wwea bulletin issue 3

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From The Editor

Welcome to the third edition of WWEA's Quarterly Bulletin!

This edition has a special focus on the outcomes of the 11th World

Wind Energy Conference which took place at beginning of July in Bonn. 500

participants from more than 40 countries on all continents gather together to

discuss in particular the main theme of the conference "Community Power -

Citizens' Power".

- The WWEC2012 Resolution was adopted by the conference delegates and identified the main

points of discussion, the main barriers for community power and recommends which action to take in

order to implement more such approaches.

- A group of WWEC2012 summarized the outcomes of the WWEC2012 from their viewpoint and has

developed very interesting proposals.

- During the IRENA workshop, the main focus was on wind power costs and on business models, in

particular related to wind power in developing countries.

- The World Wind Energy Award 2012 went to the Hepburn Community Wind Farm, the first of its

kind on the Australian continent.

- The US wind markets has been suffering since long time from the insecurity regarding future

support schemes. This situation has also a very detrimental impact on community wind farms which so

far represent only a rather small share of the installed wind capacity in the USA.

- The Hepburn Community Wind Farm in Australia has become a pilot project for many similar

projects on the continent.

- Also in Japan, pioneer projects play a very important role in the dissemination of community wind

and renewable energy in general. Especially after the Fukushima accident a new social movement can

be observed, strongly opposing nuclear energy and supporting renewable energy.

- Finally, another article reflects the importance of operation & maintenance, in particular related

to the cost structure of wind power.

Again I wish that this new edition of the WWEA Quarterly Bulletin may be interesting for you to

read and also useful for your work!

With best wishes

Stefan GsängerSecretary General of WWEA

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Editorial CommitteeEditor-in-Chief: Stefan Gsänger

Associate Editor-in-Chief: Shi Pengfei

Paul Gipe

Jami Hossain

Editors: Frank Rehmet Yu Guiyong

Visual Design: Jing Ying

ContactFrank Rehmet

[email protected]

Tel. +49-228-369 40-80

Fax +49-228-369 40-84

WWEA Head Office

Charles-de-Gaulle-Str. 5, 53113 Bonn, Germany

A detailed supplier listing and

other information can be found at

www.wwindea.org

Yu Guiyong

[email protected]

Tel. +86-10-5979 6665

Fax +86-10-6422 8215

CWEA Secretariat

28 N. 3rd Ring Road E., Beijing, P. R. China

A detailed supplier listing and

other information can be found at

www.cwea.org.cn

Published by

World Wind Energy Association (WWEA)

Produced by

Chinese Wind Energy Association (CWEA)

ISSUE 3 September 2012

01 From the Editor

News Analysis04 WWEC2012 CONFERENCE RESOLUTION06 WWEC2012: A BIRD’S - EYE VIEW OF COMMUNITY RENEWABLE ENERGY ACROSS THE WORLD12 IRENA’S SIDE-EVENT AT THE WWEC2012: WIND POWER ECONOMICS AND BUSINESS MODELS16 WORLD WIND ENERGY AWARD 2012 GOES TO THE HEPBURN COMMUNITY WIND FARM IN AUSTRALIA

Regional Focus18 COMMUNITY WIND IN THE UNITED STATES 22 COMMUNITY WIND: THE AUSTRALIAN CONTEXT26 ENERGY POLICY REFORM AND COMMUNITY POWER IN JAPAN

O&M30 WWEA BACKGROUND PAPER: OPERATIONS AND MAINTENANCE FOR ONSHORE WIND ENERGY SYSTEMS

Contents

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News Analysis ISSUE 3 September 2012

The World Wind Energy Association and the German Wind Energy Association welcome the presence of those 500 participants from 45 countries attending this conference, from wind and all other renewable energy technologies. The conference took place at a time which has brought “Energiewende” – the transformation of the energy system towards renewable energy – on the top of the

political agenda and in the focus of public attention. The conference covered all aspects of wind utilisation, related policies, manufacturing,

development, operation as well as economic and social issues, with a special focus on how to involve citizens in renewable energy and mobilise them as active beneficiaries.

The conference underlines that the “Energiewende” has actually started on the community level more than two decades ago, in countries such as Denmark or Germany.

The conference appreciates the support of the governments and governmental organisations, especially of the City of Bonn, the Government of North Rhine-Westphalia including the Ministries for Climate Protection, Environment, Agriculture, Nature Conservation and Consumer Protection, as well as for Federal Affairs, Europe and the Media, the German Federal Ministry for the Environment, Nature Conservation & Nuclear Safety, the German Federal Ministry for Economic Cooperation and Development, the European Union, GIZ, the Foundation for International Dialogue of the Savings Bank in Bonn, the International Renewable Energy Alliance, REN21 and all organisations and individuals enhancing the Conference.

WWEC2012 CONFERENCE RESOLUTION11th WORLD WINDENERGY CONFERENCE“COMMUNITY POWER– CITIZENS’ POWER”BONN, Germany, 3-5 JULY 2012

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News AnalysisISSUE 3 September 2012

The conference welcomes in particular the strong commitment and important contributions of the International Renewable Energy Agency IRENA to the event.

The conference applauds the scientifically substantiated statements made that a 100 % renewable energy supply can be reached worldwide in the foreseeable future, and specifically welcomes the decision by the German state of Rhineland-Palatinate to achieve a 100 % renewable electricity supply by the year 2020.

The Conference appreciates that the Hepburn Community Wind Farm (Victoria, Australia) and its initiators have been awarded with the World Wind Energy Award 2012 for establishing the first and groundbreaking community initiative in Australia that led to a community owned wind farm, an excellent answer in particular in order to increase social understanding, distribution of benefits and acceptance of wind power.

The Conference urges especially the German Government and the European Union to continue the successful policy frameworks like in particular the feed-in legislation and to develop a comprehensive long-term strategy that includes community power and local integration of renewable energies as key components. Recent decisions have lead to uncertainty amongst potential investors, and may have detrimental impact especially on community based investments.

The Conference welcomes that the concept of Community Power receives more and more common support worldwide, as also reflected in the very broad participation in this conference, by communities from all over the world. The conference encourages communities around the world to become renewable energy champions by harvesting the renewable energies in their environment. Governments are called upon to support these communities with dedicated policies.

The conference recognises that training and education have to be key elements of a strategy that aims at mainstreaming community power.

In addition the Conference supports the following objectives, policies and actions to:1. remove gradually all subsidies and introduce the internalisation of all externalities to achieve a level playing field;2. pursue compensatory regulatory frameworks such as sufficient and effective feed-in tariffs that encourage

renewable energy developments until this is achieved, and that provide sufficient financial security to promote long-term investment, especially for smaller and community based investors;

3. focus on the integration of wind power into existing power systems also on the local and community level, create smart grids and enhance decentralised synergies between the various renewable energy solutions in order to achieve an integrated 100 % renewable energy supply in the foreseeable future;

4. intensify the close cooperation with IRENA on the implementation of its work programme and contribute to its further refinement;

5. raise the political and social awareness on all levels of society and in particular amongst local communities and enable them to obtain access to the necessary knowledge and technologies;

6. create a stronger focus on community power in existing governmental, international, education, research and financial institutions;

7. reduce overall costs for energy supply by an increasing share of renewable energy power and by a stronger focus on least-cost decentralised options for 100 % renewable energy;

8. develop and expand national, regional and international financing mechanisms for renewable energy, especially making use of funds provided as part of the international climate change negotiations, and ensure that the Global Green Climate Fund gives priority to renewable energy and community based projects;

9. support communities especially in developing countries in obtaining easier access to technology and finance; 10. encourage all wind energy stakeholders to participate in the next World Wind Energy Conference which will be

held in Havana, Cuba, 3 to 5 June 2013.

Bonn, 5 July 2012

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The World Wind Energy Conference 2012 in Bonn brought together an impressive blend of organizations and people, with

presentation topics ranging from futuristic wind machines to wind development at extreme altitudes. The focus and presentations on community power suggested that support and investment in the community renewable

energy sector is broadly on the rise, with representatives from no less than twenty one countries across the world presenting on the state of community power. In many countries, these organizations are still relatively isolated in their mission to make the community renewable energy sector a significant player in local and national energy markets. There was therefore a sense of surprise that this is indeed a worldwide movement; that one could find

WWEC2012

■ Anna Harnmeijer / SCENE, Scotland■ Judith Lipp / TREC, Canada ■ Holle Linnea Wlokas / Energy Research Centre, South Africa■ Jarra Hicks / Community Power Agency, Australia■ Tore Wizelius / Vindform AB, Sweden■ Hans Soerensen / Spok ApS Consult, Denmark

A BIRD’S - EYE VIEW OF COMMUNITYRENEWABLE ENERGY ACROSS THE WORLD

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and exchange experiences with organizations that share this mission and implement virtually analogous solutions operating at the other side of the world.

