An insight in the future and a thaw after the crisis become the watchwords of the third Wind Farm Operators Forum, held on 13 and 14 March 2019 in Gdańsk.
Once again Gdańsk became the centre for exchange of experiences related to wind farm management. This year more than 240 participants met in the WWII Museum to recapitulate the past year and look into the future, in line with the WFOF’s main theme: “Look ahead”.
“There is a thaw in contacts with the government since the last year’s Forum. Wind energy found its way to the Energy Policy of Poland until 2040,” said Janusz Gajowiecki, President of the Polish Wind Energy Association (PWEA), who opened this year’s meeting of the wind energy industry in Poland. However, referring to the draft amendment to the Renewable Energy Sources Act, he emphasized that not all governmental proposals meet the investors’ expectations. Although provisions of the document raise hopes for auctions held for new wind capacity, they do not favour installations already in operation. The draft interferes with the substitution fee, which will indirectly decrease green certificate prices.
European outlook
Wind energy in Europe once again faces a positive outlook. “Although 2018 was the worst in many years in terms of new capacity growth, onshore and offshore wind may become the primary source of electricity by 2027,” said Ivan Pineda from WindEurope. Offshore wind farms are becoming the leader. Last year they contributed to 14 percent of 189 GW of wind capacity installed in Europe.
The Old Continent’s wind leaders are France and Germany, responsible for 44 installed capacity and totalling more than all other European countries combined.
Pineda stressed that 2/3 of all installations are located in Germany, France, UK and Sweden. The latter was the leader in new installations in 2018. However, 14 countries, including Poland, saw no growth in wind installed capacity.
This occurred notwithstanding a clear decrease in wind energy production costs. In these terms, last year Poland became competitive towards other European countries. Auctions for new capacity in Poland noted prices around 45 EUR/MWh. At the same time, the prices offered in Greece reached 58 EUR/MWh, whereas in Germany – more than 60 EUR/MWh. Offshore wind farm construction costs are also decreasing.
WindEurope representative was anxious about the decreased interest in wind energy development in France and Germany, which were the leaders to date. This was caused by investor uncertainty.
“There were many legal actions concerning wind farm locations, therefore the investors did not propose many projects to avoid penalties and compensations,” Pineda explained.
Pineda’s recommendations to streamline the procedures related to the issuance of decisions and building permits for wind energy installations included “one-stop-shop” policy. “It is about decreasing waiting time for administrative decisions,” he added.
Amendment to the RES Act – pros and cons
During its presentation Janusz Gajowiecki, PWEA President stated that the National Energy and Climate Plan submitted by Poland to the European Commission indicates a strategy leading to energy transformation. “It assumes a dynamic growth of the share of PW and wind energy in the Polish energy mix after 2030 at the expense of coal. Wind is to constitute approximately 18 percent of installed capacity by 2030,” he reminded.
However, he noted that statutory regulations to strategic documents are not unambiguously received by the industry. This includes the draft amendment to the RES Act, published by Ministry of Energy at the end of 2019. Among the positive provisions of the draft Gajowiecki listed regulations enabling the holding of auctions in 2019, extending interconnection agreements for existing RES projects, consolidating the guarantees of origin scheme and enabling the refund of an additional balance only to the value of the negative balance paid to the producer.
However, the key flaw of the draft is the proposal to decrease the substitution fee level, entailing lower proprietary interest in the subsequent years. The draft Act introduces a new formula for the calculation of the unit substitution fee. “The single change will devastate positive aspects of the amendment, for it undermines the principle of protection of accrued rights, being the foundation of long-term investment in energy infrastructure, including wind farms,” Gajowiecki emphasized.
Oversupply of green certificates continues to be high
The substitution fee level is important for the industry, as its value translates into the price of green certificates received by RES installations (with the exception of biogas installations). The substantial oversupply of green certificates on the market was discussed by Marta Pruszyńska and Tomasz Surma from PWEA analytical group. The oversupply continues to be high notwithstanding the decreasing pool of certificates available on the market.
Following settlement of 2018, the oversupply may exceed 22 TWh.
Experts predict a decrease in the oversupply of green certificates; however, the rate of the decrease will primarily depend on migration auctions for biomass installations. They also stress substantial unpredictability of the market. “The market is still subject to substantial fluctuations caused by legislative actions. The substitution fee payment method and value are among the crucial factors. The draft amendment to the RES Act concerning the above issues related to green certificates may bring far-reaching consequences for the market,” the experts indicated.
