them the different requirements of managing these systems. Larger-scale systems

are also being developed with community input around the world, including in South Africa,

where JUST Energy has two projects in South

Africa, one at ST Helena Bay with the Seeland

Development Trust (30 MW) and the Riverbank project in the Eastern Cape (66 MW) with the UncedoLwethuFarmers Cooperative.

Community Wind in Developing Countries Unfortunately despite increased interest

in wind from non-OECD countries, large-scale projects remain limited relative to potentials, although many countries either have or will soon introduce more favourable regulatory

regimes for wind, so opportunities for growth are emerging. Challenges highlighted revolve

around the cost of infrastructure, the need for imported equipment and high transportation

costs, and higher financing costs tied to smaller market size.

Other obstacles highlighted focused on

high operations and maintenance costs in some markets and inadequate data on O&M costs, difficulties of measuring policy success and

securing funding and securing reliable electric supply. Operation and maintenance (O&M) 14

countries. As capital costs decline, unless O&M

costs also decline, their share in the total LCOE that IRENA plans to address in more detail in conjunction with WWEA and others.

A crucial issue if a sustainable growth in

markets is to be achieved is that policies need to be tailored to each stage of a technology’s

deployment and appropriate business models

need to be developed for each stage. Although technology is an important part of a business model, side-event participants noted that

investment in stakeholder and local community relations, as well as utilising proven tariff

and billing models are critical to success. One

part of the solution to help facilitate the latter component can be the emergence of cheap

smart meters that allow pre-payment, load and energy limits, and demand-side management

in one. An appropriate institutional framework with a profitable and scalable tariff, and

regulatory/licensing system is also crucial. Private investors also face several

key challenges in rural electrification: to

create economic growth through reliable

electricity supply with modular expansion

potential, with special attention to be paid to

optimising operation procedures and lifetime performance.

Conclusions In an attempt to address some of these

obstacles the conference made several

recommendations. The need for additional

research and development into the design of

small wind turbines was highlighted with the aim of optimising hybrid systems in order to

minimise diesel and operation and maintenance costs, as well as improving the reliability of turbines and reducing their costs.

Financial considerations must be taken


News Analysis

ISSUE 3 September 2012

into account under the business model.

development money or impact investors are

well as understanding the investment needs

original capital for new projects which, with

Large investments are required and it is

imperative to find the right local partners, as in complementary local infrastructure. This said, financial aid exists in the form of aid

banks, and strong local business partners. An

important barrier is that smaller projects will

often struggle to secure financing as the sums

involved don’t justify the transaction costs from a banks perspective. The pooling of funding

for smaller projects, or the use of seed funding which can be recycled into new projects were offered as potential solutions.

Cost reduction strategies include the

maximisation of low-cost local manufacturing, while good policy design can help spur the development of larger local markets with

improved cost competitiveness. For instance,

switching telecoms towers power supply from diesel to renewables often makes economic

sense today on a standalone basis, but policies to encourage or require analysis of the

expansion of this type of project to consider the opportunities for rural for local electrification

at the same time can offer significant synergies and cost reductions.

Finally, tips where given on how to

structure the business model. Participants

highlighted the need to structure models in a way that helps facilitate securing investment capital, particularly by ensuring that a

reasonable financial return to investors can be achieved. This requires sustainable cost

recovery at end-user level. Building in a clear element of cost recovery, event in donor-

funded projects maintains an expectation to

involved, cost recovery can slowly increase to

cover the full cost of the project, freeing up the the experience of successful cost recovery, will attract a lower risk premium.

And last, but not least, the conference

reviewed next steps. Participants highlighted the importance of the ongoing effort create a standard certification and labelling

framework for small wind turbines in order

to reduce uncertainty and simplify banks risk

assessments. In an effort to highlight the role of

wind energy in rural electrification, the Alliance for Rural Electrification has published a best

practices publication. Similar publications on the uses and lessons learned of hybrid minigrids have been published to assist policy-

makers and practitioners. The work of IRENA on standards, the global wind resource atlas, capacity building in developing countries

and on costing was acknowledged as making an important contribution to accelerating deployment.

In addition to synthesising the results for

wind power, biomass, solar PV, concentrating solar power and hydropower, IRENA also

drew attention to its research on the costs

of renewable options for transportation and

plans in 2013 to look at the costs of renewable

technologies and energy sources for stationary applications. IRENA continues its work on

capacity building, energy planning, energy

scenarios, renewable readiness assessments and technology transfer.

For more information on the Wind Power Economics and Business

pay which protects will help ensure supply

Models conference and renewable energy please visit IRENA’s website at

that can reduce a funders perceived assessment

www.irena.org/publications

over the lifetime of the project is maintained, while it will also provide concrete examples of project risk and therefore help secure

funding on more reasonable turns. Where

www.irena.org. To download for free the five power generation costing reports got to For further information contact Michael Taylor mtaylor@irena.org

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ISSUE 3 September 2012

WORLD WIND ENERGY AWARD 2012 GOES TO THE HEPBURN COMMUNITY WIND FARM IN AUSTRALIA

launching Australia's first and groundbreaking community initiative that led to a 4.1 MW

community owned wind farm, an excellent

answer in particular in order to increase social understanding and acceptance of wind power. ↑Peter Rae hands over the World Wind Energy Award 2012 to Tary Lane from Hepburn Community Wind, in presence of Prof. He Dexin and Paul Gipe.

O

Seen from outside of Australia, the project

n the occasion of the

11th World Wind Energy

Conference 2012 in Bonn, Germany, the Board of

the World Wind Energy

Association has decided to give the World

Wind Energy Award 2012 to the Hepburn

Community Wind Farm in Victoria/Australia and its initiators.