The community power sector adopts a colourful array of legal and project finance models both within and between countries, making creative use of country-specific institutional forms, capital sources and tax regulations to provide local communities, local government and interest groups with a stake in electricity generation. A case in point is the Yansa Group (Mexico) directed by Sergio Oceransky, who negotiates subordinate debt and bank loans for investment in a subsidiary owned by the Yansa Ixtepec Community Interest Company1. Profits remaining after debt servicing are divided on a 50 percent basis between local social community-based development, and the promotion of further wind farm projects under the same scheme in other communities2. The foundation advises the communities on the use of earnings from wind energy sales, with a view to empower the community to build-up long-term assets that remain after the end of the project. Similar schemes are brokered by Just Energy (South Africa) and Sustainable Community Energy Network (UK)3,4. On the whole, the most commonly implemented association is undoubtedly the co-operative, used to channel revenues to mutually defined social, economic and cultural benefits. However, the legal definition of co-operatives varies per country and in some countries community interest companies or charitable private limited companies fulfil equivalent roles.

The maturity of the community power sector varies per country, ranging from being a seemingly politically contentious form of activism (Canada, Australia, USA) to being a serious and widely accepted player in the

energy sector (Germany, Denmark, Sweden). In the prior, community organizations involved in wind developments tend to face broad resistance from existing institutional and governance frameworks, and must overcome issues such as public anti-wind sentiment, wind veto’s at all levels of government and disproportionate planning and EIA legislation (see presentations by Meunsterman, Lane, Lipp and Daniels 5,6,7,8). With set-backs of 2km, Australian wind energy policy was shown to be the most hostile environment for community wind development on all counts, underlining the significance of the work carried out by Embark, Hepburn Wind and the Community Power Agency.

Recent policy changes in Spain and the USA have caused a slump in world demand for turbines and show how dependent the wind sector is on a favourable political framework. As demonstrated by Hans Soerensen’s observations on the effects of changes in Danish ownership regulations in 1995 (and again in 2008), the community sector is especially vulnerable to policy changes associated with wind development9. One can clearly distinguish an axis of evolution for the community power sector, framed and shaped by not only the political and financial landscape, but also by game changers such as the Fukushima disaster. While unique pilot renewable energy projects existed in Japan prior to Fukushima, the nuclear disaster has spurred dozens of community power initiatives10.

The degree to which communities collaborate with local municipalities, local energy companies, and developers as long-term partners in joint ventures to split capital costs and revenues varies on a case by case basis. However, pioneer organizations have tended to copy - paste tested models which has in several countries resulted in the existence of ‘a

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predominant business model’ for community-based projects. In Sweden for instance, the predominant business model for community wind developments is a fully community-owned consumer co-operative, spurred by a policy that provides consumer co-ops with 100% tax returns11. Germany has experimented with a wide range of business models in which local government often has a more prominent role, while public organizations have generally not engaged in joint ventures with communities in Scotland. The correlation between ownership and public acceptance for wind power appears to apply across the globe, and it is not unlikely that a vibrant community-based wind power sector is a prerequisite for high levels of wind power penetration12,13,14,15,16,17,18.

Communities seem to enjoy a love-hate relationship with commercial wind developers.

In the UK, after a decade in which the private sector has dominated the wind sector, joint ventures between commercial developers and communities are gradually on the rise19. Community organizations located far from manufacturing hubs, such as those in Canada and the USA appear to be experiencing a degree of supply chain dependence: they are dependent on the existence of a commercial sector for supply of small requisitions of small to medium-scale turbines20.

The challenges of securing local benefits from commercial wind ventures were particularly prominent in Holle Wlokas’ presentation on the interface between local communities and private sector wind development in South Africa21. Commercial developers bidding in the South African Independent Power Producer Procurement

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Programme (IPPPP) are evaluated against their contribution to economic development (30%) as well as against price (70%). Next to criteria for local content (for instance, local manufacturing) and job creation, developers are also obliged to commit between 1.5% to 2.1% of their total revenue towards socio-economic and enterprise development in communities within 40km radius around the project site. To the envy of our North American and British counterparts, renewable energy project developers in South Africa are required to prepare a socio-economic development plan in which they assess the needs of communities surrounding the proposed project site and develop strategies to address these needs. While this all sounds like a good idea and an opportunity for livelihood improvement, in practice it brings with it several problems.

There little guidance for developers in earmarking funds for achieving local benefits, nor in demonstrating impacts. Some communities are set to be eligible for multiple benefit obligations, while others are eligible for none, such that there is potential for conflict as well as migration to more favourable wind areas (‘wind nomads’).

We have learnt much, and there is no doubt that WWEC2012 was a massive success. It is interesting though, that there were broadly two streams of people at this conference which by and large did not converse. The first were the engineers, project developers, manufacturers and industry representatives, the second the social scientists, not-for-profits, umbrella groups and community organizations. Less than a handful of people seemed to be active in both these streams; a couple of strays,

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some academics and project developers such as Ostwind with a strong emphasis on civil participation. Our hope for WWEC2013 is that these two streams begin to take interest in each other’s issues and engage in serious dialogue. Here we come Cuba.

References

1. Oceransky S. (2012). Yansa’s Ixtepec Community Wind

Farm in Mexico: nurturing commons and stopping land

grabs, WWEC (2012).

2. Ashoka - Innovators for the public, https://www.ashoka.org/

node/5878

3. Just Energy, http://just-energy.org/

4. Sustainable Community Energy Network, http://scenetwork.

co.uk/ensuring-project-success

5. Lane T (2012). The Australian context; Community Power =

Community Development, WWEC 2012.

6. Meunstermann I. (2012). Wind Farming in Australia versus

the ‘Big Carbon’s Plan: Mine coal, sell coal, repeat until

rich’, WWEC 2012.

7. Lipp J. (2012). The Untapped Potential of Community Power

in Canada: Addressing the challenges, WWEC 2012.

8. Daniels L. (2012). Local, national and regional policies,

barriers, incentives to community power in the USA, WWEC

2012.

9. Soerensen H. (2012). Experience from the Danish law about

forced involvement of locals in wind projects, WWEC 2012.

10. Furuya S. et al (2012). Making Community Power Happen:

The progress report and findings on Japanese Community

Power, WWEC 2012.

11. Wizelius T. (2012). Windpower ownership models - escape

from the market, WWEC 2012.

12. Maegard P. (2012). Green RE-Heat: Integrating Wind Power and

Thermal Energy Storage as the Least-cost Retail Energy Option,

WWEC 2012

13. Koch HJ (2012). In: Mainstreaming Community Power: Strategies

and policies, WWEC 2012.

14. van Uexkull J. (2012). In: Mainstreaming Community Power:

Strategies and policies, WWEC 2012.

15. Pesch J (2012). Paradigm shift: on flat and round energy concepts,

WWEC 2012.

16. Hvelplund F (2012). Black or green windpower, WWEC 2012.

17. Barteld H.(2012). Example Dardesheim (Germany), communities

realizing 100% renewable energy solutions, WWEC 2012.

18. Cowell R. (2012). Promoting Community Renewable Energy in

a Corporate Energy World: New policy developments in the UK,

WWEC 2012.

19. Harnmeijer A. (2012). The current state of community renewable

energy in Scotland, WWEC 2012.

20. LaDuke W. (2012). Native Wind for the Future of our mother

Earth, WWEC 2012.

21. Wlokas H. (2012). How can national mitigation actions foster

community development? The case of low-carbon community

development around wind farm projects in South Africa,

WWEC2012.

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On 3 July 2012, IRENA’s Innovation and Technology Centre held a side-event onWind Power Economics and Business Models at

the 11th World Wind Energy Conference and Exhibition that was organised by the World Wind Energy Association in Bonn Germany. The event examined aspects of wind power economics and recent IRENA analysis of renewable power generation, the role of small wind turbines in mini-grids and islands, and business models for wind power development in developing countries.

