Wind power generation is a flourishing sector – and at Green Angel Syndicate we can only rejoice about that. So far, the winning strategy for wind turbine developers has been straightforward, along the line of ‘big is beautiful’: ever larger turbines generating ever more power, leading to an ever-lower cost of electricity, competing coal-based power plants away.
However, unlike in the solar PV market, which is growing at both ends, with ever growing mega-farms but also a rapid development in rooftop panels, the wind market is very unbalanced. So far, small-scale wind turbines have gone nowhere, leaving a multi-billion-dollar potential opportunity untapped. By small-scale wind turbines, we mean turbines ranging in size from 0-20 meters and with power ratings of up to 50kW (compared to megawatts for the large utility-scale turbines).
There are a million small scale wind turbines in the world, but they generate very little power, and, despite the many different attempts, there is today no widely accepted wind turbine solution that is as cheap and versatile as a solar panel.
Enter Spinetic Energy: the company, in which Green Angel Syndicate has just invested, has developed a ground-breaking, patented solution called ‘Wind Panels’, easy to install and inexpensive to mass-produce, with the ambition to crack the opportunity for community-scale wind power.
Initially, Spinetic targets the off-grid hybrid microgrid market, notably in emerging markets, which Bloomberg is now describing as ‘Frontier Power’. This is an exciting growth sector where today, electricity is mainly coming from diesel or gas generators, at very high costs. Thus far, the mainstream renewable energy solution for microgrids was solar PV, but Spinetic’s Wind Panels are ideal to help customers produce more renewable energy (the wind resource complements the sun), reducing carbon emissions and cutting the cost of electricity even more.
Green Angel Syndicate is proud to be able to support Spinetic Energy’s team in its exciting journey, which promises to be highly rewarding both financially and for the environment.
Wind is becoming very big (part 1/2)
Even though wind still represents only 4% of global electricity production, the growth trajectory is clear, and it is easy to understand why this type of renewable energy is likely to accelerate further.
At the end of 2017, there were 539GW of wind power capacity installed in the world, up 11% compared to 2016 and up almost 70% compared to just four years ago. Many countries now rely on wind for more than 10% of their electricity, Denmark being the most advanced (43% in 2017). In the UK, progress is currently very rapid, with a share of almost 20% in the last quarter of 2017.
Share of Electricity Demand Met by Wind Power, Selected Countries, 2016
The key driver for this growth is that electricity from the wind has become extremely cost competitive:
- Globally, the weighted average Levelized Cost of Energy of onshore wind has declined from $380/MWh in 1983 to $70/MWh in 2014 (World Energy Council, 2015).
- In the last edition of Lazard’s Levelized Cost of Energy Analysis, wind is the cheapest form of power generation, with an LCOE range of $30-60/MWh.
- Other sources put the LCOE of wind at $30/MWh in markets as diverse as Morocco, India, Mexico and Canada, with a recent Mexican tender coming in with prices below $20.
Wind is becoming very big (part 2/2)
For reasons which have to do both with physics and with economics, the race for wind energy has thus far been won by creating ever larger and more powerful wind turbines:
- A turbine’s blades convert kinetic energy from the movement of air into rotational energy. The wind power that is available is proportional to the area covered by the blades, so grows with the square of the turbine’s radius.
- Bigger means lower unit costs – both in the construction phase and in the installation process (erecting one large turbine costs less than installing two smaller ones).
Over the past decades, the size of wind turbines has increased massively: the average nominal rating of new grid-connected onshore turbines rose from 0.05MW in 1985 to more than 2MW nowadays – and it is easy to predict that the largest turbines will soon have a nominal rating surpassing 10MW, with diameters of more than 200 metres.
Evolution of wind turbine heights and output
Small scale wind: a market to conquer
Of the more than 539GW of installed wind power capacity globally, large onshore turbines represent more than 95%. The rest is made up of:
- Offshore wind, with a fast growing but still relatively small capacity of c.15GW, mostly in Europe – a sector where turbines are even larger than those installed onshore.