The WWEA Board wants to recognize

the Hepburn Community Wind Farm’s

contribution to the introduction of community wind power on a large scale. The award is

given to the initiators of the wind farm for 16

may appear small. However, the Hepburn

Community Wind Farm stands for a social

movement outside the strong fossil lobby in Australia, aiming at a fundamental energy

transformation that is driven by Australia’s

citizens. As the first initiative for a community wind farm on the Australian continent being

started in 2004/2005, the time when WWEA

held its WWEC in Melbourne, the wind farm has become an example and important reference project in Australia and has inspired many

similar initiatives around Australia and beyond. WWEA appreciates in particular that

other communities and initiatives in Australia are now using the ‘Hepburn Model’ in order to develop their own community power


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ISSUE 3 September 2012

projects and WWEA hopes and expects that

of sustainability.

community power assistance centre Embark

energy sector, such achievements and

many of these initiatives will materialize in the future. The establishment of the interlinked

adds materially to the ongoing impact of the groundbreaking Hepburn project. WWEA

would like to express its willingness to work closely with the Australian wind and in

particular the community wind sector and to extend its full support and cooperation

in fostering the transformation of Australia towards 100 % renewable energy and a

strengthened understanding of the importance

Taking into consideration the important

role that Australia plays in the international

ambitions have also far-reaching international implications and will contribute to speeding

up the global energy transformation. With the

award, WWEA would also like to encourage the government of Victoria and Australia as well

as governments around the world to support communities in their efforts to harvest clean and inexhaustible wind power, for their own benefit and for the benefit of our planet.

The World Wind Energy Award – previous winners: • 2011: the Egyptian wind turbine manufacturer Sewedy Wind Energy Group SWEG under the leadership of Ahmed El Sewedy • 2010: the Founding Member States of the International Renewable Energy Agency IRENA • 2009: the Hon. George Smitherman, Deputy Premier and Minister of Energy and Infrastructure of Ontario • 2008 jointly to: Ms. Jane Kruse, and Dr. Preben Maegaard, Denmark, Paul Gipe, USA • 2007 jointly to: the Hon. Ms. Dilma Vana Rousseff, today President of Brazil, former Chief of Staff Minister of Brazil and former Minister for Mines and Energy, Ms Laura Porto, Director of the Department of Renewable Energy of the Ministry of Mines and Energy, Mr. Valter Luiz Cardeal, Director of Engineering and interim President of Eletrobrás, Dr. Sebastião Florentino da Silva, Coordinator of the Proinfa Programme at Eletrobrás • 2006: the Chinese wind turbine manufacturer Goldwind under the leadership of Mr. Wu Gang • 2005 jointly to: Hon. Vilas Muttemwar, Indian Minister for Non-Conventional Energy Sources, and Dr. Pramod Deo, Chairman of the Maharashtra Electricity Regulatory Commission • 2004 jointly to: the German Minister for the Environment, Hon. Jürgen Trittin, and the German Parliamentarian Dr. Hermann Scheer • 2003: the Indian wind turbine manufacturer Suzlon under the leadership of Mr. Tulsi Tanti • 2002: Prof. Dr. Amin Mobarak, Chairman of the Industry and Energy Committee of the Egyptian Parliament

17


Regional Focus

ISSUE 3 September 2012

COMMUNITY WIND IN THE UNITED STATES By Lisa Daniels / Executive Director of Windustry, U. S. A.

In order to understand Community Wind

it is helpful to first look at the overall US wind industry. Currently the US wind industry is facing an unprecedented confluence of

unfortunate events that all equal one thing, a great amount of uncertainty.

• This is an extremely difficult political

time. We are in the midst of a major election cycle for the US president and a high

percentage of seats in US Congress along

with significant numbers of seats at state

legislatures. For the past few years, the politics in Washington have been terribly caustic and

unproductive, with 2011 being noteworthy as the least productive Congress in memory. In

this political setting, with no one getting along or willing to work across party lines to pass

legislation, the renewable energy incentives for US are expiring.

• The major incentive, the Federal

Production Tax Credit (PTC), is set to expire at

the end of December. Today we are in the boom

part of the boom/bust cycle. No one can predict what will happen in 2013 or 2014 which is

when this gap in legislation will be felt. This

policy has a 20 year history of being on again, 18

↑Lisa Daniels.

off again policy, but with the economy and other circumstances as detailed below, the industry is finding it extremely hard to float through

this period of uncertainty. The slack is gone, and companies are laying off large numbers

of employees, narrowing their US operations, going out of business or consolidating.

• Federal support for community wind

comes primarily through the USDA Farm Bill which is in the process of being rewritten,

but as of the writing of this article, it is not

complete and the current law expires at the end of September. The Farm Bill must be

temporarily extended while Congress is on

leave to campaign for elections. Starting in the 2002 Farm Bill, wind energy is classified as a

farm product. The USDA REAP (Rural Energy for America program) is hugely popular and

fully subscribed with proposals for renewable

energy and energy efficiency upgrades in every round of funding. There are other supportive programs in Rural Development, Rural Utility Service and Natural Resource Conservation


Regional Focus

ISSUE 3 September 2012

Service. Congress has been debating what

goal of energy independence by 2050. There

every year. It is yet to be determined how this

planet.

programs will get mandatory funding and

which have to be specifically appropriated story goes forward.

•The US economy continues to be

lacking in terms of manufacturing, jobs and production. In many areas of the country,

electricity use significantly decreased in 2009 with the financial meltdown and it has not

recovered or resumed its growth trajectory. With the economic downturn, utilities and

energy companies are not signing many new contracts for wind generation. And in states

where there are Renewable Energy Standards

for a percentage of the electricity to come from renewable resources, it is much easier to reach compliance with overall electric use down.

• A great deal of new attention to natural

gas and its current amazingly low prices – at about $2/MMbtu. This is having a huge

impact on the electricity markets in the US. It is impacting other fossil fuels such as coal as well as renewables. There are new deposit

discoveries and new controversial methods

of extraction with the hydraulic fracturing or

“fracking”. In the absence of federal regulation of fracking, it is up to the states to figure it out. And they are just getting up to speed on the impacts.

• The European debt crisis is contributing

to the lack of investment in wind in the US as

European energy companies have always had a big role in the US wind market.

