Major Danish offshore wind power provider Orsted, driven by worries over its underestimation of the range and complexity of the wake and blockage effects in 2019, revised down the weighted ROI forecasts of certain bidding offshore wind farms while simultaneously pointing out that the underestimation is a risk on a global scale for the wind power generation industry.
In its 3Q20 investment report, Orsted revised down its forecasted weighted ROI of the currently bidding Dutch Borssele 1&2, British Hornsea 2, German Gode Wind 3, Borkum Riffgrund 3 (also German), Taiwanese Greater Changhua Offshore Wind Farm, and U.S. Rhode Island Revolution Wind from 7.5-8.5% to 7-8% while maintaining the other key economic indicators. Orsted’s stock prices subsequently plummeted by 7% but recovered after four weeks.
According to the report, this is an issue that confronts the entire industry, as opposed to a simple miscalculation. In particular, the wake effect refers to the fact that, after wind passes past a wind power generator, said wind will become weaker and produce turbulences, which will affect the electricity output of wind generators located in the previous generator’s wake. On the other hand, the blockage effect refers to the fact that winds tend to slow down as they approach generators. While the industry historically recognized the impact these two effects have on the yield of wind farms, Orsted now believes the impacts have been wildly underestimated.
Norwegian global certification company DNV GL issued a report on Energies journal in 2018 that raised the same question. According to DNV GL, the blockage effect has more noticeable and long-lasting implications than previously expected, since the wind generators located in the first row will also be affected. In consideration of the average impact from wake and blockage effects on each generator, the yearly electricity generated from wind farms may have been overestimated by as much as 4%.
Then, as more and more wind farms become built, what will the effects on the efficiency of electricity generation and profitability be for the wind farms?
Martin Anderson, head of British renewable energies at British research organization Aurora Energy Research, indicates that the aforementioned effects have a relatively larger impact on wind farms that are now about to go online, since underestimating the wake and blockage effects may make it so that the power generators in these farms yield lower than expected outputs, thereby impacting profitability. At the same time, if the lowered electricity output of the newly development wind farms can be anticipated in advance, then the utility providers will be forced to raise their electricity costs. This means that the next time a price bid takes place, the bidders will be under severe pressure, which will be reflected on their electricity pricing.
However, Anderson is none too pessimistic either. He believes that the costs of offshore wind power projects have now become lower and lower, thereby mitigating the impacts wake and blockage effects have on profitability. According to Anderson, although the new calculations may yield a 1-2% income discrepancy compared to old calculations, the overall cost of offshore wind power is still far lower than in the past. Case in point, said costs for Britain has now dropped from £150 per MWh to £45 per MWh.
After DNV GL released the report, and Orsted revised down its estimate, the industry has since conducted multiple researches related to wake and blockage effects in an attempt to further understand them and adjust the existing models. Luke Clark, director of strategic communications at trade association RenewableUK, indicates that the offshore wind power industry has already conducted substantial analyses into the impact of blockage and wake effects; these analyses are expected to further the development of offshore wind farms and maximize the mitigation of said effects while increasing the amount of power generated.