They noted that the substitution fee – the “market cap” – has been deprived of its meaning in the previous and this year alike. For the majority fo 2018 the price of green certificates was above the applicable substitution fee. This was caused by the announcement of the President of the ERO, in accordance whereof the obligation to purchase green electricity could be fulfilled by entrepreneurs only by cancelling certificates of origin rather than paying the substitution fee. It has to be noted that currently the substitution fee amounts to approximately PLN 130 and is higher than the applicable yearly average. “Therefore, it is not possible to pay the substitution fee. We will face such a situation for the entire 2019,” PWEA analysts argued.
They also referred to the draft amendment to the RES Act, which changes the substitution fee calculation formula, binding it to electricity price. “The higher electricity price, the lower substitution fee will be. The algorithm for its calculation will result in capping the revenue of a RES producer at PLN 312.08. There’s no logic in that,” the experts comment.
The new substitution fee calculation formula required notification to the European Commission. Therefore, the provision will not become effective before 1 January 2020. If this is the case, the substitution fee next year will constitute the difference between PLN 312 and the average electricity price in 2019. “If the average electricity price is high, the substitution fee will be accordingly lower,” the experts explained.
Electricity prices
Trends on the market for electricity prices were also discussed during the Wind Farm Operators Forum. Janusz Kurzak from Enteneo, explaining the recent changes to the market, stressed the impact of long-term factors, such as macro-economic situation, fuel and CO2 emission allowance prices, as well as short-term ones, including weather.
In his opinion electricity prices in Poland last year were shaped primarily by increases in fuel and CO2 emission allowance prices. Variability risks on these markets in the Polish system will be decreased by new generation capacity appearing this year. Demand peaks will soon be stabilised by the appearing PV capacity, the capacity market as well as DSR schemes (based on curtailing power consumption upon request of the transmission system operator). In the long term the fluctuations will be further limited by offshore wind farms. Furthermore, electricity prices may also be affected by new legal regulations.
Innovation
The first day of the conference was crowned with a discussion panel on innovation in daily wind farm management.
Ivan Pineda from WindEurope emphasized cyber-security in wind farm management. “The Tulsa University in the USA demonstrated that it takes only several minutes to break into a wind farm management system and the SCADA control system,” Pineda said.
Giannis Poulis from K2 Management emphasized that savings start with the audit of one’s assets. “It is worth to precisely analyse the data available in the SCADA system, such as power curve or turbine availability.” Dennis Braun from the German company Steag presented a case study where data analysis helped to prevent a serious wind turbine failure earlier and in a more efficient manner.
There are two schools for tackling daily challenges. One prefers to commission data collection and analysis to an external company. The other process the data in-house. The Forum participants demonstrated a happy medium between the two approaches. “First it is worth to analyse data from our servers in-house. Cooperation with an external partner should commence only where this does not solve the problem,” the panellists advised. They also noted that in such circumstances it pays to review contracts with current service providers to optimise costs related to the performance thereof.
The discussion panel moderator – Hristoslav Pavlov from Deutsche Windtechnik emphasized issued with implementation of data analysis results. From his point of view, next to advanced data collection and processing methods, it is necessary to have know-how and experience enabling to properly translate the results of the analyses into preventive measures or turbine repairs. The results themselves do not solve the problem.
Workshops for proffesionals
Basing on a survey carried out after the last edition of the Forum and following numerous discussions with colleagues from the industry, the organisers decided to substantially increase the number of workshops, i.e. meetings in small groups dedicated to specific technical and commercial issues. This is one of the best methods to share experience in a small group and discuss issues appearing in daily work as well as to consult experts invited to the meetings by the Forum hosts.
This year’s workshops covered, among others, issues related to operational management forecasting, turbine inspections and maintenance strategy management optimisation. Furthermore, issues related to the possibility to increase wind turbine productivity by verifying and adjusting blade angle of attack or installing equipment increasing its efficiency were also discussed.
An interesting topic was the analysis of the impact of the gearbox oil used on energy efficiency of a turbine. The workshops were an opportunity to learn from an inspector of the Office of Technical Supervision how to deal with periodic inspection of equipment subject to the Office’s supervision. Furthermore, moder technologies (VR and AR) and their implementation in the OHS training process could not be forgotten.
Some workshops pertained to commercial issues. One could learn a number of guidelines concerning Corporate PPAs and see a presentation by the Polish Power Exchange covering the trade in guarantees of origin of RES electricity.
The workshops were very popular among participants of the 3rd edition of the Wind Farm Operators Forum, which was proven by the attendance in the workshop rooms. The organisers promise that the workshops will become an inherent element of the next meetings in Gdańsk, which already became a permanent item on the agenda of wind energy industry events.