There is no overall national energy policy

in the US. We had our hopes up for the Obama administration but they took on healthcare

rather than energy in the first term. If Obama is re-elected to a second term, there would

be a great opportunity to set national goals

and renewable energy standards. For now we can only watch with envy and celebrate the

progress being made in Germany with their

is plenty of work for all of us to make progress in whatever way we can for the health of the On a brighter note, where the federal

government doesn’t have an overall energy

policy, on a state by state basis there are several different policy approaches that support

getting community wind projects in place.

Working your way through the policy puzzle to find the right combination of federal and state incentives is what makes a community wind project viable.

The Community Wind map for the US

indicates that most states with commercial

scale wind development have Community wind. This map is as of Dec 2011. (see attached)

The American Wind Energy Association

has the 2011 total wind installed capacity at 6816MW and Community wind at 457MW.

In 2010, the total wind installed is 5214 MW

and the Community wind tally is 292MW. So Community wind grew 57% from 2010 to

2011. Clearly this is a small specialized area of the market but it is seeing significant growth even in these hard times.

States adopt their own energy policies

to get renewable energy in place. Where Renewable Portfolio Standards are the

primary market creation mechanism often

this translates into large commercial scale and utility scale projects. As I mentioned earlier,

many of the targets have been met for now in many places up through 2020.

Other leading state policies include net

metering which can be quite effective in helping get community wind projects of various sizes and shapes in place. Other important state

policies include: interconnection policies, loan programs, property tax incentives, sales tax incentives.

Also there is a small array of effective

financial mechanisms that we have seen in

19


Regional Focus

ISSUE 3 September 2012

some states including: 3rd Party PPA policies, clean energy funds, feed-in tariffs or CLEAN contracts and PACE.

With all of the current events putting

pressure on energy and renewable markets in

the US, there will have to be changes, whether or not the PTC is renewed; whether or not

the REAP program survives the rewrite of the

Farm Bill. This is a good time to embrace more diverse approaches to building renewable

energy in the US. We are working to promote business models that increase the number of people involved, expand the types of policy,

and explore more community-based business

models. Diverse policy means diverse business models. In times of chaos, there are gaps

where innovation can happen. With a slow

20

down of building larger wind projects, it may be an opportune time for turbine, crane and

construction crew availability. Getting the local communities and small businesses involved in wind project development can only be a good thing for the local economy and the

environment. Natural gas and other fuels have supply chains that are all about big energy

business. Renewable energy on the other hand

is, by its very nature, more accessible and more dispersed. There is plenty of opportunity for

smaller more distributed wind generation to fit in.

This is a defining moment for communities

to work together, share their experience and

grow the market for locally owned renewable energy.


Regional Focus

ISSUE 3 September 2012

4th World Summit for Small Wind WSSW2013 "Small Wind Certification - Status, Barriers, Prospects" Husum, Germany, 21 & 22 March 2013

CALL FOR PAPERS WWEA and New Energy

Husum are pleased to invite you

cordially to the 4th World Summit fo r S m a l l W i n d W S S W 2 0 1 3 , taking place in Husum/Germany

on 21 and 22 March 2013, during the New Energy 2013 trade fair.

The World Summit for Small

Wind is an annual opportunity to discuss the most important

issues affecting the domestic and foreign small-scale wind industry and to present news

from a variety of countries. It

is the perfect meeting place f o r e x p e r t s , p o l i c y m a ke r s , interested individuals, providers,

manufacturers and supply industries from the small-scale

wind turbine sector from all over the world.

The World Summit for Small

Wind will be held on the first two days of the New Energy Husum trade fair (21- 24 March 2012).

New Energy Husum is a trade

fair for all types of renewable energy, and is the leading trade fair for small-scale wind turbine technology, and as such is the

ideal platform for a congress of such international importance.

A gain top in tern at ion al

small wind experts and

participants from all over the world will discuss latest

power. Papers are invited on the following topics: ●

Safety and quality

standards ●

National and international

certification schemes ●

wind

wind

National policies for small

National markets for small

Off grid applications and

hybrid systems ● ●

Grid-connected systems

Manufacturing of small

developments and achievements

wind turbines

the special topic "Small Wind

inverters

of the small wind sector.

WSSW2013 will feature

Certification - Status, Barriers, Prospects" and will comprise a two-day program covering all

important aspects of small wind

Key components: blades,

generators, controllers & ●

S m a l l w i n d fo r wa t e r

pumping ●

Financing small wind

turbines

Abstracts format: The abstract should be concise and clearly state results, objectives or key components of the paper. They

should not exceed 500 words and should contain a list of key words. Please submit and electronic copy (in

doc format) of your abstract (not exceeding 2 A4 pages) by 15 December 2012 to Mr. Thomas Seifried (Messe Husum & Congress)

Seifried@messehusum.de

Phone: +49 4841 902 492

21


Regional Focus

ISSUE 3 September 2012

COMMUNITY WIND: THE AUSTRALIAN CONTEXT By Taryn Lane / Hepburn Wind & Embark, Australia

A

ustralia is embarking on a

nation, the community-ownership model will

Australian landscape is the

movement across Australia is emerging.

long journey to a clean energy future. Pioneering in the

Hepburn Community Wind

Farm – Australia’s first community-owned and operated wind farm.

Located in the central highlands of Victoria,

Hepburn Wind has brought a community closer

to the source of its electrical energy – educating it about how to take control of its energy

future and bringing them along on the journey of transition from fossil fuels to renewable 22

energy. If successfully emulated across the

see the broad acceptance of renewable energy sources by the public. The community energy

The Hepburn Wind Story Hepburn Wind represents a long struggle

supported tirelessly by volunteers who held to the vision that they could build a wind farm,

providing a localised renewable energy supply for the benefit of the community.

Two key people in developing the project

were Per Bernard – the visionary behind it and Founding Chair Simon Holmes à Court, who


Regional Focus

ISSUE 3 September 2012

has overseen the delivery of the inspirational

expectations of non-return benefits, generally

executives have included a dynamic of highly

a high requirement for communication and a

project over the past five years. As a shire with an active transition movement, the board and

skilled and passionate people and a readiness to ‘just get on with’ the vision of living

sustainably. This rendered conditions right

for the project to find its feet in this region of

rural Australia and to be developed as a model project for other communities.

