Accurate Wind Assessments: Pinning Down Performance | Wind Technology Magazine Article

Accurate pre-construction assessments are critical to securing project financing and ensuring investor confidence. However, North America’s wind power industry has developed a reputation for producing energy below levels predicted by pre-construction wind resource and energy assessments. What are the reasons for over-prediction, and how can such assessments be improved?

Wind power projects involve diverse risks for investors. Along with credit, technology and interconnection risks, production risk is a key component in project evaluation. Accurate wind resource and energy assessments are therefore critical when evaluating project feasibility and obtaining financing. However, North American wind projects have been performing significantly below expectations on average, revealing a systemic bias in pre-construction energy assessments.

Concerns emerged in the early 2000s from lenders and other industry participants. Third-party energy assessments were developing a reputation for over-predicting annual energy generation, and banks and investors relying on the estimates were losing confidence. Many investors adapted by applying a ‘haircut’ to the estimates, limiting the ability of developers to leverage debt.

In response to the emerging underperformance trend, DNV KEMA began assembling a database to assess the magnitude of the bias and identify the key drivers. Its most recent update and assessment of project performance was completed in April.

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Categories: Electricity, Energy