Why should you read this article?
- Understand the benefits and the key costs of a holistic Power Curve Strategy from the early development stage of the project
- Learn why you should have a sound understanding of state-of-the-art testing procedures, including LiDARs
- Understand how the technical details in the Power Curve Warranty can have important commercial implications for performance and revenue
- Know what you can do when the project is already underway without a properly established Power Curve Verification Strategy
Power Curve Warranty, or Power Curve Schedule, is a separate element within the Turbine Supply Agreement (TSA) where the Wind Turbine OEM delivers a guarantee towards the defined Power Curve specification on a wind turbine model. The Warranty is normally expressed as a Guarantee Level (GL in %) of the defined Power Curve specification in terms of Energy. The Power Curve Warranty is besides the TSA Defect Warranty and Availability Warranty the key contractual protection for the performance of the turbines.
For many years, Power Curve Warranties have been the standard practice in commercial agreements between onshore Wind Farm Developers and Wind Turbine OEMs. The warranty states that at least one or few turbines are selected to be tested according to best practices, and the performance test results are assumed to be contractually representative of the whole wind farm.
For more than 30 years, the best practice method for onshore wind projects has been using Wind Measurements based on meteorological Met Mast mounted instruments. Met Mast mounted instruments are used for measuring the wind and atmospheric variables close to the wind turbine under Power Curve test. These best practices have been covered in the IEC 61400-12 standard series, first published in 1998 and outlining procedures for measuring the power performance of a wind turbine (Source: iec.ch). The IEC 61400-12-1 for power performance measurements is a formal reference in most, if not all, Power Curve Warranty Schedules offered by Wind Turbine OEM.
Following the legacy of onshore wind, many offshore projects were relying on meteorological Met Mast installations to be able to execute a warranted Power Curve Verification test. The methodology for carrying out Power Curve Warranty schedules was directly transferred from onshore to offshore wind projects. However, due to CAPEX and OPEX cost of having a offshore Met Mast, these were rarely constructed.
In the last 10 years, emerging technologies based on LiDAR (Light Detection and Ranging) have allowed adapting Power Curve Schedules for offshore projects, substituting expensive offshore Met Masts with Nacelle Mounted LiDARs to measure the wind in front of the turbine rotor.
Nacelle Mounted LiDARs have technically allowed to execute Power Curve tests offshore at a comparable equipment cost to onshore projects. They can be up to 100 times cheaper than an offshore Met Mast, making Power Curve testing offshore commercially viable. The latest best practice procedures for Nacelle Mounted LiDAR measurements for power curve tests have been covered by IEC Standard 61400-50-3 from January 2022. Still, many of the schedules offered by wind turbine OEMs within the Turbine Supply Agreement (TSA) are based on pre-standardisation guidelines originating from research publications or on some occasions documents that are not in the public domain.
It is important for wind developers to familiarise themselves with and make use of the latest industry-recommended best practices. Those wind developers who fail to take advantage of state-of-the-art LiDAR technology due to lack of expertise, will soon find themselves at a significant disadvantage in relation to the level of risks and cost associated to their Power Curve Warranty.
Before introducing new technology to the Power Curve testing, developers need to take a step back and make sure they have established a solid foundation by developing a comprehensive holistic Power Curve Strategy. The next questions are key to establishing a sound and holistic Power Curve Verification Strategy:
- What are the key steps for having a well-defined Power Curve Verification Strategy across the project timeline?
- Which considerations are critical during the TSA negotiation phase?
- How can developers manage to have technical insight from an expertise area that is concentrated in few experts worldwide?
Defining a Power Curve Verification Strategy
Contractually, it is always the Employer’s right (i.e., the wind farm owner’s right) to execute a Power Curve Warranty through a Power Curve Test. The test results will be compared against a Power Curve Specification. The process of starting and executing a Power Curve Warranty test and comparing it with turbine Power Curve Specification, is what we colloquially call “Power Curve Verification”. The Power Curve Specification is the power curve used as input to the Yield Estimation of a wind farm and therefore defines the investment business case.
A Power Curve Warranty also limits the risk of turbines underperforming and impacting the project revenue during the warranted years of operation. In case a turbine on a project fails to meet the performance Guaranteed Level (GL), there are provisions in the Warranty to be used effectively as a dialogue tool to implement remedies from the Wind Turbine OEM. Normally the costs of the Warranty Test will be significantly lower than the potential increase in performance accounted for during the first year after a corrective action has been agreed. There have been projects that with proper advice have been able to see an impact equivalent to 2-4% of Annual Energy Production (AEP) increase after a Power Curve Warranty test.
