The future of wind energy: Navigating the performance gap in Scandinavia’s onshore wind farms

A new week. A new call from a customer. The story is like the one presented by another customer last week. The customer is operating an onshore wind farm in northern Scandinavia, which has been underperforming compared to initial expectations. The wind farm has an unfavorable offtake agreement and suffers from increasing levels of curtailment. In addition, during the last few years wind conditions at the site have been below historical long-term wind averages, while turbine availability has been significantly lower than expected, all resulting in unsatisfactory profitability.

In recent years, DNV has been observing a gap in the operational performance of newly constructed onshore wind farms in Scandinavia. Our experience shows that many wind farms underperform relative to pre-construction expectations, resulting in unsatisfactory profitability. In certain cases, the discrepancies can be significant. When assessing the underlying factors, we often find that performance deviations can be attributed to several key issues. These vary from case to case, with the most critical being:

  • Unfavorable market and commercial conditions, such as very low or negative market prices with increasing cannibalization effects that do not cover the operational costs and result in commercial curtailments, or baseload offtake agreements that result in a need to procure missing volumes at very high market prices.
  • Technical issues on key components, very often related to blades, gearboxes, generators and main bearings on new generations of large turbines, which were originally selected before being sufficiently proven with the target to increase energy yields.
  • Shortcomings in organization, ability and in certain cases also contractual incentives to resolve the technical issues in a timely and efficient manner. 
  • Wind conditions below expectations, where parts of Scandinavia have been experiencing several consecutive years of wind speeds below their long-term historical averages. This has for example been observed in parts of Finland.
  • Significant icing losses experienced on turbines without verified and efficient icing protection systems.

Generally, the market and commercial conditions currently represent the biggest challenge. The large increases in electricity demand previously predicted in Sweden and Finland are urgently needed from an industry perspective but given the ongoing postponements and cancellations of key industrial projects, they are unlikely to occur anytime soon to the required extent. At the same time, poor technical performance is in many cases also a key contributor to the unsatisfactory profitability levels of the wind farms. 

Most of the technical underperformance can be explained with some of the issues mentioned above. However, when comparing pre-construction energy production assessments (EPAs) for Scandinavian wind farms with ones that are based on the actual operational data (OEPAs), we nevertheless often still find differences that can be difficult to explain. These can at times be as high as 10%. Further research is needed to validate the potential explanations and mitigation actions. As this seems to be an industry challenge, we are more than happy to discuss further potential industry collaboration on this topic.

So, in conclusion, is the story on operational onshore wind completely bleak? Fortunately, no! First, we do see technically well-performing wind farms in Scandinavia. It is also worth noting that we in DNV probably do not hear from most of them, as the owners of such generally do not have any reason to call us. Interestingly, many of the well-performing wind farms are using well-proven turbine types, thus avoiding the initial challenges experienced on newer turbine models. 

Second, many of the technical issues encountered can be understood and resolved. This often requires that a timely analysis of the root causes and the proposed solutions is made, and that proper organization and incentives are put in place. We generally expect that the technical performance of many wind farms will be gradually improved as the key issues are addressed, with individual improvements leading to significant culminative benefits. Here, the devil is typically in the contractual details of the supply and service agreements, where the right warranty and liability provisions are making a key difference on the speed and costs of implementation. 

Third, depending on the characteristics of the wind farm and their contractual set-up, we often uncover opportunities for long-term optimizations. This may include changes to the operations and maintenance strategies, potential for contract renegotiations, as well as colocation, hybridization and lifetime extensions of the assets.

Overall, while the market and commercial conditions may remain challenging, many of the technical underperformance issues can be addressed and rectified. With effective management of operational performance, we can ensure progress and minimize recurring issues in the future. If so, then perhaps next week our customer will no longer have a reason to call us on this topic, and we may be looking forward to receiving calls about other challenging technical matters.
 

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Join us to dive deeper into the underperformance of onshore wind and its role in the energy transition

Join us in Stockholm or via live stream on 27 March for DNV’s Financing the Energy Transition event. Together with industry leaders, we’ll examine how to navigate the performance gap in onshore wind and continue the efforts to support the energy transition.
Click here to learn more and register.

 

 

3/21/2025 7:53:00 AM