Upgrading Old Wind Farms: Repowering Emerges as a Lucrative Business Model

In a notable development in the renewable energy sector, Norwegian wind energy company Statkraft is making significant strides in expanding its wind farm portfolio in Germany by embracing the concept of repowering. The company’s move to purchase 35 aging wind farms in Germany indicates the growing trend and highlights the potential of upgrading existing infrastructure to maximize energy output.

The deal, amounting to an impressive 413 million euros, reflects Statkraft’s strategic approach to the energy transition in Germany. Stefan-Jörg Göbel, the head of Germany at Statkraft, believes that a substantial portion of the country’s energy transition will be achieved through repowering, a process that involves the replacement of old wind turbines with more efficient and larger ones at the same location.

The wind turbines targeted by Statkraft are between 15 and 21 years old, nearing the end of their 20-year statutory compensation period as stipulated by the Renewable Energy Sources Act. This act mandated fixed compensation for wind power fed into the grid for two decades, but this legal guarantee is set to expire for these turbines within the next five years.

Repowering has gained traction as a viable solution, especially given the diminishing subsidies for older wind turbines. The German Wind Energy Association (BWE) predicts a steady decline in annual subsidies until 2025 for wind turbines with a total capacity of 2400 megawatts, prompting operators to consider repowering, continued operation, or shutdown after the initial 20-year period.

Recent years have seen favorable changes in the regulatory framework for repowering, with accelerated approval processes and simplified procedures. In 2022, over 550 wind turbines were commissioned, a quarter of which were the result of repowering efforts. This signifies a notable increase from the previous year, where repowered turbines accounted for only 14 percent of new installations.

Stefan-Jörg Göbel notes the intensifying competition in the sector, particularly from the financial industry, as evident in the substantial investment raised by start-up Nextwind in a financing round of 750 million euros. This trend underscores the growing interest and confidence in the repowering business model.

Repowering offers several advantages beyond regulatory incentives. The streamlined approval processes and existing public familiarity with wind power at repowered sites contribute to smoother implementation. Moreover, the economics of repowering are compelling, driven by the prospect of higher electricity prices and the improved efficiency of new, more powerful turbines.

Despite a decrease in electricity prices following a period of energy crisis, rates remain elevated compared to historical averages. The price per megawatt-hour of electricity, currently at 114 euros, still surpasses the typical range of 30 to 50 euros, indicating a favorable market for repowered wind farms.

Statkraft’s strategic outlook involves a three-year planning phase for new wind farms at existing sites. As older turbines are upgraded, newer models boasting six to seven megawatts of capacity on land and even twelve megawatts at sea are expected to substantially contribute to Germany’s renewable energy expansion strategy.

However, challenges remain, and Germany’s progress toward its 2030 expansion targets is uncertain. The German Wind Energy Association (BWE) cautions that while repowering plays a vital role, the country might fall short of its goals due to various factors, including high electricity prices.

Interestingly, the surge in electricity prices has influenced the operational lifespans of older wind farms. Many operators have extended the use of their turbines beyond original plans, capitalizing on the favorable economic conditions. This unexpected outcome underscores the dynamism of the renewable energy sector and the adaptability of industry players to changing market dynamics.

The trend of repowering is gaining momentum in the renewable energy sector, exemplified by Statkraft’s substantial investment in rejuvenating aging wind farms in Germany. As the energy transition progresses, repowering emerges as a viable business model that extends the life of existing infrastructure and contributes significantly to the expansion of renewable energy capacity. With regulatory support, economic incentives, and a keen focus on technological advancements, the renewable energy landscape is set to witness further transformation in the years to come.

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