The 25-year Lifetime


July 27, 2012

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Twenty-five years. It’s an oft-bandied around timeframe in renewable energy, and one that is used in many different contexts – be it financial support, procurement, research and design or equipment lifetime.

But why? Yes, choosing subsidy regimes over a 25-year lifetime makes sense for Governmental macro-financial planning, but it forces industries into cycles that may not be most appropriate.

One only has to look at the US for an example of the boom and bust scenarios created by Governmental support for wind energy.

And as we’ve seen in the UK this week with the wrangling and eventual deal on ROC revisions to onshore wind, these support cycles can make investors and industry practitioners very nervous.

It’s not just all about the financials, either. If we look at industry procurement, equipment is commensurately supplied with 25-year operating lifetimes. But this doesn’t always work in practice, with some turbine gearboxes failing much earlier, meaning the insurance industry has to step in if the warranties are not supported.

Conversely, a 25-year period doesn’t always ensure the fastest means of innovation either, as manufacturers see order cycles in the longer term, rather than continually striving to improve in time for the next phase.

And it’s this question of life cycles and support that leads many people to forget the overarching aims of renewable energy – that is to combat climate change and enhance energy security.

It’s why the revised tariff changes are actually disappointing. With the deal struck to placate the Treasury for a 10% cut, the banding is again up for review in 2013.

Hypothetically, had the banding been cut by 25%, but with the guarantee that the revision would stay until 2050, industry responses would probably be far more positive.

The 25 year time frame also raises a ‘what then?’ question. It’s surely time to ask the long-term questions about wind energy.

Will wind farms be reduced in size as new technology enables increased generational capacity from fewer turbines? Will storage and the supergrid enable wind to be the most efficient renewable?

The answer may not yet be clear, but like the defence and automotive sectors, the wind energy industry needs to look beyond 25 years to really scope its future.

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