Cost of Wind Power

While leading wind experts and economists discussed issues ranging from costing and competitiveness of wind power, small wind turbines for mini-grids and islands, wind costs and deployment in Central and South America and business models for mini-grids and large wind project development in developing countries a single theme permeated the event: a renewable revolution is underway. Due to the rapid deployment of renewable power generation technologies

and the corresponding rapid decline in costs, renewable energy has become an economically viable option for both private and government bodies looking to diversify energy sources, meet energy and climate goals, accelerate rural electrification and reduce the costs of running isolated grids. Wind turbine prices appear to have peaked and the installed cost wind is expected to fall in 2012 and, in all probability, out to 2015. The rest of this article will discuss the core messages explored at the side-event.

Thanks to data collected by IRENA over the course of 2011 several conclusions were highlighted and expanded on during the event. The first and perhaps most significant is that almost half of all new power generation capacity additions are from renewable sources. This share has doubled in the last five years.Renewable power generation systems are today the most economically viable solution for off-grid electrification, mini-grids and many grid extension projects in developing countries. IRENA has estimated that if current trends continue, by 2030 half of total installed generation capacity could be renewable.

The event opened with the question of whether the recent decline in wind costs was likely to be sustained in the coming years.

IRENA’S SIDE-EVENT AT THE WWEC2012

By Michael Taylor / IRENA Innovation and Technology Centre

WIND POWER ECONOMICS AND BUSINESS MODELS

↑Michael Taylor.

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Conclusions drawn at the conference suggested that this trend was likely to continue due in part to increased competition. PV is also increasingly competitive and has attained grid-parity against residential tariffs where installed costs are competitive and resources good. Supporting this downward trend is the effect low-cost manufacturers are having on equipment prices. In the solar PV market, costs are falling quickly, but the growth in market share of low-cost manufacturers has resulted in even more rapid cost reductions having important implications for the costs of hybrid PV-wind mini-grids. If this trend of emerging market manufacturers pushing down prices in established markets, similar to experience in PV, eventuates for wind turbines, then costs could fall significantly. Finally, the trend towards larger wind turbines is allowing capacity factors to increase and is reducing the Levelized Cost Of Electricity (LCOE) from wind.

The Future of Small Wind

Having discussed the competitive position of wind, the side-event moved on to discuss the role of small wind turbines in the future energy market and asked how policy may be improved. Participants agreed that small (<100 kW) and medium sized (100-500 kW) wind turbines are playing an increasing role in markets where large wind turbines are less suited, such as in energy access projects and on islands. However, China’s strong presence in the wind industry, with 0.5 million small-scale wind turbines in operation in Inner Mongolia, demonstrates that small wind energy is also becoming a mainstream technology. As wind turbine technology becomes cheaper IRENA emphasised the need to deepen our knowledge of cost and quality of turbines and develop harmonised technical standards

and certification in order to accelerate deployment and reduce barriers.

Wind Power in the Developing World

Having addressed the role of wind energy in the developed world the conference turned to the role of wind technology in the developing world. Issues addressed revolved around the competitiveness of wind today in Central and South America, the outlook for wind turbine and total installed costs and current wind project development barriers.Wind is receiving increasing attention in Central and South America; however, despite an improving competitive position relative to hydropower and shorter significantly shorter lead times significant barriers have slowed wind deployment on the continent below its undoubted potential.

Business Models for Minigrides

The conference turned to the economists to address the critical questions of how to develop business models for wind based mini-grids or hybrid mini-grids. In all cases, the need for a viable business model was emphasized but differences drawn based on project size. For mini-grids a community based approach was highlighted as often best to gain local buy-in to ensure the success of the project (reliable payments and continued O&M). The economics and viability of projects is closely tied to issues of ownership, electricity price setting, recuperation of dues, costs for transmission (if applicable), distribution and connection. Critically, various types of financing models, including microfinance, require attention if wind in mini-grids is to see rapid growth. Similarly, creative payment models are often required, as although the willingness to pay for electricity can be high, consumers in developing

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countries are often constrained to making very small, sometimes irregular payments as income is often only earned daily or weekly on an irregular basis.

Examples of small wind turbine projects in Fiji, New Caledonia, Guadeloupe, Martinique, Mauritius and Dongfushan Island were presented demonstrating the suitability of micro-grids and hybrid grids for islands. Under these circumstances the technical solutions to manage micro-grids are available and often the major hurdle is overcoming the pre-conceived ideas of existing grid operators and familiarising them the different requirements of managing these systems. Larger-scale systems are also being developed with community input around the world, including in South Africa, where JUST Energy has two projects in South Africa, one at ST Helena Bay with the Seeland Development Trust (30 MW) and the Riverbank project in the Eastern Cape (66 MW) with the UncedoLwethuFarmers Cooperative.

Community Wind in Developing Countries

Unfortunately despite increased interest in wind from non-OECD countries, large-scale projects remain limited relative to potentials, although many countries either have or will soon introduce more favourable regulatory regimes for wind, so opportunities for growth are emerging. Challenges highlighted revolve around the cost of infrastructure, the need for imported equipment and high transportation costs, and higher financing costs tied to smaller market size.

Other obstacles highlighted focused on high operations and maintenance costs in some markets and inadequate data on O&M costs, difficulties of measuring policy success and securing funding and securing reliable electric supply. Operation and maintenance (O&M)

costs still vary greatly between projects and countries. As capital costs decline, unless O&M costs also decline, their share in the total LCOE of wind will increase. This is an emerging issue that IRENA plans to address in more detail in conjunction with WWEA and others.

A crucial issue if a sustainable growth in markets is to be achieved is that policies need to be tailored to each stage of a technology’s deployment and appropriate business models need to be developed for each stage. Although technology is an important part of a business model, side-event participants noted that investment in stakeholder and local community relations, as well as utilising proven tariff and billing models are critical to success. One part of the solution to help facilitate the latter component can be the emergence of cheap smart meters that allow pre-payment, load and energy limits, and demand-side management in one. An appropriate institutional framework with a profitable and scalable tariff, and regulatory/licensing system is also crucial.

Private investors also face several key challenges in rural electrification: to create economic growth through reliable electricity supply with modular expansion potential, with special attention to be paid to optimising operation procedures and lifetime performance.

Conclusions

In an attempt to address some of these obstacles the conference made several recommendations. The need for additional research and development into the design of small wind turbines was highlighted with the aim of optimising hybrid systems in order to minimise diesel and operation and maintenance costs, as well as improving the reliability of turbines and reducing their costs.

Financial considerations must be taken

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into account under the business model. Large investments are required and it is imperative to find the right local partners, as well as understanding the investment needs in complementary local infrastructure. This said, financial aid exists in the form of aid banks, and strong local business partners. An important barrier is that smaller projects will often struggle to secure financing as the sums involved don’t justify the transaction costs from a banks perspective. The pooling of funding for smaller projects, or the use of seed funding which can be recycled into new projects were offered as potential solutions.

Cost reduction strategies include the maximisation of low-cost local manufacturing, while good policy design can help spur the development of larger local markets with improved cost competitiveness. For instance, switching telecoms towers power supply from diesel to renewables often makes economic sense today on a standalone basis, but policies to encourage or require analysis of the expansion of this type of project to consider the opportunities for rural for local electrification at the same time can offer significant synergies and cost reductions.

Finally, tips where given on how to structure the business model. Participants highlighted the need to structure models in a way that helps facilitate securing investment capital, particularly by ensuring that a reasonable financial return to investors can be achieved. This requires sustainable cost recovery at end-user level. Building in a clear element of cost recovery, event in donor-funded projects maintains an expectation to pay which protects will help ensure supply over the lifetime of the project is maintained, while it will also provide concrete examples that can reduce a funders perceived assessment of project risk and therefore help secure funding on more reasonable turns. Where

development money or impact investors are involved, cost recovery can slowly increase to cover the full cost of the project, freeing up the original capital for new projects which, with the experience of successful cost recovery, will attract a lower risk premium.

And last, but not least, the conference reviewed next steps. Participants highlighted the importance of the ongoing effort create a standard certification and labelling framework for small wind turbines in order to reduce uncertainty and simplify banks risk assessments. In an effort to highlight the role of wind energy in rural electrification, the Alliance for Rural Electrification has published a best practices publication. Similar publications on the uses and lessons learned of hybrid mini-grids have been published to assist policy-makers and practitioners. The work of IRENA on standards, the global wind resource atlas, capacity building in developing countries and on costing was acknowledged as making an important contribution to accelerating deployment.

