Thursday, 20 October 2011

Harrison article revisited

On October 3, 2011, we published a reference to  John Harrison's analysis of wind farm economics.  In his article, Professor Harrison attempts to dissuade further wind farm investment in Ontario because he believes that the financial returns are poor and getting worse. 

We therefore posed the question, "Why are sophisticated organizations with long histories of renewable energy development in other jurisdictions continuing to invest in Ontario?".

We promised some follow-up analysis and this is the third and final instalment.  In instalment two, we looked at Dr. Harrison's technique of correcting historical capacity factors for annual wind speed variation.  We demonstrated that his fundamental assumption that wind turbine output varies with the cube of wind velocity wasn't true and therefore its use as a normalizing function is flawed.  We concluded that his normalizing factors could be off by 5 to 10%.

What Dr. Harrison was attempting to do was to remove the year-to-year variations in wind speed and just look at the operational performance of the wind farms.  Just like a high tide can lift all boats, high annual wind speeds can mask poor performance.  The performance factor that he was seeking is called availability.  It's the measure of the potential for a wind farm to generate electrical power.  100% is perfection.  It's analogous to whether your car will start in the morning, blow a tire, run out of gas, be in the garage for repairs, etc.

Since Dr. Harrison didn't have availability data from Ontario wind farms, he attempted to "back in" to the number by taking published capacity factors (i.e. the ratio of actual power produced, divided by the theoretical power produced by a wind farm if it ran 24/7 at full capacity) and normalizing those factors for year-to-year wind variations.

As we proved in the previous instalment, Dr. Harrison made two false assumptions:

1. All wind farms in Ontario experience the same wind in a particular year (he naively chose Toronto as the surrogate for all wind farms in Ontario)

2. Wind farm output varies with the cube of wind speed (it actually varies closer to the square of wind speed)

Based on those false assumptions, Dr Harrison reached the following conclusion:

Typically, the individual Ontario WEGS [Wind Energy Generating System] start within the first year or two at a capacity factor of about 30% (Kingsbridge, on the shore of Lake Huron, is an exception) which then declines. This decline is about 2% per year. This of course augurs very badly for a generating system designed for a 20 year life and with capital funding based upon a 20 year life. 

Rather than trying to correct Dr. Harrison's line of logic with localized wind speed data and actual wind turbine power curves, we went directly to availability data within the wind industry.  Each of the six wind farms mentioned in Dr. Harrison's analysis are unlikely to reveal their individual availability data publicly.  Their ability to maintain a fleet of turbines at top availability is proprietary.

However, we found something even better.  Garrard Hassan is the globally pre-eminent consultant in wind farm design and operational improvement.  As part of their service offerings, they accumulate data from a large number of clients and publish the findings without identifying individuals.  They recently published a report  on the availability of over 100 wind farms in North America.  The key graphic is shown below.

The graphic might be confusing (hint: just follow the purple bouncing ball - it's the average), but the takeaway is that availability suffers in the first year or two as wind farms work through what is called, in the reliability arena, "infant mortality".  That's when installation errors (typically loose wires or inadequate lubrication) are exposed.  However, those errors and weak components are weeded out fairly quickly without a safety issue and the wind farm settles into a very consistent level of availability. 

So, what does this mean for Ontario wind farms?  It means that Ontario wind farms run a close line to a fair return on capital and that power consumers in Ontario can expect them to be viable power producers for many years into the future.

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