Six years after the formation of the co-

operative, obtaining planning permits, capital

raising, engaging the community, undertaking research, analysis and finally construction, the two turbines are now generating clean

energy. The community of the co-operative now numbers 2000 members who raised almost $10 million to build the turbines. The two

2.05 MW REpower turbines are expected to

generate enough energy per annum to power

2300 homes, more than required by the homes of the nearby town of Daylesford.

Hepburn Wind has many dimensions

of benefits. One is via returning profits to

the community through a community grants

process. This has the potential to underwrite the sustainability movement across the local

area for at least the next 25 years. Furthermore, once dividends begin to be paid out to

shareholders, a large proportion of this will

likely remain within the region with over half the shareholders local to the region.

A number of Hepburn Wind investors

are sophisticated investors with self-managed superannuation funds, but in the course of establishing this project, Hepburn Wind

found that there was an emerging class of

investors who will invest in local infrastructure projects due to the benefits to the local area – the community investor. Hepburn Wind characterises the community investor as

having modest return expectations, increased

modest sums to invest, low appetite for risk, no appetite for capital loss, high levels of patience, high expectation of transparency.

A recent member survey highlighted the

level of satisfaction members have with the project - with 97% stating their pride and contentment. However, the socio-political

landscape has not been an easy one to navigate in this process. Whilst Hepburn Wind enjoys

overwhelming support within its community, it is not universal support. When the project

went into the planning phase, there were 325

letters of support and 18 objections and whilst the latter number has dropped, Hepburn Wind continues to seek engagement with those who oppose the wind farm.

As a beacon for community power and

community acceptance of wind energy within

Australia, Hepburn Wind has valued celebration and accessibility by the community to their

wind farm. In March this year, 300 supporters sat atop Leonards Hill as Hepburn Wind set

up marquees and held a ‘turbine raising picnic day’ to watch the erection of the first turbine. Then, in early November, the wind farm was

officially launched with over 750 supporters in attendance. Both events attracted nationwide

media and Prime Minister Julia Gillard wrote a

letter recognising the importance of the project. Dozens of members donated to publish this

letter in regional newspapers after the event. Hepburn Wind has been recognised on

a local, regional, national and global level,

receiving the 2010 Climate Alliance Award, 2011 Premiers Sustainability Award, 2011

Banksia Award and most recently, this year the 2012 WWEA Award. 2012 is the UN’s International Year of Co-operative and in

Australia, Hepburn Wind has been selected

as a standout social enterprise to be profiled 23


Regional Focus

ISSUE 3 September 2012

throughout the international year of co-

to their own requirements. Embark aims

Embark

viable model capable of attracting large-scale

operatives.

This message of community

empowerment and energy democracy has

resonated across other Australian communities. Founding Chair of Hepburn Wind Simon

Holmes à Court, saw the need for communities

to be supported to start the community energy journey themselves, and established a NFP called Embark.

Since launching in October 2010, Embark

has been contacted by over 60 communities who are interested in developing their own

renewable energy initiatives across a range of geographic locations and technologies,

including wind, solar and mini-hydro. Embark is building on the lessons learned by Hepburn

Wind so that communities around the country can extend and adapt the Hepburn Model

to shift the community energy sector into

the mainstream as a proven and financially investment.

Embarks first project was to create an

online best-practise information ‘wiki’ for

communities. Creating this information portal kick-started the organisation and has enabled Embark to assist many communities in the

early stages of developing their own renewable energy projects. To ensure that the next

activities and projects of the community energy movement grow strong within this landscape, community groups are supported by Embark to seek opportunities to enable locally scaled clean energy transitions.

The Socio-political Landscape In 2011, Hepburn Wind was awarded the

Premier’s Sustainability Award for Community Engagement and the prestigious Banksia

Award for harmonious manmade landscapes. Under the new state government planning

policy, however, the wind farm would not have been built due to a requirement that a project

receives unanimous support from all residents living within 2 kilometres of any new wind farm developments.

This new planning policy has very

significantly constrained new wind

development within Victoria and includes the strictest wind farm planning regulations in

the world. What is of deep concern is that they

apply only to wind energy, but not to any other energy producing infrastructure.

Across the same regional area as Hepburn

Wind, groups have been advocating for an

allowance in the planning guidelines exempting small-scale community projects from these

24


Regional Focus

ISSUE 3 September 2012

restrictions. In particular, the Macedon Ranges

The Next Generation

owned wind farms. They are still forging ahead

projects that are embarking on a clean energy

to be considered.

(MACW) in Victoria, have launched the project

wind turbines. Much has been written on the

over 300 supporters signed up.

and Mount Alexander communities, who were

in process of developing their own communityin the belief that the show of people power in

support of these projects will eventually have One of the lively protests occurring in

Australia concerns the health ramifications of political and sociogenic dimensions of these

There are a number of community wind

future across the nation: •

Mt Alexander Community Wind

to their local community and made great

progress on their community engagement with •

WISE Community Wind in Victoria,

claims and the effect of the groups driving

have been monitoring wind speeds with a real-

the largely-held medical diagnosis is that the

possibility of the wind farm more tangible.

them. With no reported health effects on people perceived to be ‘benefiting’ from wind farms, perceived symptoms of those suffering from

time display which is linked to the mast has

been installed at a local newsagent to make the •

Denmark Community Wind Farm in

them are caused by their annoyance with the

Western Australia celebrated their ‘turning of

Social Licence to Operate

will consist of two 800 kW turbines which are

wind farm.

On the Australian landscape, to navigate

these challenges, the issue of having a social license to operate is of great importance.

Significant transformations are by nature

disruptive, especially where these expose communities to change, and often change without consent.