In addition to synthesising the results for wind power, biomass, solar PV, concentrating solar power and hydropower, IRENA also drew attention to its research on the costs of renewable options for transportation and plans in 2013 to look at the costs of renewable technologies and energy sources for stationary applications. IRENA continues its work on capacity building, energy planning, energy scenarios, renewable readiness assessments and technology transfer.

To download for free the five power generation costing reports got to

www.irena.org/publications

For further information contact Michael Taylor [email protected]

For more information on the Wind Power Economics and Business

Models conference and renewable energy please visit IRENA’s website at

www.irena.org.

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On the occasion of the 11th World Wind Energy Conference 2012 in Bonn, Germany, the Board of the World Wind Energy

Association has decided to give the World Wind Energy Award 2012 to the Hepburn Community Wind Farm in Victoria/Australia and its initiators.

The WWEA Board wants to recognize the Hepburn Community Wind Farm’s contribution to the introduction of community wind power on a large scale. The award is given to the initiators of the wind farm for

launching Australia's first and groundbreaking community initiative that led to a 4.1 MW community owned wind farm, an excellent answer in particular in order to increase social understanding and acceptance of wind power.

Seen from outside of Australia, the project may appear small. However, the Hepburn Community Wind Farm stands for a social movement outside the strong fossil lobby in Australia, aiming at a fundamental energy transformation that is driven by Australia’s citizens. As the first initiative for a community wind farm on the Australian continent being started in 2004/2005, the time when WWEA held its WWEC in Melbourne, the wind farm has become an example and important reference project in Australia and has inspired many similar initiatives around Australia and beyond.

WWEA appreciates in particular that other communities and initiatives in Australia are now using the ‘Hepburn Model’ in order to develop their own community power

WORLD WIND ENERGY AWARD 2012

↑Peter Rae hands over the

World Wind Energy Award

2012 to Tary Lane from

Hepburn Community Wind, in

presence of Prof. He Dexin

and Paul Gipe.

GOES TOTHE HEPBURN COMMUNITY WIND FARM IN AUSTRALIA

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projects and WWEA hopes and expects that many of these initiatives will materialize in the future. The establishment of the interlinked community power assistance centre Embark adds materially to the ongoing impact of the groundbreaking Hepburn project. WWEA would like to express its willingness to work closely with the Australian wind and in particular the community wind sector and to extend its full support and cooperation in fostering the transformation of Australia towards 100 % renewable energy and a strengthened understanding of the importance

of sustainability. Taking into consideration the important

role that Australia plays in the international energy sector, such achievements and ambitions have also far-reaching international implications and will contribute to speeding up the global energy transformation. With the award, WWEA would also like to encourage the government of Victoria and Australia as well as governments around the world to support communities in their efforts to harvest clean and inexhaustible wind power, for their own benefit and for the benefit of our planet.

• 2011: the Egyptian wind turbine manufacturer Sewedy Wind Energy Group SWEG

under the leadership of Ahmed El Sewedy

• 2010: the Founding Member States of the International Renewable Energy Agency

IRENA

• 2009: the Hon. George Smitherman, Deputy Premier and Minister of Energy and

Infrastructure of Ontario

• 2008 jointly to: Ms. Jane Kruse, and Dr. Preben Maegaard, Denmark, Paul Gipe, USA

• 2007 jointly to: the Hon. Ms. Dilma Vana Rousseff, today President of Brazil, former

Chief of Staff Minister of Brazil and former Minister for Mines and Energy, Ms Laura Porto,

Director of the Department of Renewable Energy of the Ministry of Mines and Energy, Mr.

Valter Luiz Cardeal, Director of Engineering and interim President of Eletrobrás, Dr. Sebastião

Florentino da Silva, Coordinator of the Proinfa Programme at Eletrobrás

• 2006: the Chinese wind turbine manufacturer Goldwind under the leadership of Mr.

Wu Gang

• 2005 jointly to: Hon. Vilas Muttemwar, Indian Minister for Non-Conventional

Energy Sources, and Dr. Pramod Deo, Chairman of the Maharashtra Electricity Regulatory

Commission

• 2004 jointly to: the German Minister for the Environment, Hon. Jürgen Trittin, and

the German Parliamentarian Dr. Hermann Scheer

• 2003: the Indian wind turbine manufacturer Suzlon under the leadership of Mr. Tulsi

Tanti

• 2002: Prof. Dr. Amin Mobarak, Chairman of the Industry and Energy Committee of

the Egyptian Parliament

The World Wind Energy Award – previous winners:

Regional Focus

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COMMUNITY WIND IN THE UNITED STATESBy Lisa Daniels / Executive Director of Windustry, U. S. A.

In order to understand Community Wind it is helpful to first look at the overall US wind industry. Currently the US wind industry is facing an unprecedented confluence of unfortunate events that all equal one thing, a great amount of uncertainty.

• This is an extremely difficult political time. We are in the midst of a major election cycle for the US president and a high percentage of seats in US Congress along with significant numbers of seats at state legislatures. For the past few years, the politics in Washington have been terribly caustic and unproductive, with 2011 being noteworthy as the least productive Congress in memory. In this political setting, with no one getting along or willing to work across party lines to pass legislation, the renewable energy incentives for US are expiring.

• The major incentive, the Federal Production Tax Credit (PTC), is set to expire at the end of December. Today we are in the boom part of the boom/bust cycle. No one can predict what will happen in 2013 or 2014 which is when this gap in legislation will be felt. This policy has a 20 year history of being on again,

off again policy, but with the economy and other circumstances as detailed below, the industry is finding it extremely hard to float through this period of uncertainty. The slack is gone, and companies are laying off large numbers of employees, narrowing their US operations, going out of business or consolidating.

• Federal support for community wind comes primarily through the USDA Farm Bill which is in the process of being rewritten, but as of the writing of this article, it is not complete and the current law expires at the end of September. The Farm Bill must be temporarily extended while Congress is on leave to campaign for elections. Starting in the 2002 Farm Bill, wind energy is classified as a farm product. The USDA REAP (Rural Energy for America program) is hugely popular and fully subscribed with proposals for renewable energy and energy efficiency upgrades in every round of funding. There are other supportive programs in Rural Development, Rural Utility Service and Natural Resource Conservation

↑Lisa Daniels.

Regional Focus

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Service. Congress has been debating what programs will get mandatory funding and which have to be specifically appropriated every year. It is yet to be determined how this story goes forward.

•The US economy continues to be lacking in terms of manufacturing, jobs and production. In many areas of the country, electricity use significantly decreased in 2009 with the financial meltdown and it has not recovered or resumed its growth trajectory. With the economic downturn, utilities and energy companies are not signing many new contracts for wind generation. And in states where there are Renewable Energy Standards for a percentage of the electricity to come from renewable resources, it is much easier to reach compliance with overall electric use down.

• A great deal of new attention to natural gas and its current amazingly low prices –at about $2/MMbtu. This is having a huge impact on the electricity markets in the US. It is impacting other fossil fuels such as coal as well as renewables. There are new deposit discoveries and new controversial methods of extraction with the hydraulic fracturing or “fracking”. In the absence of federal regulation of fracking, it is up to the states to figure it out. And they are just getting up to speed on the impacts.

• The European debt crisis is contributing to the lack of investment in wind in the US as European energy companies have always had a big role in the US wind market.

There is no overall national energy policy in the US. We had our hopes up for the Obama administration but they took on healthcare rather than energy in the first term. If Obama is re-elected to a second term, there would be a great opportunity to set national goals and renewable energy standards. For now we can only watch with envy and celebrate the progress being made in Germany with their

goal of energy independence by 2050. There is plenty of work for all of us to make progress in whatever way we can for the health of the planet.

On a brighter note, where the federal government doesn’t have an overall energy policy, on a state by state basis there are several different policy approaches that support getting community wind projects in place. Working your way through the policy puzzle to find the right combination of federal and state incentives is what makes a community wind project viable.

