Getting the most out of wind farm projects from a financial, operational and technical standpoint

  • Session Topic
    Wind Energy

Getting the most out of wind farm projects from a financial, operational and technical standpoint

11 Oct 2017, 1:10 PM - 2:30 PM

Room 218, Melbourne Convention & Exhibition Centre

Language:
English (Australia)

Chairperson: Ahmad Zahedi, Associate Professor, James Cook University 

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Risk, return and valuation methods of wind farms through the project lifecycle

Megan Raynal, Director, Maven Libera

In this presentation we will discuss the risks, returns, valuation methods and investors at each stage of the wind farm project lifecycle. We break the project lifecycle down into three phases: greenfields/development, construction/seasoning and the brownfields operational phase. 

At the greenfields/development stage risks are high; there is uncertainty around capacity factor, technology (depending on what is being installed), wind history, regulation, off-take agreements/PPAs and pricing. Returns outcomes are variable. They can be high if the right pricing is obtained and a high capacity factor is achieved. Key valuation considerations include: short, medium and long term pricing assumptions; ability to showcase/test new technology or use of proven technology; individual strategic considerations e.g. power security; closeness to grid and funding sources. Valuation approaches include discounted cash flows using probability weighted outcomes and multiple-based approaches reflecting the opportunity cost of project origination. At this stage investors are generally strategic investors. They may be buying in to test technology or obtain a power source. They are typically deeply involved in the project.

At the construction/seasoning phase risks are medium. The wind farm is built and starting operations and there usually is a PPA or some off-take agreement in place, however there is still uncertainty around wind risk, capacity factor and sometimes there are technology issues. Return outcomes are less variable with less chance of unexpectedly high returns. Medium returns are possible if wind risk meets forecast and PPAs are better than forecast. Key valuation considerations relate to energy yield as in addition to wind and technology risk, there may be a number of technical and regulatory factors that impact overall availability. Valuation approaches typically include using discounted cash flow scenarios with a focus on availability/yield. There are a wide range of potential investors at this stage, including super funds looking to move up the risk curve.

At the brownfields stage risk is low if there is an established wind and capacity factor history, and long term PPAs. Risk can be very low (bond- like to investors) if there is no wind risk at all because operators, rather than key investors, bear wind risk (e.g. the Hallett series of wind farms). Returns are stable and moderate to low. Above average returns are mainly possible through refinancing structures and the terminal value. Key valuation considerations relate to who bears wind and price risk, PPA pricing, debt term and costs, long term (post PPA) pricing and the terminal value (post design life/post PPA) period. Brownfields wind farms are valued using a discounted cash flow approach, with the major variability being the terminal value assumptions. Investors at this stage are often long term financial investors looking at yield, e.g. super funds. Many investors have limited or no involvement in the day to day wind farm operations. 

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Improving Confidence: Validation of Australian wind farm energy production assessments

Christian Peake, Head of Section, Energy and Development Services, DNV GL

DNV GL has recently completed an industry-first validation of pre-construction energy assessments based on operational data from 32 Australian wind farms. Market confidence in preconstruction energy predictions has a direct influence on a project’s risk profile, and hence the cost of finance. Validation studies, which compare preconstruction energy assessment results paired with actual performance of projects once they are in operation, are critical to understanding this risk. Having been involved in the wind farm business for over 30 years, DNV GL is in a unique position to conduct validation studies with statistically significant results. Using DNV GL's global and Australian database of preconstruction energy assessment results paired with data from operational studies, we will look at the overall accuracy of the energy assessment process, with a specific focus on Australian projects, and then focus on what influences the accuracy in a variety of complex conditions. Specific issues that will be examined will include complex flow conditions (terrain, atmospheric stability, forestry), the influence of turbine technology, and the robustness of the preconstruction measurement campaign.

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Wind generation cost of energy optimisation and innovation

Christopher Williams, Lead Technical Bid Engineer, Vestas Wind Energy

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Playing in extra time: Life extension and optimisation lessons from Europe

Bronwyn Sutton, Principal Consultant, Wood Group

 

Contributors

  • Ahmad Zahedi

    Chairperson

    Associate Professor in Power Engineering

    James Cook University

    Associate Professor Ahmad Zahedi is with the college of Science, Technology, and Engineering of James Cook University, Queensland, Australia....

  • Megan Raynal

    Speaker

    Director

    Maven Libera

    Megan is one of Australia’s leading valuation experts, with extensive experience assisting Australian and global clients on engagements. Her clients...

  • Christian Peake

    Speaker

    Head of Section, Energy and Development Services

    DNV GL

    Christian is a Principal Engineer with DNV GL and has a Bachelor of Engineering (Hons) Degree from Monash University in Melbourne.   Christian has...

  • Christopher Williams

    Speaker

    Lead Technical Bid Engineer

    Vestas Wind Energy

  • Bronwyn Sutton

    Speaker

    Principal Consultant

    Wood Group

    Renewable energy is a lifestyle for Bronwyn, from a childhood spent off-grid to solar car racing at university. This year she celebrates a decade...

Opening Times
Wed 3 Oct Exhibition 9.00am – 5.00pm
Wed 3 Oct Networking Event 5.00pm - 6.30pm
Thur 4 Oct Exhibition 9.00am – 5.00pm

Registration opens 8.00am

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