As the first community-owned energy

project, Hepburn Wind has clearly shown that given the right conditions, host communities can accept renewable energy projects. The emergent community energy sector will

play a keystone role in ushering in the broad

the sod’ on the 7 of March 2012. The project is scheduled for completion in late 2012. It

expected to supply about 40% of Denmark's domestic demand annually. •

Island Energy in South Australia has

completed the initial feasibility study to build

a renewable energy company that is expected to meet up to one third of the island’s energy needs.

The New England Wind Cooperative

(NEW) in New South Wales is formed and will

now lead and coordinate the final site selection

and raising the early stage capital to allow them to move into the development phase.

There are a number of developer-

acceptance of renewable energy nationwide. To

community partnerships evolving as larger

Through this engagement, community energy

farms. Community Power Agency is another

build future projects, a high level of engagement is therefore invited from the community.

projects then have the potential to influence

behavioural change within their communities.

developers see the clear benefits and

necessity in community acceptance of wind organisation supporting the emergent community energy sector.

Further information hepburnwind.com.au embark.com.au

25


Regional Focus

ISSUE 3 September 2012

ENERGY POLICY REFORM AND COMMUNITY POWER IN JAPAN Shota Furuya / Institute for Sustainable Energy Policies, Japan

Transitional Energy Policy Landscape after 3.11 in Japan The triple disaster, earthquake, tsunami

and nuclear accident, on March 11th 2011

revealed the vulnerability of the centralized Japanese energy system towards massive

natural disaster. And Fukushima showed the

unreversible impact of nuclear accident when the nuclear risk becomes reality.

Needless to say, this situation forced not

only the Japanese government but also the broader society to reconsider the national

energy policy and system. The former Prime

Minister, Naoto Kan, took the initiative for the fundamental reform of the national energy

policy without any bias of the vested interests. Then dozens of energy policy committe have

been organized such as on reconsideration of nuclear power policy, energy system reform and renewable energy policy.

Among them, the focal point of the policy

reform is the Energy and Environment Council in the National Policy Unit of the Cabinet,

where the new national energy strategy will be decided. In order to provide the draft of

the new national energy strategy, the Ministry of Economy, Trade and Industry (METI)

organized the Basic Issue Committee under the Agency for Natural Resources and Energy. The committee consists of 25 committee members

from the representatives of the broader society such as business and industrial leaders,

engineers, scientists, consumers' associations, sustainability NGOs and so on. The committee

met 27 times from October 2011 to June 2012, and the committee members discussed the

possibility and difficulty for the nuclear phase

out fiercely, and finally the committe submitted the three scenarios regarding to the share of 26


Regional Focus

ISSUE 3 September 2012

nuclear energy at the time of 2030: (1) 0%,

(2) 15% and (3) 20-25% (graphic 1). Based on these three scenarios, the National Policy Unit has developed a information database in July and conducted a public hearing, deliberative polling and solicitation of public comments

in August, and based on the series of national public debate, the government will formulate the New Strategic Energy Plan of Japan soon. In fact, though the point of departure of

the policy reform was "reduction of nuclear dependency", scenarios (2) and (3) include

new addtional construction of nuclear power plants. On the other hand, most of the public

opinion polls show that more than half of the

public support the nuclear reduction. Therefore it is obvious that there is a gap between the

formal policy reform arena and the public, and this symbolically shows the political difficulty of Japanese nuclear phase out.

However, out of the formal policy reform

arena, several new initiatives for nuclear phase out have been emerged. For example, some

business leaders from the economic circles of small and medium sized enterprises started

to ornganize a new network called "Network of Business Leaders and Entrepreurs for a

Sustainable Business and Energy Future". And the Global Conference for a Nuclear Power

Free World held in Yokohama in January 2012 triggered the formation of "the Mayors for a Nuclear Power Free Japan Network" which

has more than 70 mayor members around the country.

most of the demonstrations are organized by

union's activists in Japan, however, the weekly

demonstrations are not like that. Mostly people come to join the demonstrations voluntarily by connecting social media such as Twitter

and Facebook, and they are ordinary citizen thinking that they must take actions for the

nuclear phase out. The weekly demonstrations have been called "the Hydrangea Revolution"

named after the Japanese seasonal flower and the Jasmin Revolution in Tunisia (picture 1).

It is Japanese societal challenge that this kind of activities will connect to the formal policy

reform arena and lead to political decision for nuclear phase out.

Triggering Energy Transition: Feed-in Tariffs It was a historical coincidence that

And one of the most fundamental

Japanese government agreed on the Feed-

the nuclear power plants. A group of citizens

policy reform discussion, the basic frame

transformation of the Japanese society is the

active demonstrations against the restarting of has initiated demonstrations which take place every Friday evening at the Prime Minister's office since March 2012. The number of

people has increased steadily and has been

estimated to reach 150'000 in June. Usually

in Tariffs in the morning of March 11th

2011. Then, in the course of the energy

of FIT was formulated and passed the Diet on 26 August 2011. In order to design the details of the system, METI organized a committee to calculate the price of FIT.

The committee conducted open hearings

27


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ISSUE 3 September 2012

including representatives of each renewable

connection issue, regulatory issue, social

formulated the detail design of FIT in June

Fourth Revolution".

energy sector (wind, solar, small and medium hydro, geothermal and biomass), and finally 2012. Japan started FIT on 1 July 2012.

The price setting of the FIT is shown in

the table 1. Compared with other countries, Japanese FIT, especially solar PV, looks

generous. This is partly because the provision

that the FIT will trigger Japan to start "the

The Second Stage of Japanese Community Power Looking at the local or grass-roots level of

of the FIT law includes the special promotion

renewable energy development, Japan comes

wind, it seems reasonable and the system will

pioneer community power projects in Japan

of renewable energy for the first three years. Regarding to other renewables including

promote the steady increase of renewable energy in Japan in coming years.