The Community Wind map for the US indicates that most states with commercial scale wind development have Community wind. This map is as of Dec 2011. (see attached)

The American Wind Energy Association has the 2011 total wind installed capacity at 6816MW and Community wind at 457MW. In 2010, the total wind installed is 5214 MW and the Community wind tally is 292MW. So Community wind grew 57% from 2010 to 2011. Clearly this is a small specialized area of the market but it is seeing significant growth even in these hard times.

States adopt their own energy policies to get renewable energy in place. Where Renewable Portfolio Standards are the primary market creation mechanism often this translates into large commercial scale and utility scale projects. As I mentioned earlier, many of the targets have been met for now in many places up through 2020.

Other leading state policies include net metering which can be quite effective in helping get community wind projects of various sizes and shapes in place. Other important state policies include: interconnection policies, loan programs, property tax incentives, sales tax incentives.

Also there is a small array of effective financial mechanisms that we have seen in

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some states including: 3rd Party PPA policies, clean energy funds, feed-in tariffs or CLEAN contracts and PACE.

With all of the current events putting pressure on energy and renewable markets in the US, there will have to be changes, whether or not the PTC is renewed; whether or not the REAP program survives the rewrite of the Farm Bill. This is a good time to embrace more diverse approaches to building renewable energy in the US. We are working to promote business models that increase the number of people involved, expand the types of policy, and explore more community-based business models. Diverse policy means diverse business models. In times of chaos, there are gaps where innovation can happen. With a slow

down of building larger wind projects, it may be an opportune time for turbine, crane and construction crew availability. Getting the local communities and small businesses involved in wind project development can only be a good thing for the local economy and the environment. Natural gas and other fuels have supply chains that are all about big energy business. Renewable energy on the other hand is, by its very nature, more accessible and more dispersed. There is plenty of opportunity for smaller more distributed wind generation to fit in.

This is a defining moment for communities to work together, share their experience and grow the market for locally owned renewable energy.

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4th World Summit for Small Wind WSSW2013"Small Wind Certification - Status, Barriers, Prospects"

Husum, Germany, 21 & 22 March 2013

WWEA and New Energy Husum are pleased to invite you cordially to the 4th World Summit for Smal l Wind WSSW2013, taking place in Husum/Germany on 21 and 22 March 2013, during the New Energy 2013 trade fair.

The World Summit for Small Wind is an annual opportunity to discuss the most important issues affecting the domestic and foreign small-scale wind industry and to present news from a variety of countries. It is the perfect meeting place fo r ex p e r t s , p o l i c y m a ke r s , interested individuals, providers, m a n u f a c t u r e r s a n d s u p p l y industries from the small-scale wind turbine sector from all over the world.

The World Summit for Small

Wind will be held on the first two days of the New Energy Husum trade fair (21- 24 March 2012). New Energy Husum is a trade fair for all types of renewable energy, and is the leading trade fair for small-scale wind turbine technology, and as such is the ideal platform for a congress of such international importance.

Again top international s m a l l w i n d e x p e r t s a n d p a r t i c i p a n t s f r o m a l l o v e r the world will discuss latest developments and achievements of the small wind sector.

WSSW2013 wil l feature the special topic "Small Wind Certification - Status, Barriers, Prospects" and will comprise a two-day program covering all important aspects of small wind

The abstract should be concise and clearly state results, objectives or key components of the paper. They should not exceed 500 words and should contain a list of key words. Please submit and electronic copy (in doc format) of your abstract (not exceeding 2 A4 pages) by 15 December 2012 to Mr. Thomas Seifried (Messe Husum & Congress)

[email protected]: +49 4841 902 492

power. Papers are invited on the following topics:

● S a f e t y a n d q u a l i t y standards

● National and international certification schemes

● National policies for small wind

● National markets for small wind

● Off grid applications and hybrid systems

● Grid-connected systems ● Manufacturing of small

wind turbines ● Key components: blades,

g e n e r a t o r s , c o n t r o l l e r s & inverters

● S mal l wind for water pumping

● F inancing smal l wind turbines

Abstracts format:

CALL FOR PAPERS

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Australia is embarking on a long journey to a clean energy future. Pioneering in the Australian landscape is the Hepburn Community Wind

Farm – Australia’s first community-owned and operated wind farm.

Located in the central highlands of Victoria, Hepburn Wind has brought a community closer to the source of its electrical energy – educating it about how to take control of its energy future and bringing them along on the journey of transition from fossil fuels to renewable energy. If successfully emulated across the

COMMUNITY WIND: THE AUSTRALIAN CONTEXT

nation, the community-ownership model will see the broad acceptance of renewable energy sources by the public. The community energy movement across Australia is emerging.

The Hepburn Wind Story

Hepburn Wind represents a long struggle supported tirelessly by volunteers who held to the vision that they could build a wind farm, providing a localised renewable energy supply for the benefit of the community.

Two key people in developing the project were Per Bernard – the visionary behind it and Founding Chair Simon Holmes à Court, who

By Taryn Lane / Hepburn Wind & Embark, Australia

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has overseen the delivery of the inspirational project over the past five years. As a shire with an active transition movement, the board and executives have included a dynamic of highly skilled and passionate people and a readiness to ‘just get on with’ the vision of living sustainably. This rendered conditions right for the project to find its feet in this region of rural Australia and to be developed as a model project for other communities.

Six years after the formation of the co-operative, obtaining planning permits, capital raising, engaging the community, undertaking research, analysis and finally construction, the two turbines are now generating clean energy. The community of the co-operative now numbers 2000 members who raised almost $10 million to build the turbines. The two 2.05 MW REpower turbines are expected to generate enough energy per annum to power 2300 homes, more than required by the homes of the nearby town of Daylesford.

Hepburn Wind has many dimensions of benefits. One is via returning profits to the community through a community grants process. This has the potential to underwrite the sustainability movement across the local area for at least the next 25 years. Furthermore, once dividends begin to be paid out to shareholders, a large proportion of this will likely remain within the region with over half the shareholders local to the region.

A number of Hepburn Wind investors are sophisticated investors with self-managed superannuation funds, but in the course of establishing this project, Hepburn Wind found that there was an emerging class of investors who will invest in local infrastructure projects due to the benefits to the local area – the community investor. Hepburn Wind characterises the community investor as having modest return expectations, increased

expectations of non-return benefits, generally modest sums to invest, low appetite for risk, no appetite for capital loss, high levels of patience, a high requirement for communication and a high expectation of transparency.

A recent member survey highlighted the level of satisfaction members have with the project - with 97% stating their pride and contentment. However, the socio-political landscape has not been an easy one to navigate in this process. Whilst Hepburn Wind enjoys overwhelming support within its community, it is not universal support. When the project went into the planning phase, there were 325 letters of support and 18 objections and whilst the latter number has dropped, Hepburn Wind continues to seek engagement with those who oppose the wind farm.

As a beacon for community power and community acceptance of wind energy within Australia, Hepburn Wind has valued celebration and accessibility by the community to their wind farm. In March this year, 300 supporters sat atop Leonards Hill as Hepburn Wind set up marquees and held a ‘turbine raising picnic day’ to watch the erection of the first turbine. Then, in early November, the wind farm was officially launched with over 750 supporters in attendance. Both events attracted nationwide media and Prime Minister Julia Gillard wrote a letter recognising the importance of the project. Dozens of members donated to publish this letter in regional newspapers after the event.

Hepburn Wind has been recognised on a local, regional, national and global level, receiving the 2010 Climate Alliance Award, 2011 Premiers Sustainability Award, 2011 Banksia Award and most recently, this year the 2012 WWEA Award. 2012 is the UN’s International Year of Co-operative and in Australia, Hepburn Wind has been selected as a standout social enterprise to be profiled

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throughout the international year of co-operatives.

Embark

This message of community empowerment and energy democracy has resonated across other Australian communities. Founding Chair of Hepburn Wind Simon Holmes à Court, saw the need for communities to be supported to start the community energy journey themselves, and established a NFP called Embark.

Since launching in October 2010, Embark has been contacted by over 60 communities who are interested in developing their own renewable energy initiatives across a range of geographic locations and technologies, including wind, solar and mini-hydro. Embark is building on the lessons learned by Hepburn Wind so that communities around the country can extend and adapt the Hepburn Model

to their own requirements. Embark aims to shift the community energy sector into the mainstream as a proven and financially viable model capable of attracting large-scale investment.

