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Is it time to rethink repowering?

by RES | Nov 08, 2020 | Reading time: 6 min

Onshore wind in the UK and Ireland (UK&I) was given a new lease of life in 2020 with the re-opening of the Contract for Difference scheme to new onshore wind in the UK, and the first round of the Renewable Electricity Support Scheme (RESS) auctions in Ireland. In the months since, there has been speculation about what this means for existing projects and their end-of-life strategies. On the other side of the Channel, the French repowering market continues to grow at pace with the use of CfDs.

Throughout the pandemic, RES has continued to support many clients with end-of-life strategies for their renewable assets – both through repowering and life extension.

In this double interview, Karen Anne Hutton (KAH), Head of Repowering & Life Extension for the UK&I, and Christophe Soulier (CS), Repowering Manager for France provide some answers on where their markets are currently, how COVID-19 has impacted repowering activity, and how owners should be approaching end-of-life strategies in the future.


Has end-of-life activity slowed during the pandemic?

KAH: We’ve not seen signs of a slowdown across the UK and Ireland. Over the past six months we’ve continued to work with our clients on strategies designed to make the most of their assets. Such work continues to be important in order to maximise energy generation and return on investment.

The key thing about an end-of-life strategy is to plan. Allow enough time to consider all the options on the table and implement your chosen strategy. In many cases, the pandemic has given clients more breathing space to explore those opportunities and collaborate with us.

CS: Despite the difficulties experienced globally during the pandemic, repowering activity has not slowed down in France. We continued to have many meaningful exchanges with our customers who own wind farms: we solidified some of our existing partnerships, and we even managed to sign a development contract with a new customer – Alpiq – for the repowering of the Gravières wind farm.

Are onshore wind farm owners finding it much more economical (in the current climate) to extend the life of their existing projects, instead of repowering?

KAH: To date in the UK and Ireland, life extension has been the preferred option for many of our clients. However, with many older UK assets losing Renewable Obligation Certificates (ROCs) from 2027 and the recent RESS-1 auctions in Ireland including an allocation for repowering projects, we are seeing an increase in enquires from clients keen to review all options to maximise the return on their investment and increase the value of their portfolio(s). These clients are also aware that in order to be ready to repower, if that is the chosen strategy, they need to start the process now. At RES we have the knowledge and experience to support them in exploring all the options available.

CS: In France, projects are eligible for a 20-year Contracts for Difference (CfD); this is the major difference with life extension when compared to the UK – as Karen Anne says some of the older UK projects could benefit from ROCs for more than 25 years. An existing wind asset continues to have value but the sooner a client receives repowering authorisation, the sooner they can secure a sale price (CfD). This leverage, coupled with a significant increase in production (two times on average) by installing larger turbines, increases the value of the assets.

On the other hand, the acquisition in France of a “ready to build” wind farm asset is very expensive. One of the advantages of repowering, for the owners, is to use the location of an already existing site as this provides a considerable financial advantage. For owners of older wind farms it is an opportunity to re-invest in a new asset, without having to make an acquisition.

When will more owners start turning their attentions to repowering?

KAH: As Christophe said, a strong repowering project will bring a welcome boost to most investor portfolios, giving a greater return than life extension. Repowering projects also provide clients with a better sight of where their next projects will come from.

Each project is unique and the decision to repower and/or life extend is highly project and market specific, driven by site constraints, legal and technical considerations and economics. Most owners won’t know what option to take until they speak to someone with the expertise and technical excellence to advise. At RES we encourage our clients to talk to us as early as possible to assess their options in the current market.

Deciding on an end-of-life strategy allows clients to tailor their operational strategy to ensure they get the most from their assets. Crucially, any decision about end-of-life management doesn’t need to be a binary one – we are currently helping clients in the UK&I with a combination of life extension and repowering.

As we approach the end of ROCs in the UK in March 2027 and look towards the future rounds of RESS auctions, more clients will consider repowering as a viable long-term option. That means it’s imperative to start to explore options now to ensure that repowering consents are in place ahead of this date.

CS: The tipping point when owners are interested in repowering is when we show the economic prospects of the project considering the constraints of the site in a realistic way.

In order to demonstrate the achievable business model, we have developed a methodology with Options Reports that detail the economic prospects of a repowering project and the development risks it entails. RES finishes these reports with a proposed strategy and development plan bespoke for the asset.

How much repowering potential exists in the UK&I/France?

KAH: Within 10 years we expect about 1GW of commercial-scale wind farms to reach their 25-year milestone in the UK&I. We estimate that the majority of these could be repowered successfully.

These are some of the first wind farms in the UK and these are in some of the windiest locations – prime real estate for energy generation – so it is vitally important to utilise their geographic location.

We’re committed to the green transition and want to see the UK meet its decarbonisation targets. Ensuring we keep as many onshore turbines turning is key to meeting these long-term goals. At RES our vision is a future where everyone has access to affordable zero carbon energy, so we have a vested interest in working with clients to find the right solutions for them and their assets.

CS: In France, there is 6 GW of onshore wind power that will be taken out of the purchase obligation in France by 2025, and a further 10 GW in 2030.

A third of these parks belong to players who do not have sufficient development capacity, which gives RES the opportunity to offer our services.

Why is RES well positioned to advise on and manage repowering projects?

KAH: RES is active at every stage in the life of a project, so this makes us well positioned to advise and manage repowering projects.

We sold our first subsidy-free UK onshore wind project last year, so we know what it takes to deliver economically viable projects in the current climate. We have over 39 years of experience across development, construction and operations – and a wealth of experience across our diverse teams to identify and secure new sites, secure Corporate Power Purchase Agreements (CPPAs), RESS auction prices, or Contracts for Difference (CfDs).

Not only do we have the expertise to manage assets and maximise return on investment for our clients, we also have the technical excellence to maintain and operate assets of all ages. We are proud to be a dedicated, client-focused life-cycle renewable energy company, and because RES is multinational, we can draw on experience in other regions and countries around the world.

CS: RES is well placed thanks to its skills and experience in the three key areas of finance, operations and development. These skills allow us to carry out work for clients which takes into account proper analysis and presents clients with the best options available to them.

What makes us stand out is our ability to provide clients with economic forecasting which is achievable and considers market specific development risks.

Lastly, our development presence across all of France gives us an advantage in a market where administrative constraints can be extreme.

Does the future remain bright for the long-term corporate PPA model?

KAH: Alongside the re-opening of the CfD scheme to onshore wind and the recent RESS auctions in Ireland, there’s still a strong market out there for corporate PPAs. The benefits of PPAs – safeguarding against future energy price rises, helping companies achieve sustainability goals and creating goodwill with employees and customers – are still attractive as corporates across all sectors turn their head to carbon neutral targets.

CS: The long-term corporate PPA model is well suited to projects that are not eligible for tenders. In France for the next three years, we expect that the repowering model will generally respond to calls for tenders.

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