There are still challenges for the

substantial energy transition, such as grid

28

acceptance issue and so on. However, it is sure

into the second stage of Community Power. As shown in the graphic 2, there have been some since 2001. The first community wind farm

in Hokkaido was initiated by a local NPO, and this became the model of the citizen-owned renewable energy project. Then, following


Regional Focus

ISSUE 3 September 2012

this model, several community wind projects

start it within three years.

applied to distributed community solar PV

candidates to make a secure business plan.

have developed around the country, and this

community based business scheme has been project in 2005, community biomass project

in 2006, and community small hydro project in 2011. Even though there was poor policy support and severe market condition, the

pioneer leaders have realized these community power projects with tremendous efforts and

stakeholders' cooperation. We may be able to call these community power activities as "the first stage of Japanese Community Power".

After 3.11, Japanese people have become

more and more aware of renewable energy with the safe and distributed energy supply in mind, and dozens of community based renewable

energy initiatives have emerged around the

country. Then, Ministry of Environment (MoE)

started the support program for the community based renewable energy development, and

called for applications in early 2011. There

were 68 applications, and seven applications were formally selected as the community

power candidates (graphic 3). They have to

organize local renewable energy Consultation processes in order to build social consensus, and to appoint several coordinators to make

actual community power business plans and to

Fortunately the FIT started on July 1st

2012 and this enabled these community power And it was also fortunate that the support program offered several opportunities for

the candidates to meet and consult with the

community power pioneer leaders, so that they were able to share the pioneers' community power models and experience. One of such interactive opportunities was the Japan

Community Power Conference held on March 8, 2012 in Tokyo in cooperation with WWEA ( http://goo.gl/khrZK ). Three international

speakers, community power pioneer leaders and candidates discussed the significance,

possibility and barriers of community power in Japan. Then we may be able to call these

interactive community power activities as "the second stage of Japanese Community Power". As described above, Japan is exactly in

the transitional time of both national energy

policy and local project development. There are still many challenges to realize a massive and

substantial energy transition in Japan, however, as shown in the Hydrangea Revolution, the societal energy transition is real, and the

Japanese citizens' active community power engagement will make it substantial.

29


O&M

ISSUE 3 September 2012

WWEA BACKGROUND PAPER: OPERATIONS AND MAINTENANCE FOR ONSHORE WIND ENERGY SYSTEMS By Wesley Lien, Stefan Gs채nger, Everaldo Feitosa and Jami Hossain

W

ind energy today

approaches to turbine maintenance, the current

with fossil fuel

The paper focuses primarily on onshore wind

has reached a costcompetitive level sources in many

parts of the world, and in some countries has become a key pillar of electricity generation. This report seeks to explain the importance

of operations and maintenance, as well as the

developments that seek to lower overall costs. turbines, as offshore turbines face completely different challenges and the O&M conditions require completely different approaches.

I. Operations and Maintenance

current status of the wind energy operations

General Importance of O & M

be reduced. We will discuss the importance

a critical component of wind energy systems.

and maintenance market. It will also try to

elaborate on whether/how these costs can of O&M and cost characteristics, three 30

market structure, and recent turbine design

Operations and maintenance (O&M) is

Wind energy remains quite capital-intensive,


O&M

ISSUE 3 September 2012

due to the fact that wind power utilization

expense for equipment represents the main

O&M as it may give us better insight as to the

cost component. As such, adequate O&M is

Cost Breakdown

operational for the expected lifetime. Good

variable costs. Fixed costs include insurance,

downtime or extending their lifetime.

Replacement parts and materials, maintenance

does not require expenses for fuel; the

required to protect these assets and keep them O&M practices can optimize returns from a wind farm investment by reducing turbine

O & M and Marginal Costs

Approximately 75%-80% of the total

cost of onshore wind projects is capital and

investment costs, while O&M typically accounts for 20 to 25%, depending on where the project [1]

is located . (There are indications that in

China, the share of O&M costs is significantly higher and may reach 40 % of the lifetime

costs, due to the lower initial investment cost per kW.)

The predominating cost structure results

in relatively high risk for investors. Once a

wind turbine is installed, its efficiency cannot be easily changed, nor can energy production be easily altered; the investment costs are

fixed. Thus, wind operators have very limited possibilities to reduce generation costs

during the lifetime of a project by influencing operations and maintenance.

Hence O&M is the predominant method by

which operators can influence their marginal

costs. As these marginal costs are much lower

than the breakeven prices for wind investment, it is easy to understand that wind power

simply cannot compete on the spot market

for electricity. The price at which electricity is sold would be close to the marginal cost;

however, this would be insufficient to cover the capital cost. Thus, investors would refrain from investing in wind farms.

Therefore, it is important to understand

basic economics of wind power investment. O&M can be divided into fixed and

administration, fixed grid access fees, and

service contracts for scheduled maintenance. not covered by contracts, and other labour

costs fall under variable costs. One must also

consider costs associated with losses in energy

production during non-scheduled maintenance. There are no fuel costs under fixed O & M.

The cost of O&M varies depending on

several aspects. O&M costs differ by region and nation based on wind speeds, geographical

location, labour costs, etc. O&M also tends to be higher for offshore wind systems than onshore ones. This is attributable to the difficulty and

logistics of maintaining wind turbines in harsh marine environments.

In addition, O & M becomes more

expensive as turbines age; the chances of

failure increase as machine parts experience

prolonged wear and tear. Finally, O&M depends on the extent of the maintenance contract.

Some services will only maintain wind turbines, whereas others may broaden their scope to

include access roads, transmission lines, etc.

The aforementioned variables, as well as

other factors (turbine capacity, model, project lifetime), make O&M cost comparisons fairly challenging. Estimates have, however, been

calculated for wind energy projects in different countries. For instance, the International Renewable Energy Agency (IRENA)

approximates that wind O&M costs are lowest in the United States, with service costs for

onshore projects at around 0.01 USD/kWh of energy produced [1].