Embarks first project was to create an online best-practise information ‘wiki’ for communities. Creating this information portal kick-started the organisation and has enabled Embark to assist many communities in the early stages of developing their own renewable energy projects. To ensure that the next activities and projects of the community energy movement grow strong within this landscape, community groups are supported by Embark to seek opportunities to enable locally scaled clean energy transitions.

The Socio-political Landscape

In 2011, Hepburn Wind was awarded the Premier’s Sustainability Award for Community Engagement and the prestigious Banksia Award for harmonious manmade landscapes. Under the new state government planning policy, however, the wind farm would not have been built due to a requirement that a project receives unanimous support from all residents living within 2 kilometres of any new wind farm developments.

This new planning policy has very significantly constrained new wind development within Victoria and includes the strictest wind farm planning regulations in the world. What is of deep concern is that they apply only to wind energy, but not to any other energy producing infrastructure.

Across the same regional area as Hepburn Wind, groups have been advocating for an allowance in the planning guidelines exempting small-scale community projects from these

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restrictions. In particular, the Macedon Ranges and Mount Alexander communities, who were in process of developing their own community-owned wind farms. They are still forging ahead in the belief that the show of people power in support of these projects will eventually have to be considered.

One of the lively protests occurring in Australia concerns the health ramifications of wind turbines. Much has been written on the political and sociogenic dimensions of these claims and the effect of the groups driving them. With no reported health effects on people perceived to be ‘benefiting’ from wind farms, the largely-held medical diagnosis is that the perceived symptoms of those suffering from them are caused by their annoyance with the wind farm.

Social Licence to Operate

On the Australian landscape, to navigate these challenges, the issue of having a social license to operate is of great importance. Significant transformations are by nature disruptive, especially where these expose communities to change, and often change without consent.

As the first community-owned energy project, Hepburn Wind has clearly shown that given the right conditions, host communities can accept renewable energy projects. The emergent community energy sector will play a keystone role in ushering in the broad acceptance of renewable energy nationwide. To build future projects, a high level of engagement is therefore invited from the community. Through this engagement, community energy projects then have the potential to influence behavioural change within their communities.

The Next Generation

There are a number of community wind projects that are embarking on a clean energy future across the nation:

• Mt Alexander Community Wind (MACW) in Victoria, have launched the project to their local community and made great progress on their community engagement with over 300 supporters signed up.

• WISE Community Wind in Victoria, have been monitoring wind speeds with a real-time display which is linked to the mast has been installed at a local newsagent to make the possibility of the wind farm more tangible.

• Denmark Community Wind Farm in Western Australia celebrated their ‘turning of the sod’ on the 7 of March 2012. The project is scheduled for completion in late 2012. It will consist of two 800 kW turbines which are expected to supply about 40% of Denmark's domestic demand annually.

• Island Energy in South Australia has completed the initial feasibility study to build a renewable energy company that is expected to meet up to one third of the island’s energy needs.

• The New England Wind Cooperative (NEW) in New South Wales is formed and will now lead and coordinate the final site selection and raising the early stage capital to allow them to move into the development phase.

There are a number of developer-community partnerships evolving as larger developers see the clear benefits and necessity in community acceptance of wind farms. Community Power Agency is another organisation supporting the emergent community energy sector.

Further information

hepburnwind.com.au

embark.com.au

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Transitional Energy Policy Landscape after 3.11 in Japan

The triple disaster, earthquake, tsunami and nuclear accident, on March 11th 2011 revealed the vulnerability of the centralized Japanese energy system towards massive natural disaster. And Fukushima showed the unreversible impact of nuclear accident when the nuclear risk becomes reality.

Needless to say, this situation forced not only the Japanese government but also the broader society to reconsider the national

ENERGY POLICY REFORMAND COMMUNITY POWER IN JAPAN Shota Furuya / Institute for Sustainable Energy Policies, Japan

energy policy and system. The former Prime Minister, Naoto Kan, took the initiative for the fundamental reform of the national energy policy without any bias of the vested interests. Then dozens of energy policy committe have been organized such as on reconsideration of nuclear power policy, energy system reform and renewable energy policy.

Among them, the focal point of the policy reform is the Energy and Environment Council in the National Policy Unit of the Cabinet, where the new national energy strategy will be decided. In order to provide the draft of the new national energy strategy, the Ministry of Economy, Trade and Industry (METI) organized the Basic Issue Committee under the Agency for Natural Resources and Energy. The committee consists of 25 committee members from the representatives of the broader society such as business and industrial leaders, engineers, scientists, consumers' associations, sustainability NGOs and so on. The committee met 27 times from October 2011 to June 2012, and the committee members discussed the possibility and difficulty for the nuclear phase out fiercely, and finally the committe submitted the three scenarios regarding to the share of

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nuclear energy at the time of 2030: (1) 0%, (2) 15% and (3) 20-25% (graphic 1). Based on these three scenarios, the National Policy Unit has developed a information database in July and conducted a public hearing, deliberative polling and solicitation of public comments in August, and based on the series of national public debate, the government will formulate the New Strategic Energy Plan of Japan soon.

In fact, though the point of departure of the policy reform was "reduction of nuclear dependency", scenarios (2) and (3) include new addtional construction of nuclear power plants. On the other hand, most of the public opinion polls show that more than half of the public support the nuclear reduction. Therefore it is obvious that there is a gap between the formal policy reform arena and the public, and this symbolically shows the political difficulty of Japanese nuclear phase out.

However, out of the formal policy reform arena, several new initiatives for nuclear phase out have been emerged. For example, some business leaders from the economic circles of small and medium sized enterprises started to ornganize a new network called "Network of Business Leaders and Entrepreurs for a Sustainable Business and Energy Future". And the Global Conference for a Nuclear Power Free World held in Yokohama in January 2012 triggered the formation of "the Mayors for a Nuclear Power Free Japan Network" which has more than 70 mayor members around the country.

And one of the most fundamental transformation of the Japanese society is the active demonstrations against the restarting of the nuclear power plants. A group of citizens has initiated demonstrations which take place every Friday evening at the Prime Minister's office since March 2012. The number of people has increased steadily and has been estimated to reach 150'000 in June. Usually

most of the demonstrations are organized by union's activists in Japan, however, the weekly demonstrations are not like that. Mostly people come to join the demonstrations voluntarily by connecting social media such as Twitter and Facebook, and they are ordinary citizen thinking that they must take actions for the nuclear phase out. The weekly demonstrations have been called "the Hydrangea Revolution" named after the Japanese seasonal flower and the Jasmin Revolution in Tunisia (picture 1). It is Japanese societal challenge that this kind of activities will connect to the formal policy reform arena and lead to political decision for nuclear phase out.

Triggering Energy Transition: Feed-in Tariffs

It was a historical coincidence that Japanese government agreed on the Feed-in Tariffs in the morning of March 11th 2011. Then, in the course of the energy policy reform discussion, the basic frame of FIT was formulated and passed the Diet on 26 August 2011. In order to design the details of the system, METI organized a committee to calculate the price of FIT. The committee conducted open hearings

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including representatives of each renewable energy sector (wind, solar, small and medium hydro, geothermal and biomass), and finally formulated the detail design of FIT in June 2012. Japan started FIT on 1 July 2012.

The price setting of the FIT is shown in the table 1. Compared with other countries, Japanese FIT, especially solar PV, looks generous. This is partly because the provision of the FIT law includes the special promotion of renewable energy for the first three years. Regarding to other renewables including wind, it seems reasonable and the system will promote the steady increase of renewable energy in Japan in coming years.

There are still challenges for the substantial energy transition, such as grid

connection issue, regulatory issue, social acceptance issue and so on. However, it is sure that the FIT will trigger Japan to start "the Fourth Revolution".

The Second Stage of Japanese Community Power

Looking at the local or grass-roots level of renewable energy development, Japan comes into the second stage of Community Power. As shown in the graphic 2, there have been some pioneer community power projects in Japan since 2001. The first community wind farm in Hokkaido was initiated by a local NPO, and this became the model of the citizen-owned renewable energy project. Then, following

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this model, several community wind projects have developed around the country, and this community based business scheme has been applied to distributed community solar PV project in 2005, community biomass project in 2006, and community small hydro project in 2011. Even though there was poor policy support and severe market condition, the pioneer leaders have realized these community power projects with tremendous efforts and stakeholders' cooperation. We may be able to call these community power activities as "the first stage of Japanese Community Power".

