On the pathway to net negative: ESG drives longer wind farm lifetimes.

Keir Harman, Director at DNV Energy Systems

Limiting global warming to 1.5°C is an extremely challenging task requiring a rapid reduction in greenhouse gas (GHG) emissions across all sectors and regions. Governments and companies are striving to reach net zero, but it isn’t enough. That is because, try as they might, many developing nations and hard-to-abate sectors will not be able to achieve zero emissions by 2050. Developed nations, leading companies and easy-to-electrify sectors are therefore going to have to go below zero before 2050. For the wind industry this means that the whole lifecycle must now be considered in terms of emissions, environmental and social impact as well as financial return on investment.

Environmental Social Governance (ESG) will need to be at the forefront of all investors’ minds as they strive for their vested assets to be low carbon, net zero or even net negative greenhouse gas (GHG) emitters, coupled with an increasingly environmentally aware investment mindsets, led by a will to act to counter the impact of the climate change crisis. There are now also governance obligations in investment regulations, in Europe this is guided by the EU Taxonomy. Investors naturally look to the renewables industry for the most sustainable investments and wind farms have long been the gold standard for a low carbon footprint option, when compared to fossil-fuel power generating assets. In order to rely on wind for net zero carbon ambitions, we must continue to drive down the full life cycle emissions (or carbon intensity).

Just a few years ago the lifetime of a wind farm was set to a rather arbitrary 20 or 25 years after which the turbines and infrastructure would be decommissioned and materials at best recycled. Today, previously untapped value of extending life has been discovered purely based on the potential of lowering levelized cost of energy, with the most common assumption now 30 years with tweaks to the operating strategy and associated engineering risk calculations. In most cases this change in philosophy alone has increased net asset value by more than 5%. With the new era of planning for giant offshore projects, many developers are now looking at design lifetimes of beyond 50 years from the outset.

The possibility of operating a wind farm for double its original intended lifetime, results in a return of almost twice as much low emission production for the same installed raw materials, dramatically reducing greenhouse gas (GHG) intensity. Additionally, a wind farm’s local community would continue to benefit from the employment and the social investment wind farms often deliver over this extended time. These environmental and social benefits are in addition to the direct financial uplift in the net asset value from the longer lifetime.

It is clear that age is now just a number and the useful lifetime of the asset depends on attitude to risk and aptitude for rolling replacement, refurbishment and more dynamic engineering design coupled with adoption of advanced data analytics techniques.

The financial case for a longer lifetime philosophy is clear, but let’s take a closer look at what longer lifetime means in terms of carbon emissions. In order for an asset to be considered ‘sustainable’ and receive more favourable interest rates under the EU taxonomy framework, it should yield a whole life cycle ‘Green House Gas (GHG) Intensity’ of less than 100g of CO2 equivalent for every kilo-watt hour produced (gCO2eq/KWh). Typically, a natural gas power plant will be way above this threshold with a GHG intensity of more than 500 gCO2eq/KWh. Studies show that a typical wind farm will already be well below this threshold returning a GHG Intensity in the range of 10 to 40 gCO2eq/kWh. But with a net zero ambition, these intensities must be further reduced. Longer life assumptions will allow a pathway to even lower intensities along with optimizing emissions in the supply chain. But net zero or negative emissions where the GHG Intensity drops to zero or below will require carbon capture and storage during the life cycle from extraction of raw materials through to operations.

As well as direct emissions, circularity in the wind industry has become a hot topic in recent times with investors seeking to account for what happens at the end of a wind farm’s life. In Europe alone there are over 17,000 turbines that are over 15 years old and which are expected to generate over 30,000 tonnes of composite waste from blades per year by 2025. Understanding the ‘recyclability’ is fundamental. Most wind turbines have recyclability of over 80% by weight, with the turbine blades being a major component that is not so easily recycled due to their composite construction. Understanding the material composition and recyclability of the turbine at the supply stage can allow the investor to accurately estimate decommissioning costs (or upside) and also drive up the overall circularity, ultimately targeting 100%. During the supply chain assessment social responsibility will also play a significant part. In recent times the impact of demand for materials such as Balsa wood in blades has come into question.

The good news is that the wind farm owner has access to the toolkit now that will help create and navigate a pathway to net zero emissions with a holistic approach to ESG:

First it is essential to understand the complex position regarding emissions. A full Life Cycle Analysis (LCA) can be conducted to identify the GHG intensity level of the asset and identify target areas where carbon emissions can be driven down. The LCA can be coupled with recyclability analysis giving a view on to what extent the asset components can be reused, repurposed or recycled. Supply chain audits following international standards provide a rigorous and objective analysis of supply chain activity from the mining of base raw material to delivery to establish emissions and social practice.

Next, based on the results of the LCA, the owner can change the operations philosophy, focusing on longer lower emission lifetime. This would include adopting data driven frameworks to manage risks of a longer lifetime. Such a framework would include sophisticated data analytics, digital twins that make use of ML and AI to calculate consumed lifetime of the asset and estimate remaining lifetime, scenario planning and changing wind farm control to optimize loads and deliver longer life.

A comprehensive life cycle management plan will eventually have a route map that includes Carbon Capture, Utilization and Storage. This fast-evolving field offers opportunities in the lifecycle to remove not only the emissions that are created during operations, but also emissions that were generated during the construction of the wind farm. Ultimately, paving the way for wind farm owners and investors to achieve net zero or even net negative GHG emissions.