In addition, not having a proper Power Curve Verification Strategy in place can potentially impact the owners’ ability to divest a wind project. When a due diligence advisor from a potential investor sees lack or inappropriate handling of the Power Curve Warranty, they may recommend a penalty on the project value. Normally this penalty translates to a decrease in % on the Annual Energy Production valuation, thus impacting the project sales price (often 2% AEP reduction is seen).
A complete Power Curve Strategy considers three critical phases along the project life, and an expert steer in each of them is required for maximising the outcome (Figure 1):
- Contractual Negotiation
- Power Curve Test planning and execution
- Evaluation of results and maximising the test results derived information value
Figure 1: The 3 key phases to consider from Contract Schedule definition to Power Curve Test execution
1. Contractual Negotiation
Start engaging in a Power Curve Strategy from early development stage of the negotiations with the Wind Turbine OEMs. When possible, set a baseline agreement for the Power Curve Warranty through appropriate schedules inside the tender for the wind turbine supply. For offshore projects, acceptance of Nacelle Mounted LiDARs should be included in this baseline agreement.
During the negotiations with the potential wind turbine supplier, a more detailed negotiation of the commercial and technical terms will happen. For these negotiations, key critical items must be encompassed for a fair and executable agreement (Figure 2).
Figure 2. Key Aspects of Contractual Negotiation of the Power Curve Schedule
It is always worth to have an expert look at the OEM’s Power Curve Schedule within the TSA contract, so that you do not land in a situation where you are not able to adequately judge the technical specifics of the proposal. Regardless of the project phase, seek proper advice when contract terms are not fully understood, especially when a divestment of the asset could be under consideration. Otherwise the terms may favour the Contractor’s side in a non-obvious manner, and it is more challenging to change terms at a later point despite of the “in good faith” language.
Key aspects when reviewing Power Curve Warranty
One key aspect involving technical and commercial perspective is deciding how many and which turbines are to be tested. There should be a balance between the number of turbines to be tested taking on the size of the project and the preliminary costs of the power curve test execution. Increasing the number of turbines tested would not necessarily provide many advantages and will make the warranty execution too expensive. We recommend making a specific cost benefit analysis based on the limit amount claimable as Litigated Damages (LDs).
Once the number of turbines is decided, it is of good practise to agree on the specific turbine selection, i.e., the pre-selection of turbines nominated for the power curve test a later point in time. For locking down the turbines selection there is normally a legal notification period in the TSA that needs to be observed aside of the technical feasibility. Selecting the turbines for the test involves several technical factors such as the need of site calibration (on onshore sites), atmospheric characteristics at site, wind seasonal variations, logistics related to the test execution, timeline of the project construction, etc. These factors are evaluated against the costs of the tests, which require a holistic approach to balance pro’s and con’s.
In the case of offshore projects, another critical key aspect is choosing the right type of LiDAR technology. This requires expertise to negotiate the associated measurement uncertainty terms. Further understanding than the test prescriptions in IEC Standard 61400-50-3 is necessary, since public best practices covered by standards do not elaborate on the specific LiDARs available on the market. It is therefore required to agree at a contractual level the type of LiDAR device and how to specifically use it. Selecting the type of LiDAR and the measurement settings requires the parties to have first-hand experience with it to properly de-risk the Power Curve Warranty agreement.
A key final point is the level of measurement uncertainties as they normally impact the commercial agreement on the GL. Normally, the uncertainty level involved in the test results “pass-criterion” is formulated in the main Power Curve Warranty schedule.
Any specific proposal on the measurement uncertainty levels prescriptions that are deviating from public standards are to be scrutinised as in many cases they may hide OEM commercial margins with an apparent technical appearance. Specifically, LiDAR measurement uncertainty needs to be understood in depth because different type of LiDARs have spicily different uncertainties associated.
It is recommended to not accept terms which are not fully understood.
2. Power Curve Test planning and execution
The Power Curve Test needs to be properly planned and executed. If the Power Curve Warranty schedule is already in place without the previous considerations, there is always a chance to do an expert peer review to identify the key contractual terms prior to the test execution (Figure 3).
Figure 3. Key Aspects of Power Curve Test planning and execution
Key aspects in the planning of Warranty Power Curve tests
A common key risk aspect in the Power Curve Test execution is that the Warranty Schedules may not have a straightforward interpretation. The text in Warranty Schedules may also be based on text from public IEC standards which can have several interpretations and optional terms. Having a sound understanding of those contractual references is necessary to de-risk and, if needed, renegotiate some of the technical details in the Power Curve Warranty ahead of the actual execution. Making a few terms more technically sound and specific will facilitate a smooth execution, which ultimately would benefit both parties.