After 3.11, Japanese people have become more and more aware of renewable energy with the safe and distributed energy supply in mind, and dozens of community based renewable energy initiatives have emerged around the country. Then, Ministry of Environment (MoE) started the support program for the community based renewable energy development, and called for applications in early 2011. There were 68 applications, and seven applications were formally selected as the community power candidates (graphic 3). They have to organize local renewable energy Consultation processes in order to build social consensus, and to appoint several coordinators to make actual community power business plans and to

start it within three years.Fortunately the FIT started on July 1st

2012 and this enabled these community power candidates to make a secure business plan. And it was also fortunate that the support program offered several opportunities for the candidates to meet and consult with the community power pioneer leaders, so that they were able to share the pioneers' community power models and experience. One of such interactive opportunities was the Japan Community Power Conference held on March 8, 2012 in Tokyo in cooperation with WWEA ( http://goo.gl/khrZK ). Three international speakers, community power pioneer leaders and candidates discussed the significance, possibility and barriers of community power in Japan. Then we may be able to call these interactive community power activities as "the second stage of Japanese Community Power".

As described above, Japan is exactly in the transitional time of both national energy policy and local project development. There are still many challenges to realize a massive and substantial energy transition in Japan, however, as shown in the Hydrangea Revolution, the societal energy transition is real, and the Japanese citizens' active community power engagement will make it substantial.

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Wind energy today has reached a cost-competitive level with fossil fuel sources in many

parts of the world, and in some countries has become a key pillar of electricity generation. This report seeks to explain the importance of operations and maintenance, as well as the current status of the wind energy operations and maintenance market. It will also try to elaborate on whether/how these costs can be reduced. We will discuss the importance of O&M and cost characteristics, three

WWEA BACKGROUND PAPER: OPERATIONS AND MAINTENANCE FOR ONSHORE WIND ENERGY SYSTEMS By Wesley Lien, Stefan Gsänger, Everaldo Feitosa and Jami Hossain

approaches to turbine maintenance, the current market structure, and recent turbine design developments that seek to lower overall costs. The paper focuses primarily on onshore wind turbines, as offshore turbines face completely different challenges and the O&M conditions require completely different approaches.

I. Operations and Maintenance

General Importance of O & MOperations and maintenance (O&M) is

a critical component of wind energy systems. Wind energy remains quite capital-intensive,

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due to the fact that wind power utilization does not require expenses for fuel; the expense for equipment represents the main cost component. As such, adequate O&M is required to protect these assets and keep them operational for the expected lifetime. Good O&M practices can optimize returns from a wind farm investment by reducing turbine downtime or extending their lifetime.

O & M and Marginal CostsApproximately 75%-80% of the total

cost of onshore wind projects is capital and investment costs, while O&M typically accounts for 20 to 25%, depending on where the project is located [1]. (There are indications that in China, the share of O&M costs is significantly higher and may reach 40 % of the lifetime costs, due to the lower initial investment cost per kW.)

The predominating cost structure results in relatively high risk for investors. Once a wind turbine is installed, its efficiency cannot be easily changed, nor can energy production be easily altered; the investment costs are fixed. Thus, wind operators have very limited possibilities to reduce generation costs during the lifetime of a project by influencing operations and maintenance.

Hence O&M is the predominant method by which operators can influence their marginal costs. As these marginal costs are much lower than the breakeven prices for wind investment, it is easy to understand that wind power simply cannot compete on the spot market for electricity. The price at which electricity is sold would be close to the marginal cost; however, this would be insufficient to cover the capital cost. Thus, investors would refrain from investing in wind farms.

Therefore, it is important to understand

O&M as it may give us better insight as to the basic economics of wind power investment.

Cost BreakdownO&M can be divided into fixed and

variable costs. Fixed costs include insurance, administration, fixed grid access fees, and service contracts for scheduled maintenance. Replacement parts and materials, maintenance not covered by contracts, and other labour costs fall under variable costs. One must also consider costs associated with losses in energy production during non-scheduled maintenance. There are no fuel costs under fixed O & M.

The cost of O&M varies depending on several aspects. O&M costs differ by region and nation based on wind speeds, geographical location, labour costs, etc. O&M also tends to be higher for offshore wind systems than onshore ones. This is attributable to the difficulty and logistics of maintaining wind turbines in harsh marine environments.

In addition, O & M becomes more expensive as turbines age; the chances of failure increase as machine parts experience prolonged wear and tear. Finally, O&M depends on the extent of the maintenance contract. Some services will only maintain wind turbines, whereas others may broaden their scope to include access roads, transmission lines, etc.

The aforementioned variables, as well as other factors (turbine capacity, model, project lifetime), make O&M cost comparisons fairly challenging. Estimates have, however, been calculated for wind energy projects in different countries. For instance, the International Renewable Energy Agency (IRENA) approximates that wind O&M costs are lowest in the United States, with service costs for onshore projects at around 0.01 USD/kWh of energy produced [1].

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European countries seem to have higher service costs. As an example, O&M for onshore projects in Germany ranges from 0,0219 to 0,0249 Eurocents/kWh (approximately 0.0282 to 0.0321 USD/kWh) [2].

IRENA additionally released a working paper on wind energy that gives estimates for the variable costs of onshore wind turbine service in various countries (see Table 1) [1]. Once again, such figures are only approximations and should not be taken at face value. Nevertheless, these approximations can give us a general sense of current O&M costs around the world.

II. Three Approaches to Maintenance

There are generally three approaches to wind turbine maintenance: reactive, preventive, and predictive[3]. Nowadays the O&M industry primarily uses preventive maintenance, but a growing number of companies are beginning to adopt predictive maintenance strategies.

Reactive MaintenanceReactive maintenance involves waiting

for the system to run to failure, and completely replacing parts or even the entire turbine. This method is considered to be the least effective and most costly in the long run, especially when considering the losses in energy production and the infrastructure necessary for such replacements. Hence it is not common practice.

Preventive MaintenancePreventive maintenance is time-based,

meaning maintenance inspections are carried out at regular time intervals (typically six months) [3]. This form of maintenance should at the very least follow the turbine manufacturer’s manual and instructions regarding how often components should be checked. The effectiveness of preventive maintenance can be enhanced by feedback obtained from coordinated maintenance activities, such as those carried out by different companies on different time schedules. Some of these activities can even be reduced in

Table 1 Variable and total costs of onshore wind energy operations and maintenance in different countries.

Country Variable O&M cost (USD/kWh) Total O&M cost (USD/kWh)

Austria 0,032-0,048

China 0,02*

Denmark 0,014-0,018

Germany 0,028-0,032**

India 0,01***

The Netherlands 0,013-0,017

Norway 0,020-0,037

Spain 0,027

Sweden 0,010-0,033

Switzerland 0,043

United States 0,010

Source: IRENA, IEA Wind, Liu, Wallasch et al., Hossain*Estimated cost. Converted from RMB/kWh using US dollar exchange rate as of 13 Sept. 2012.**Converted from Euro/kWh using US dollar exchange rate as of 12 Sept. 2012.***Converted from INR/kWh using US dollar exchange rate as of 13 Sept. 2012.

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frequency based on test results from predictive maintenance.

Predictive MaintenancePredictive maintenance (also referred to

as condition monitoring) involves continuous equipment tests through the use of installed online and offline sensors [3]. Turbine parts are constantly monitored, and data is collected and analyzed at an off-site computer. Impending faults or failures are detected if there is a noticeable deviation in data trends, such as for gear vibration or oil particle characteristics.

Because condition monitoring detects problems well in advance of actual failure, operators have ample time to order parts, schedule maintenance on days of low wind conditions, and coordinate repairs or refurbishment. It also minimizes unplanned turbine outages and downtime, maximizing energy output and revenue generation. Predictive maintenance additionally allows operators to lower inventory costs, since parts can be ordered as required instead of kept in a large backup inventory.

Analysis of previous faults and breakdowns is an equally important component of predictive maintenance. Often this kind of analysis can enable the operator to arrive at the root cause of particular component or machine faults, which when addressed, completely eliminates said faults. Also secondary damages can be avoided and the general turbine health can be improved. All of these benefits ultimately result in reduced O&M costs for the operator.

Predictive maintenance and condition monitoring are generally considered the cheapest and most effective form of wind turbine maintenance. This method virtually eliminates the need for unscheduled

maintenance, which constitutes approximately 75% of total wind turbine maintenance costs, according to a report from the National Wind Coordinating Committee in the United States [3]. Moreover, there have been a number of case studies supporting the cost-effectiveness of condition monitoring.

