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Wind projects ‘underperform against energy yield assessments’

Wind projects ‘underperform against energy yield assessments’

Energy yield assessments (EYAs) are power production estimates created by consultants to calculate the annual energy production (AEP) of wind projects. Investors rely on these assessments to determine the level of risk associated with a project.

Onshore European wind projects systemically underperform when compared with projections in their initial EYA, research has shown.

Research by renewable energy technical consultants Hendrickson Renewables found that “there does appear to be a systemic underperformance of projects with respect to their EYAs”. 

By how much are wind projects underperforming?

A long-term AEP estimate is often referred to as the 10 or 20-year P50. A P50 is a prediction that has a 50% chance of being exceeded. This and related downside scenarios – which set performance expectations for the life of a project – are factored into financing decisions.

The Hendrickson study of onshore European wind projects found that there was a median P50 bias of -8.9%. To provide some context, if a project was performing the same as, or better than, its pre-construction expectations set by the EYA, this figure would be at or greater than 0%.  

The study found that only 14.3% of projects matched, or bettered, their EYA projections.

‘Lower wind speed projects perform worse’

The research also concluded that there was “very little improvement when filtered for recent years”. The report added: “Projects with a COD [commercial operation date] of 2017 and later had a median P50 bias of -8.8%.”

Meanwhile, the study said there were few “observable trends with respect to project and turbine nameplate”. 

It continued: “It was comforting that within the data, newer and larger turbines did not come with additional underperformance. There appears to be a relationship with respect to project average wind speed. Lower wind speed projects tended to perform worse.”

The investors’ perspective

Hendrickson Renewables said the study involved a survey of investors with interests in 77 onshore European wind projects. The survey posed the question: how did projects perform against initial EYA P50 expectations? 

Hendrickson added that the purpose of the study was to “produce information from the investor’s perspective about the magnitude of P50 bias”. It added: “This is not an evaluation of any consultant but rather a view from the side of companies relying on consultant EYAs. It is hoped this study will be used as basis for further investigations into plant performance and can further the continual improvement of EYA predictions within the wind industry.”

Doubts about accuracy of pre-construction EYAs

The study said that, for a number of years, questions have been raised about the accuracy of pre-construction EYAs. “It is generally accepted that over time there has usually been a negative bias in project performance, or otherwise, projects have tended to underperform,” the report said. “In the United States, there has been very public dialogue on this topic. National Renewable Energy Labs (NREL) shows that within the US, while there has been large negative bias in the past, there has generally been improvement over time.”

The research also highlighted that, in recent times, several consultants have produced self-validation studies. The report said that, in 2019, DNV-GL reported a P50 validation result of 96.9% in Great Britain and 95.0% in Ireland for a study based on 87 and 25 projects respectively. Meanwhile, in 2020, UL reported that UL-DEWI, its European arm, had a 94.0% performance ratio in a study of 50 projects. 

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