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O&M

ISSUE 3 September 2012

Table 1 Variable and total costs of onshore wind energy operations and maintenance in different countries. Country

Variable O&M cost (USD/kWh)

Total O&M cost (USD/kWh)

Austria

0,032-0,048

China

0,02*

Denmark

0,014-0,018

Germany

0,028-0,032**

India

0,01***

The Netherlands

0,013-0,017

Norway

0,020-0,037

Spain

0,027

Sweden

0,010-0,033

Switzerland

0,043

United States

0,010

Source: IRENA, IEA Wind, Liu, Wallasch et al., Hossain

*Estimated cost. Converted from RMB/kWh using US dollar exchange rate as of 13 Sept. 2012. **Converted from Euro/kWh using US dollar exchange rate as of 12 Sept. 2012.

***Converted from INR/kWh using US dollar exchange rate as of 13 Sept. 2012.

European countries seem to have higher

service costs. As an example, O&M for onshore projects in Germany ranges from 0,0219 to

0,0249 Eurocents/kWh (approximately 0.0282 to 0.0321 USD/kWh) [2].

IRENA additionally released a working

paper on wind energy that gives estimates for the variable costs of onshore wind

turbine service in various countries (see [1]

Table 1) . Once again, such figures are only

approximations and should not be taken at face value. Nevertheless, these approximations can

Reactive maintenance involves waiting

for the system to run to failure, and completely replacing parts or even the entire turbine. This method is considered to be the least effective

and most costly in the long run, especially when considering the losses in energy production and the infrastructure necessary for such

replacements. Hence it is not common practice.

Preventive Maintenance

Preventive maintenance is time-based,

give us a general sense of current O&M costs

meaning maintenance inspections are carried

II. Three Approaches to Maintenance

should at the very least follow the turbine

around the world.

There are generally three approaches to

wind turbine maintenance: reactive, preventive, [3]

and predictive . Nowadays the O&M industry primarily uses preventive maintenance, but a

growing number of companies are beginning to adopt predictive maintenance strategies. 32

Reactive Maintenance

out at regular time intervals (typically

six months) [3]. This form of maintenance

manufacturer’s manual and instructions

regarding how often components should

be checked. The effectiveness of preventive maintenance can be enhanced by feedback obtained from coordinated maintenance

activities, such as those carried out by different companies on different time schedules. Some of these activities can even be reduced in


O&M

ISSUE 3 September 2012

frequency based on test results from predictive

maintenance, which constitutes approximately

Predictive Maintenance

Coordinating Committee in the United States

maintenance.

Predictive maintenance (also referred to

as condition monitoring) involves continuous equipment tests through the use of installed

online and offline sensors [3]. Turbine parts are

constantly monitored, and data is collected and analyzed at an off-site computer. Impending faults or failures are detected if there is a

noticeable deviation in data trends, such as for gear vibration or oil particle characteristics. Because condition monitoring detects

problems well in advance of actual failure, operators have ample time to order parts, schedule maintenance on days of low

wind conditions, and coordinate repairs or

refurbishment. It also minimizes unplanned turbine outages and downtime, maximizing energy output and revenue generation.

Predictive maintenance additionally allows

operators to lower inventory costs, since parts can be ordered as required instead of kept in a large backup inventory.

Analysis of previous faults and

breakdowns is an equally important component of predictive maintenance. Often this kind of

analysis can enable the operator to arrive at the root cause of particular component or machine faults, which when addressed, completely

eliminates said faults. Also secondary damages can be avoided and the general turbine

health can be improved. All of these benefits

ultimately result in reduced O&M costs for the operator.

Predictive maintenance and condition

monitoring are generally considered the

cheapest and most effective form of wind

turbine maintenance. This method virtually eliminates the need for unscheduled

75% of total wind turbine maintenance costs, according to a report from the National Wind [3]

. Moreover, there have been a number of case

studies supporting the cost-effectiveness of condition monitoring.

Just to give one example, operators of

a particular wind farm installed a vibration

spectrum analyzer and magnetically mounted accelerometer onto a turbine’s electric motor. The generated data indicated that one of the turbine’s gears had sustained some tooth

damage; inspection of the gearbox proved this analysis to be accurate. Due to this early fault detection, the operators saved 9’000 USD,

compared to a potential loss of 200’000 USD

had the faulty gear caused secondary damage to the entire gearbox.

Condition monitoring is recognized by

many to be the most effective maintenance

strategy, especially in the eyes of banks and

insurers. As such, some insurance companies are beginning to offer premium discounts

for wind farms with condition monitoring technologies installed [4].

While predictive maintenance promises

clear savings in O&M costs, it is unclear

whether or not the necessary sensor equipment and software will translate to higher capital costs. Furthermore, condition monitoring

requires skilled and knowledgeable operators who can interpret the data and accurately

predict part failures; staffing costs will still exist. Nevertheless, as far as maintenance

strategies go, predictive maintenance seems to show the most promise.

Another promising approach is power

performance monitoring. It utilizes historical wind turbine data to predict wind turbine performance parameters such as desired

33


O&M

ISSUE 3 September 2012

power output through the modelling of the

a recent study [7].

artificial intelligence are methods currently

service providers. On the one hand are original

wind turbine power curve. Data mining

algorithm, evolutionary computation and used for modelling wind turbine power curves

[5,6]

. The constructed models are used

as reference profile of the power curve in

order to detect performance deterioration and early indications of failures of an operational

wind turbine. Unexpected deviations from the desired values are promptly detected by the performance monitoring algorithm and the

nature of change in shape of the power curve

related to this deviation will indicate the type of malfunction. The operator can then implement corrective measures respectively to maximize energy yield.

III. Market Structure The service market for wind energy is

projected to grow substantially in coming years. In the European market alone, its net value is

expected to increase from 2,3 billion Euros in

2011 to 4,5 billion Euros by 2020, according to

34

Today’s wind energy O&M market

consists largely of two different types of

equipment manufacturers (OEMs) that are

able to provide both turbines and full-service

contracts. On the other are independent service providers (ISPs) that tend to specialize in

specific or outdated makes of turbines. Both types of service providers have their own

strengths and their own drawbacks. Of course, some major wind farm operators such as

utilities may conduct O&M services on their own.

