Time to repower?
Published on 1st Nov 2021
When a power asset is modernised – such as updating a wind farm – existing contractual structures need to be considered.
As with any good technology, energy generation is becoming more and more efficient and less and less expensive. The speed of technological development in the sector means that repowering existing assets is no longer an exercise confined to the end of a project's life but can instead form part of an asset manager's toolbox from much earlier on. Repowering can take many different forms, ranging from the full dismantling and replacement of a wind farm to the replacement of out-dated components on a solar project.
For larger repowering projects where existing installations are replaced in their entirety, new construction and operations and management (O&M) arrangements are likely to be essential. However, for the more modest modernisation project where a specific aging component is being replaced or updated, the optimal procurement route may be less clear cut.
What to consider?
Even though the works may appear straightforward, asset managers will need to consider how these fit in with the existing contractual structure. The same goes for the modified project itself once the upgrade works are complete.
Key points for asset managers to consider include:
- Are the works covered by existing consenting arrangements (planning, real estate, grid etc.)?
- Is lender consent required for the works?
- Should the works be procured directly with an installer or through the O&M contractor? If the latter, then how should this be documented? If the former, then how will this impact on delivery of existing O&M services and should relief be given in relation to certain obligations and how will this be documents? Also, who will be responsible for e.g. access and health and safety and is this clearly documented.
- Will the works impact upon the validity of any existing manufacturer warranties for any related or interconnecting parts?
- Will existing O&M arrangements cover the modified project or will they need updating to reflect the changes?
- Are the guarantees provided by the current O&M provider (if applicable) sufficiently robust given the capital improvements that the owner has made to the project?
While many of these points can be readily addressed in the project documentation, it is always worth pausing for thought before making any significant changes to an asset. This is particularly important where project finance is involved.
If you would like to discuss the above or any issues relating to repowering then please get in touch with our Smart Power team.