Page 8 - AsiaElec Week 50
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AsiaElec RENEWABLES AsiaElec
Chinese wind sector set for repowering challenge
CHINA
CHINA is expected to repower 21 GW of its fleet of wind turbines by 2028, with the vast majority forecast to be replaced after 2023.
Until 2023, China’s near-term repower- ing potential is forecast to reach just 334 MW, although repowering demand should acceler- ate after this date, offering potential compound annual growth rates of 83%, according to a recent report form Wood Mackenzie.
The sector is also set to be dominated by state- owned enterprises, with the country’s private operators said to be less keen to invest in repow- ering because of their low appetite for risk and the lack of state subsidies, the report found.
The Chinese repowering market is forecast to expand rapidly from 2023 as turbines built dur- ing the 2007-2010 boom period reach the end of their 15-20-year working life and are gradually replaced.
Repowering involves replacing elderly tur- bines at established wind farms. At installations over 15 years old, operation and maintenance (O&M) costs are 50% higher than those of wind farms younger than five years, the report stated.
Wood Mackenzie consultant Kevin Han said: “There is an early mover opportunity for for- ward-thinking OEMs and service providers able to develop repowering solutions for at-risk tur- bines prior to this rapid acceleration in demand.
“Despite the potential, the market is likely to pay little attention to the repowering market in the near term due to the limited capacity of [the] aged wind turbine fleet, lack of supporting pol- icies and near-term focus on fulfilment due to expiring FiTs.”
A second driver of the repowering market
boom is the declining availability of good wind resources for new wind projects.
Most new projects after 2023 will be in regions with wind speeds below 6.5 metres per second (m/s) and have an internal rate of return (IRR) of no more than 10%.
Repowering at 9-10 m/s sites could provide an IRR of over 15%. As subsidy cuts take effect and the new-build market slows, developers will increasingly focus on the repowering market for new investments, the report said.
State-owned asset owners (SOEs) are antici- pated to be key players in the repowering market, as they hold more than 83% of operating wind assets. SOE exposure to ageing wind assets will strengthen their motivation to engage in repow- ering activities with an eye towards enhanced cash flow and higher profits.
“In addition, SOEs are better positioned to overcome barriers to repowering, including negotiating terms with local governments and grid operators on issues such as land-use rights and operating hours,” Han said.
“SOEs will dominate the market, command- ing a repowering market share in excess of 96% in 2028. The remaining non-SOE segment is mainly composed of private companies, which are likely to exit the market when their tur- bines retire due to low risk tolerance and lack of subsidies.”
While there is a paucity of policies to address challenges to the feasibility and profitability of repowering activities, Wood Mackenzie predicts that significant profits could be made from wind repowering, and policy measures are expected to be released in the 2020s.
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w w w . N E W S B A S E . c o m Week 50 18•December•2019