Full Service with Original Equipment Manufacturers Many wind turbine manufacturers today

exhibit a large enough degree of vertical

integration that they can offer full service

contracts as well as actual turbines [8]. While

this makes sense for them economically, it also makes sense technically. Original equipment manufacturers are the ones who best

understand the technical specifications of their


O&M

ISSUE 3 September 2012

turbine designs. Some manufacturers even offer full service packages that go beyond purely

technical O&M service, covering financial risks related to O&M as well.

Smaller wind farm operators especially

seem to prefer this kind of service. OEMs

and full service offer one-stop maintenance, which may save time. This also seems to

be the preferred service method for banks [8]

and insurance companies . These financial

institutions desire stable costs, minimal risk,

performance guarantees, and certified staff to

carry out maintenance and repairs, aspects fullservice contracts can cover more easily. Two thirds of all operators in Germany have fullservice contracts with OEMs.

Specialization with Independent Service Providers Like on every other market, competition

may reduce prices and lead to more efficiency.

In this sense independent service providers can play a substantial role in bringing down wind power costs. Independent service providers may cater to a broader range of turbine

designs, so their services could be interesting for wind farms with turbines from different manufacturers.

ISPs may also specialize in specific or

outdated wind turbine designs, which could be especially beneficial to any operator

owning models no longer sold on the market. Smaller service providers usually repair

components instead of replacing them, which results in cost savings and much less hassle

if these components are no longer available. In addition, ISPs can offer customer service

adjusted to the specific requirements of the

clients. They may be able to offer rapid, more personalized service for wind farms.

ISPs seem to be favoured by operators

with many different turbine models. Some operators elect to hold off on signing full-

service contracts; instead, they cover parts of their required maintenance themselves and

leave the rest to specialists [9]. Thus, while the market appears to be leaning toward OEMs

and full service, ISPs still have many benefits to offer.

Both types of service offer their own

advantages. OEMs and full service can

potentially provide more plant capacity and

preventive maintenance, repairs that are not delayed by tendering procedures, and less

responsibility for the operator [5]. This also

seems to be the preferred strategy of banks

and insurance providers. ISPs may offer cost savings, more control and influence for the

operator, and more scope for comparing costs and quality.

At least in Europe, the wind energy service

market is traditionally dominated by OEMs [7]. However, with the impending expiration of a

growing number of first guarantee contracts, there may be more opportunities for ISPs to

further penetrate the market in the near future.

IV. New Designs Thanks to the efforts of wind energy

research and development, wind turbine

technology has seen continuous improvements,

in particular over the past two decades. Further improvements can be expected, which may reduce O&M costs or the need for O&M in general.

One of the key focuses for new wind

turbines is improved design, e.g. through

less parts and more simplicity. To that end, turbines with no gearbox, termed direct

35


O&M

ISSUE 3 September 2012

drive technology, are being implemented by a growing number of companies. The result

could be turbines with a reduced number of moving parts and hence lower maintenance requirements.

Wind turbine technology is constantly

progressing, and the potential for reducing

costs is still substantial. Like the automobile, which after 125 years still sees continuous improvements and innovation, it is only a

matter of time before the next generation of

wind turbines appears on the market, offering

Wallasch. "Vorbereitung und Begleitung der Erstellung des Erfahrungsberichtes 2011 gemäߧ 65 EEG." Federal Ministry for the Environment, Nature Conservation and Nuclear Safety, 2011. 3. Barber, Steve and P. Golbeck.“The benefits of a pro-active approach using preventive and predictive maintenance tools and strategies - actual examples and case studies.” WindRisk, n.d. 4. WWEA. Operation and Maintenance. 2006. World Wind Energy Association. August 2012 <http://www.wwindea.org/ technology/ch03/estructura-en.htm>. 5. Kusiak, A., Zheng, H., & Song, Z. (2009). On-line monitoring of power curves. Renewable Energy, 34(6), 1487-1493. 6. Marvuglia, A., & Messineo, A. (2012). Monitoring of wind

even greater reliability, improved efficiencies, and lowered costs across the board.

7. Garus, Katharina.“Service market is growing.”Sun & Wind

V. Summary

8. German Wind Energy Association.“Two thirds of all

farms’power curves using machine learning techniques. Applied Energy, 98, 574-583. Energy, September 3, 2012. operators have full-service contracts.”Wind Energy Market:

While wind energy seems to be sufficiently

cost-competitive with fossil fuel sources,

optimizing O&M is still a priority for wind farm operators. Therefore, a firm understanding

of the current conditions of the wind energy O&M market is crucial. The importance and

Yaerbook Service, Technology & Markets 2012, 22nd ed.: 84-91. 9. -.“Competing for top service.”Wind Energy Market: Yearbook Service, Technology & Markets 2012, 22nd ed.: 68-83.

Table 1 References

cost structure of O&M, the various approaches

1. IRENA Secretariat.“Wind Power.”Working paper.

be considered in order for wind operators

3. Liu, Jasmine.“Re: Re: O&M cost data for WWEA report.”

to maintenance, different service providers, and new emerging technologies must all

worldwide to reach best practice levels in operations and maintenance. References

1. IRENA Secretariat.“Wind Power.”Working paper. International Renewable Energy Agency, 2012. 2. Wallasch, Anna-Kathrin, Knud Rehfeldt and Jan

International Renewable Energy Agency, 2012. 2. IEA Wind. "2011 Annual Report." Annual report. International Energy Association, 2012. Email to Wesley Lien. September 2012. 4. Wallasch, Anna-Kathrin, Knud Rehfeldt and Jan Wallasch.“Vorbereitung und Begleitung der Erstellung des Erfahrungsberichtes 2011 gemäß § 65 EEG.”Federal Ministry for the Environment, Nature Conservation and Nuclear Safety, 2011. 5. Hossain, Jami.“Re: O&M cost data for WWEA report.” Email to Wesley Lien. September 2012.

On 18 September, WWEA, in partnership with IRENA, BWE and SVIF, held a half day congress during HUSUM WindEnergy 2012. This paper is a summary of the congress and reflects the main scope of the discussions. The proceedings can be ordered from WWEA.

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