Just to give one example, operators of a particular wind farm installed a vibration spectrum analyzer and magnetically mounted accelerometer onto a turbine’s electric motor. The generated data indicated that one of the turbine’s gears had sustained some tooth damage; inspection of the gearbox proved this analysis to be accurate. Due to this early fault detection, the operators saved 9’000 USD, compared to a potential loss of 200’000 USD had the faulty gear caused secondary damage to the entire gearbox.

Condition monitoring is recognized by many to be the most effective maintenance strategy, especially in the eyes of banks and insurers. As such, some insurance companies are beginning to offer premium discounts for wind farms with condition monitoring technologies installed [4].

While predictive maintenance promises clear savings in O&M costs, it is unclear whether or not the necessary sensor equipment and software will translate to higher capital costs. Furthermore, condition monitoring requires skilled and knowledgeable operators who can interpret the data and accurately predict part failures; staffing costs will still exist. Nevertheless, as far as maintenance strategies go, predictive maintenance seems to show the most promise.

Another promising approach is power performance monitoring. It utilizes historical wind turbine data to predict wind turbine performance parameters such as desired

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power output through the modelling of the wind turbine power curve. Data mining algorithm, evolutionary computation and artificial intelligence are methods currently used for modelling wind turbine power curves [5,6]. The constructed models are used as reference profile of the power curve in order to detect performance deterioration and early indications of failures of an operational wind turbine. Unexpected deviations from the desired values are promptly detected by the performance monitoring algorithm and the nature of change in shape of the power curve related to this deviation will indicate the type of malfunction. The operator can then implement corrective measures respectively to maximize energy yield.

III. Market Structure

The service market for wind energy is projected to grow substantially in coming years. In the European market alone, its net value is expected to increase from 2,3 billion Euros in 2011 to 4,5 billion Euros by 2020, according to

a recent study [7]. Today’s wind energy O&M market

consists largely of two different types of service providers. On the one hand are original equipment manufacturers (OEMs) that are able to provide both turbines and full-service contracts. On the other are independent service providers (ISPs) that tend to specialize in specific or outdated makes of turbines. Both types of service providers have their own strengths and their own drawbacks. Of course, some major wind farm operators such as utilities may conduct O&M services on their own.

Full Service with Original Equipment Manufacturers

Many wind turbine manufacturers today exhibit a large enough degree of vertical integration that they can offer full service contracts as well as actual turbines [8]. While this makes sense for them economically, it also makes sense technically. Original equipment manufacturers are the ones who best understand the technical specifications of their

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turbine designs. Some manufacturers even offer full service packages that go beyond purely technical O&M service, covering financial risks related to O&M as well.

Smaller wind farm operators especially seem to prefer this kind of service. OEMs and full service offer one-stop maintenance, which may save time. This also seems to be the preferred service method for banks and insurance companies [8]. These financial institutions desire stable costs, minimal risk, performance guarantees, and certified staff to carry out maintenance and repairs, aspects full-service contracts can cover more easily. Two thirds of all operators in Germany have full-service contracts with OEMs.

Specialization with Independent Ser-vice Providers

Like on every other market, competition may reduce prices and lead to more efficiency. In this sense independent service providers can play a substantial role in bringing down wind power costs. Independent service providers may cater to a broader range of turbine designs, so their services could be interesting for wind farms with turbines from different manufacturers.

ISPs may also specialize in specific or outdated wind turbine designs, which could be especially beneficial to any operator owning models no longer sold on the market. Smaller service providers usually repair components instead of replacing them, which results in cost savings and much less hassle if these components are no longer available. In addition, ISPs can offer customer service adjusted to the specific requirements of the clients. They may be able to offer rapid, more personalized service for wind farms.

ISPs seem to be favoured by operators with many different turbine models. Some operators elect to hold off on signing full-service contracts; instead, they cover parts of their required maintenance themselves and leave the rest to specialists [9]. Thus, while the market appears to be leaning toward OEMs and full service, ISPs still have many benefits to offer.

Both types of service offer their own advantages. OEMs and full service can potentially provide more plant capacity and preventive maintenance, repairs that are not delayed by tendering procedures, and less responsibility for the operator [5]. This also seems to be the preferred strategy of banks and insurance providers. ISPs may offer cost savings, more control and influence for the operator, and more scope for comparing costs and quality.

At least in Europe, the wind energy service market is traditionally dominated by OEMs [7]. However, with the impending expiration of a growing number of first guarantee contracts, there may be more opportunities for ISPs to further penetrate the market in the near future.

IV. New Designs Thanks to the efforts of wind energy

research and development, wind turbine technology has seen continuous improvements, in particular over the past two decades. Further improvements can be expected, which may reduce O&M costs or the need for O&M in general.

One of the key focuses for new wind turbines is improved design, e.g. through less parts and more simplicity. To that end, turbines with no gearbox, termed direct

O&M

36


drive technology, are being implemented by a growing number of companies. The result could be turbines with a reduced number of moving parts and hence lower maintenance requirements.

Wind turbine technology is constantly progressing, and the potential for reducing costs is still substantial. Like the automobile, which after 125 years still sees continuous improvements and innovation, it is only a matter of time before the next generation of wind turbines appears on the market, offering even greater reliability, improved efficiencies, and lowered costs across the board.

V. Summary While wind energy seems to be sufficiently

cost-competitive with fossil fuel sources, optimizing O&M is still a priority for wind farm operators. Therefore, a firm understanding of the current conditions of the wind energy O&M market is crucial. The importance and cost structure of O&M, the various approaches to maintenance, different service providers, and new emerging technologies must all be considered in order for wind operators worldwide to reach best practice levels in operations and maintenance.

References

1. IRENA Secretariat. “Wind Power.” Working paper.

International Renewable Energy Agency, 2012.

2. Wallasch, Anna-Kathrin, Knud Rehfeldt and Jan

Wallasch. "Vorbereitung und Begleitung der Erstellung

des Erfahrungsberichtes 2011 gemäß§ 65 EEG." Federal

Ministry for the Environment, Nature Conservation and

Nuclear Safety, 2011.

3. Barber, Steve and P. Golbeck. “The benefits of a pro-active

approach using preventive and predictive maintenance

tools and strategies - actual examples and case studies.”

WindRisk, n.d.

4. WWEA. Operation and Maintenance. 2006. World Wind

Energy Association. August 2012 <http://www.wwindea.org/

technology/ch03/estructura-en.htm>.

5. Kusiak, A., Zheng, H., & Song, Z. (2009). On-line

monitoring of power curves. Renewable Energy, 34(6),

1487-1493.

6. Marvuglia, A., & Messineo, A. (2012). Monitoring of wind

farms’ power curves using machine learning techniques.

Applied Energy, 98, 574-583.

7. Garus, Katharina. “Service market is growing.” Sun & Wind

Energy, September 3, 2012.

8. German Wind Energy Association. “Two thirds of all

operators have full-service contracts.” Wind Energy Market:

Yaerbook Service, Technology & Markets 2012, 22nd ed.:

84-91.

9. -. “Competing for top service.” Wind Energy Market:

Yearbook Service, Technology & Markets 2012, 22nd ed.:

68-83.

Table 1 References

1. IRENA Secretariat. “Wind Power.” Working paper.

International Renewable Energy Agency, 2012.

2. IEA Wind. "2011 Annual Report." Annual report.

International Energy Association, 2012.

3. Liu, Jasmine. “Re: Re: O&M cost data for WWEA report.”

Email to Wesley Lien. September 2012.

4. Wallasch, Anna-Kathrin, Knud Rehfeldt and Jan

Wallasch. “Vorbereitung und Begleitung der Erstellung

des Erfahrungsberichtes 2011 gemäß § 65 EEG.” Federal

Ministry for the Environment, Nature Conservation and

Nuclear Safety, 2011.

5. Hossain, Jami. “Re: O&M cost data for WWEA report.”

Email to Wesley Lien. September 2012.

On 18 September, WWEA, in partnership with IRENA, BWE and SVIF, held a half day congress during

HUSUM WindEnergy 2012. This paper is a summary of the congress and reflects the main scope of

the discussions. The proceedings can be ordered from WWEA.

wwea bulletin issue 3

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