- Small onshore wind, representing only a tiny 1GW of installed capacity (World Wind Energy Association 2017 Small Wind World Report and Global Wind Energy Council).
So, is there no market for community scale renewable energy generation?
In fact, there is: worldwide, sub-1MW installations were worth over $70bn in 2015 and set for rapid further expansion with the advent of microgrid technology (in particular ‘hybrid microgrid’, which are local electricity grids incorporating a mix of renewable power and fossil fuel generators – see below).
However, at present, the community scale market is entirely dominated by solar PV instead of small wind turbines – for a very simple reason: today’s small wind turbines are not nearly as cost-effective or user-friendly as solar PV panels. As a result, despite the wind energy resource being better than the solar resource at many locations across the globe, it often remains untapped.
So, is there no market for community scale renewable energy generation?
In fact, there is: worldwide, sub-1MW installations were worth over $70bn in 2015 and set for rapid further expansion with the advent of microgrid technology (in particular ‘hybrid microgrid’, which are local electricity grids incorporating a mix of renewable power and fossil fuel generators – see below).
However, at present, the community scale market is entirely dominated by solar PV instead of small wind turbines – for a very simple reason: today’s small wind turbines are not nearly as cost-effective or user-friendly as solar PV panels. As a result, despite the wind energy resource being better than the solar resource at many locations across the globe, it often remains untapped.
The challenges with small wind turbines
Small wind turbines (SWTs) have existed for decades, from ‘micro SWTs’ (rated at less than 1kW) to ‘midi SWTs’ (reaching 100 kW). SWTs are commonly used as stand-alone electricity systems and frequently applied in isolated locations where the main grid is not accessible.
Clearly, if it could be developed to its full potential, the small-scale wind resource could become a multi-billion-dollar market. However, this has not happened so far, due to several challenges.
First, compared to large wind turbines, small wind presents lower load factors and higher capital cost per kW, as well as high planning costs per installed unit. Also, lower towers mean a more turbulent wind resource caused by obstacles in the surroundings. Higher towers can be built but at a higher cost.
Then, compared to solar PV, community-scale wind turbines have been less successful for two main reasons:
- Their higher cost: today’s small-scale wind turbines generate electricity too expensively to compete with other forms of generation and the cost of solar PV continues to drop rapidly.
- The complexity: small wind turbines are mechanically more complex and more difficult to deploy than solar PV panels.
Of course, the challenge of developing an economically viable small wind turbine has excited entrepreneurs for years. Many have tried to come up with innovative designs, from small turbines on a vertical axis mounted on rooftops to airborne or low speed wind turbines, and no-rotor wind energy harvesting systems using piezoelectric technology. These have mostly failed, so this problem is now commonly viewed as too difficult to crack – and today, anyone proposing an exciting new small wind technology inevitably faces a barrier of ‘rational scepticism’, which is just fair.
Examples of innovative wind turbine designs
Enter Spinetic
As we have seen, the yet untapped ‘small wind’ resource could be exploited if a small-scale wind energy system existed that produced electricity at an affordable cost and was as easy to deploy as solar panels.
This is what Spinetic Energy has developed, applying a completely new technical approach to make community wind energy ultra-simple, modular, scalable and easy to install.
Spinetic calls its patented solution a ‘Wind Panel’ (see picture below). It brings many advantages over existing systems, in terms of its simplicity and versatility, similar in many ways to solar PVs:
- Wind Panels are the building blocks from which a community scale wind farm can be constructed, of a size and configuration to suit the physical size and power requirements of each site. Individual Wind Panels would be linked together to form a ‘Wind Fence’.
- The frame of a Wind Panel is demountable and can thus be carried in sections for assembly on site, or alternatively can be transported fully populated with turbines and generators.
- Spinetic has designed novel vertical self-starting blades achieving excellent performance and suitable for mass production.
- Spinetic has also developed proprietary permanent magnet generators with several benefits over existing designs: less components, greater reliability and easier mass production.
