O&M Cost Modelling, Technical Losses and Associated Uncertainties

1. O&M Cost Modelling, Technical Losses and Associated Uncertainties Axel Albers Dipl.-Phys. Deutsche WindGuard Consulting GmbH Oldenburger Straße 65, D26316 Varel a.albers@windguard.d testing- and calibration laboratory with quality management system according EN ISO/IEC 17025:2005 DAP-PL-3565.99 for power curve measurements, wind measurements, wind resource assessments for power curve measurements

2. Contents • Modelling of O&M cost development in time • Comparison of modelled O&M cost with real wind farm data • Development of WT availability in time • Combination of uncertainties of wind resource, expected technical losses and O&M cost

3. O&M Cost Issues • Questions: 1. How large are maintenance and repair cost? 2. How do maintenance and repair cost develop with the age of WT’s? • Problems A) analysis of future O&M-cost on component by component basis often impossible B) accurate public data on O&M cost is rare C) only limited number of wind farms in high age (15-20a) D) rapid development of technology and size of WT in last decade • Several studies show rise in Q&M-cost with WT age (BWE, WMEP, University of Durham and TU Delft)

4. Operational Costs by WT Age According to WMEP 2006 repair maintenance insurance property other Warranty Period operating year Source: WMEP 2006

5. Rise of Repair and Maintenance Cost BWE 2002 Study • In second decade cost twice as high as in first decade (BWE study 1999) • 12 €/MWh/a average cost over 20 years (corresponds to BWE 2002 numbers if 2000 full load hours are assumed), well in line with cost of most full service contracts • Often assumed by wind farm developers or financiers: - no rise with age - step functions: after 10a or steps every 5th year

6. Improved Approach for Rise in Repair and Maintenance Cost • There is no reason to assume a step function. • Integrated cost increase in 2nd decade compared to 1st decade overtaken from BWE 2002 study (double cost in 2nd decade)

7. Physical Model for Rise in Repair and Maintenance Cost • Damage increase per time is inversely proportional to remaining lifetime L-t - L: total lifetime - t : age • Damage increase is proportional to increase of cost C

8. Fit of Model for Rise of Repair and Maintenance Cost to Observations • In single years large outliers are observed, but the cumulated cost is fitted well by model. • Always the same cost rise has been assumed (twice as much cost in 2nd decade than in 1st decade).

9. Extrapolation of Repair and Maintenance Cost • standard approach : 0.012€/kWh/a averaged over 20a assumed (value from BWE-study 2002) • Estimated standard uncertainty of standard approach: 50% of modelled cost

10. Observations in Old Wind Farms In Respect to Availability • Experience based on: - hundreds of WT’s in age 12-20a in Eastern-Frisia (backyard of WindGuard) - due diligence in the frame of sales of wind farms - technical management of wind farms • Availability normally high, but within year 5 to 15 single events with long standstills likely • One event with 3 months standstill leads to 2.5% additional non-availability over 10 years • Consequence: 97% availability hardly possible in 2nd decade in case of only a single extraordinary event

11. Model for Increase of Availability Losses in Time • The initialisation is treated case dependent: - adjustment according to warranties or - adjustment according to availability of past operating period or - adjustment according to experience with wind turbine type

12. Example for Increase of Availability Losses in Time • Model adjusted to observed non-availability losses in past (after initial project stage with teething problems)

13. Combination of Uncertainties of Wind Resource (Revenue) and O&M-Cost • Problem 1: The lower the wind resource, the lower the wear (repair cost) Solution: i) calculate P50-value of O&M-cost and standard uncertainty of O&M- cost on the basis of Px-value of the production estimate ii) combine standard uncertainty of wind resource (revenue) and new standard uncertainty of O&M-cost as independent uncertainties iii) consider normal distribution of difference of revenue and O&M- cost with the combined standard uncertainty and calculate Px-value of this distribution

14. Combination of Uncertainties of Non-Availability Losses (Revenue) and O&M-Cost • Problem 2: increase of O&M-cost with age highly correlated with increase of non-availability losses • Solution: combine standard uncertainty of O&M-cost and standard uncertainty of revenue due to non-availability losses linearly

15. Result of Combination of Uncertainties moderate wind resource, high tariff high wind resource, low tariff • final result: risk assessment of net earnings

16. Conclusions • Individual modelling of expected O&M cost and availability over project lifetime is recommended • Long-term O&M cost often underestimated in planning phase: - often about 85% EBITDA-margin expected over 20a - latest study of BWE from 2009: 76% EBITDA-margin (average of 66 wind farms) • Cost modelling often results in positive earnings even after 20 years • Problem: type certificate valid only 20 years - building permit of WT may lose validity - extension of type certificate to longer period in most cases not possible i) high cost ii) WT design often not conform with latest revision of IEC 61400-1