The technical terms in the Warranty Schedules need to be translated into a concrete scope for work for an Independent Tester to deliver cost effective services. Independent Testers are engineering companies which are accredited to execute power curve tests in compliance with the above-mentioned standard IEC 61400-12-1. On some occasions there is a list of electable companies inside the Power Curve Warranty Schedule. This list may also impact the pricing of the Power Curve Verification test.
To select a cost-effective testing contractor, we recommend launching a request through a competitive tender and if possible, having independent references on the former works in this field. Several matters such as local content or the installation logistics should also be considered as they can affect the Independent Testers costs.
Another common risk is starting the planning and preparation of the execution too late. The moment to kick-off preparations will depend on the project specifics. For example, many sites used in onshore projects require a site calibration to be done before the Construction phase begins.
For offshore projects, the requirement to use a calibrated Nacelle LiDAR needs to be accounted for in the Power Curve Verification test program. In general, the overall planning of the project should be studied with ad-hoc needs and put in place no later than construction kick-off for offshore projects (see Figure 4). And in many cases, an earlier preparation observing the specific notification period in the Power Curve Warranty need to be observed.
Figure 4. Steps for establishing a sound Power Curve Verification Strategy vs project lifetime phases
Key risks in the execution of the Warranty Power Curve tests?
In the Warranty Power Curve test execution, it is key to select a knowledgeable and engaged contractor that can act as Independent Tester. Despite the maturity of these testing services, it is not yet a commodity-type business, especially when LiDAR technology is involved.
Having an interlocutor who can understand, and peer review the external reports will smooth out any source of conflict. During test execution, having enough expertise into the technical details will increase your chance to gain value from the test results and will maximise the chances to use the Power Curve Test results as a tool to improve turbine performance.
Any possible claims for underperformance are to be based in extensive reports and spotless execution from the Independent Tester. So, it is important to be able to understand, digest the content and extract the critical information of the extensive reports following the IEC norms for report formatting. It is then critical to match or even surpass the expertise from the Independent Tester and the Power Curve test counterparts from the Wind Turbine OEM to have an influential and proactive dialogue about turbine performance results.
3. Evaluation of results and maximising their value
Key focus areas when reviewing Power Curve Report
The Power Curve Warranty test is normally expressed with a simplistic pass/no pass criteria on the performance GL. Yet, there is much more information to extract from a power curve report.
For example, it is common when following the Warranty terms that test uncertainty is only used to reduce the risk on the WTGs OEM, without acknowledging that test uncertainties are linked to a statistical distribution. However, measurement uncertainty is in any case bidirectional.
To understand whether the results are consistent, it is recommended to test several turbines as part of the Power Curve Warranty. That level of certainty and the aggregation of different test results contribute to building a comprehensible knowledge about the turbine and consequently the fleet performance.
As a final step, being able to engage with the Wind Turbine OEM in a constructive dialogue on the test results will lead to improvement in asset performance (see Figure 5). The conversation should involve both the assets management and the operational teams.
Figure 5. Key focus areas when evaluating the results of the Power Curve Report
Finally: The learnings from each Power Curve test should be implemented into your next negotiation with a Wind Turbine OEM. Capturing the technical learning for your technical or commercial staff can be facilitated by an expert on the matter.
Keep in mind…
- It is better to have an established holistic Power Curve Verification Strategy already during the TSA negotiation when the Power Curve Warranty Schedule is being negotiated
- Having a thorough understanding of LiDAR measurements will ensure you have an accurate depiction of the risks and costs associated with your Power Curve Warranty.
- Seek advice in case you lack in-house expertise during TSA negotiations: No contract text has a straightforward interpretation and even “in good faith” some aspects may need re-negotiation. The advice is applicable to situations where public standards are used as contract schedule references, like the IEC standards. These texts may be difficult to navigate for non-experts.
Want to learn more about how to deal with your Power Curve Warranty challenges?
PEAK Wind offer technical and commercial advice during Turbine Supply Agreement negotiations and involves experts with more than 20 years’ experience in the wind industry.
PEAK Wind also wants to disseminate knowledge on LiDARs to technical teams that have capacity to grow competences, we can offer ad-hoc training to those teams managing Power Curve test execution.
Just reach out to us, we are always happy to answer your questions and get into discussions on Power Curve Warranties negotiations and later test executions!
Rebeca Rivera Lamata | Senior Consultant | Get in touch
Lene Hellstern | Director & Head of Engineering & Asset Integrity | Get in touch