Artist’s impression of multiple Wind Panel arrays (“Wind Fence”)
How cost competitive will the electricity produced by Spinetic’s Wind Panels be?
This will obviously depend on the volumes produced – the more the better. However, the company’s detailed calculations, based on actual observations of how much electricity the panels produce in different wind conditions, point to an initial commercial Levelized Cost of Energy in the range of $90-150/MWh, assuming average wind speeds of 4.5-5.5m/s and early production volumes, and declining to $50-80/MWh when production is at scale.
In most cases, Spinetic’s Wind Panels are therefore unlikely to be competitive versus solar PV, but they will be versus other sources of electricity, most notably diesel generators in off-grid areas. And the key point, explored in more detail below, is that Spinetic’s Wind Panels were designed to complement solar panels, not compete with them.
Off-grid hybrid microgrids: an exciting initial market
The growth in power generation capacity globally will increasingly be driven by the developing world, where those with electricity want to use more of it, and the billion without electricity want to get connected.
Grid-edge: a large market…
In developing countries, the electric grid often has limited coverage, leading to large investment in ‘grid-edge’ electricity systems. According to Bloomberg New Energy Finance, almost half of new fossil fuel generator capacity installed in 2015 were added at the grid edge, a total of 29GW new diesel genset capacity installed at behind-the-meter or off-grid locations. At the grid edge, all these generators burn diesel and half of the installations are <300kW in capacity.
Power capacity additions in developing countries in 2015
…where renewables make ecological and financial sense
In the same report, Bloomberg estimates that $40bn is spent annually on diesel fuel for power generation. Moving to renewable energy would represents a massive opportunity not only to reduce carbon emissions, but also to save costs.
So far, the main opportunity has been to introduce solar PVs to substitute diesel at least partially. As shown below, in almost all geographies, the Levelized Cost of Energy for solar PV falls below the cost of the diesel fuel used in gensets.
Cost of energy from solar versus diesel generator
To add wind or not to add wind?
Today, community scale turbines are not incorporated in microgrid projects for two reasons that we have already touched upon (high LCOE and complexity of installation) but also because, unlike solar panels and diesel generators, conventional wind turbines cannot readily be relocated, whilst relocation is often a requirement in microgrid projects, e.g. at mining or military sites.
With Spinetic’s solution, the operational issues are solved – Wind Panels are easy to install and can be relocated. What’s more, even assuming an LCOE of 15p/kWh initially, adding wind to the mix makes economic sense.
Solar power used at the time of generation may be cheap, but solar power time-shifted by batteries is more expensive – and the longer the period of storage, the higher the cost. At the extreme, it would never make sense to generate solar power in summer and then store it for use during the winter. In most regions, solar power generation is concentrated in the warmer months – and only during daylight hours.
This means that in hybrid microgrids, it is difficult to substitute for more than 25% of the total power using solar at its point of generation. Adding wind can substitute for a further 25% – meeting demand during the winter and at night.
In the chart below, Spinetic assumes that diesel costs 30p/kWh and shows that adding solar to the mix (for a quarter of the production) reduces the average cost by 21% to 24p; adding its Wind Panels (for another quarter of the mix) would reduce the average cost by a further 16% (to 20p). It would also double the amount of carbon saved.
Adding wind into the equation can further reduce the cost of energy
Clearly, there is greater operational complexity in adding renewable energy in the mix, but the potential savings are large, enabling relatively short pay-back times.
According to different sources, the global market for microgrids is already worth more than $15bn annually and will grow to double or triple that over the coming years, and distributed energy outside the OECD is a $40bn industry already today (BNEF).
In conclusion, for Spinetic, hybrid off-grid microgrids are the ideal initial market, because unlike other segments where ultra-low LCOE is essential, customers in this space will be able to derive good returns from the Wind Panels even if their initial cost of energy is relatively high, and because it is a very large and growing opportunity indeed.
Green Angel Syndicate is proud to support Spinetic Energy in what promises to be an exciting and rewarding journey, with great positive implications for the environment and a very positive financial return.