NWF - NZ Windfarms

[BlackPeter]

Ouch. Long term investment then :-). What was a company like Vector thinking buying into a wind farm with bleeding edge turbines anyway? All of the gentailers are conspicuous by their absence from this venture.

Agreed - the turbines had plenty of teething problems - and the jury is still out, whether they are by now fully understood and sorted, though there are some positive indications related to the first part .. as well that they are working through the resolution.

Otherwise - I think the question should be: Why didn't Vector run this wind farm in a much ore efficient way? If you look at it - two out of the five board positions are filled with Vector directors (Simon MacKenzie and Michael Stiassny) and Chris Saddler (the CEO) comes out of the same stable (ex-Vector man).

There are obviously plenty of things which could be improved, but just for starters ..

Integrating NWF into Vector (without changing anything else) would save the separate listing costs (roughly one million according to a recent chat I had with one of the board members). This alone would make the company profitable.
Re-organising NWF alone (by reducing the bureaucratic management overhead) could probably save some 300 to 400k and make it profitable.
Turbines are still operating below the designed power output. Increase the power output by just 10 percent (quite conservative and still ways below the designed power output - 30% should be possible) and the wind farm is profitable;
Come to a peaceful agreement with city council and neighbors and save (roughly) 500k pa in lawyer and court cost - and hey, the wind farm would be profitable.
Not to mention the (probably not just in hindsight) crazy lease agreement for the line equipment - paying basically more than 10% for another 15 years or so ...
Obviously - there are other things which could be improved as well - but just tackling one of the issues above would turn this company from a money drain into a cash cow.

Not sure, what Vectors strategy is - and speculating on it might bring me into dangerous waters ... Do your own speculation!

So many things to do ... and it appears the current (de facto Vector dominated) board decided to wait instead for more wind and higher electricity prices ... maybe not the best strategy ...

[Coles Killer]

Agreed - the turbines had plenty of teething problems - and the jury is still out, whether they are by now fully understood and sorted, though there are some positive indications related to the first part .. as well that they are working through the resolution.

Otherwise - I think the question should be: Why didn't Vector run this wind farm in a much ore efficient way? If you look at it - two out of the five board positions are filled with Vector directors (Simon MacKenzie and Michael Stiassny) and Chris Saddler (the CEO) comes out of the same stable (ex-Vector man).

There are obviously plenty of things which could be improved, but just for starters ..

Integrating NWF into Vector (without changing anything else) would save the separate listing costs (roughly one million according to a recent chat I had with one of the board members). This alone would make the company profitable.
Re-organising NWF alone (by reducing the bureaucratic management overhead) could probably save some 300 to 400k and make it profitable.
Turbines are still operating below the designed power output. Increase the power output by just 10 percent (quite conservative and still ways below the designed power output - 30% should be possible) and the wind farm is profitable;
Come to a peaceful agreement with city council and neighbors and save (roughly) 500k pa in lawyer and court cost - and hey, the wind farm would be profitable.
Not to mention the (probably not just in hindsight) crazy lease agreement for the line equipment - paying basically more than 10% for another 15 years or so ...
Obviously - there are other things which could be improved as well - but just tackling one of the issues above would turn this company from a money drain into a cash cow.

Not sure, what Vectors strategy is - and speculating on it might bring me into dangerous waters ... Do your own speculation!

So many things to do ... and it appears the current (de facto Vector dominated) board decided to wait instead for more wind and higher electricity prices ... maybe not the best strategy ...

Increase the power output by 10%? 30%??? You're telling me that there is a way to get those turbines to make more power? Forgive my skepticism but surely if it were that easy... they would have done it already?

[Jantar]

Increase the power output by 10%? 30%??? You're telling me that there is a way to get those turbines to make more power? Forgive my skepticism but surely if it were that easy... they would have done it already?

Increasing the turbine output is not difficult. Power is simply Torque x Rotational Speed. The speed is pretty well fixed, but the torque can be increased by changing the pitch of the blades. The downside is that although more power may be obtained it would likely be over a smaller range of wind speed, and may therefore result in lower energy output overall.

Also, with the Windflow turbines there is a complex coupling that ensures that the blades are equally stressed, and it may be that this is where some of the power loss is coming from. PSE would be able to answer this better, but unfortunately the Mod told him to go away (Banned).

[James108]

Increasing the turbine output is not difficult. Power is simply Torque x Rotational Speed. The speed is pretty well fixed, but the torque can be increased by changing the pitch of the blades. The downside is that although more power may be obtained it would likely be over a smaller range of wind speed, and may therefore result in lower energy output overall.

Also, with the Windflow turbines there is a complex coupling that ensures that the blades are equally stressed, and it may be that this is where some of the power loss is coming from. PSE would be able to answer this better, but unfortunately the Mod told him to go away (Banned).

Yea sure, increasing the turbine output is as simple as 6th form physics.

[Jantar]

Yea sure, increasing the turbine output is as simple as 6th form physics.

Well, a touch more complex in practice, but the basic principle is only high school level.
In our company we are having that very debate at the moment. Some hydro turbines are due for new runners. Do we go for more efficiency (more power) over a smaller flow range, or do we opt for more flexibility to cope with more wind generation at reduced efficiency (less power), or do we replace with exactly the same as we have now?

[BlackPeter]

Increase the power output by 10%? 30%??? You're telling me that there is a way to get those turbines to make more power? Forgive my skepticism but surely if it were that easy... they would have done it already?

Hi CK, interesting you don't comment on the other savings opportunities I mentioned. If you are holding - are you happy for the board splashing your money away?

Anyway - skepticism is always good ... particularly towards a board destroying over the last 10 years roughly 90% of shareholders money.

So lets look at what the board told us .... and what the facts are:

From the 2013 annual report:

Output is modelled on volumes of 130.000 GWh, a reduction from 2012 which applied 152.765 GWh, being the P50 (average expected generation) measurement from the Parsons Brinkerhoff Power modelling. This reduction reflects an initial assessment of reduced power curve performance and varying turbine outputs as a consequence of location.

The board promised us (based on the report of some industry specialists) an average annual power output for this wind farm of nearly 153 GWh pa.

The board revised their opinion in 2013 down to 130 GWh pa (I couldn't find more in-depth information than above given about their change in opinion)

The wind farm produced in the last 4 years (of full time production) an average of 116.5 MWh pa - and the peak production was 123 GWh in FY2015;

Which means the wind farm runs in average at 76.5% of designed power output and / or 90% of for whatever reason revised power output.

Still think that a 10% (or higher) increase would be that unachievable?

Sure - apparently the wind came over the last 4 years from the wrong direction ... apparently not long enough to establish a means value - and who knows how long this ill-spirited mood of mother nature might continue. The board didn't tell us which period of time is long enough to reach "average" wind conditions - i.e. as far as I am concerned they can tell us the next 10 years (or until they exhausted all shareholder funds) that unfortunately the time period is not long enough to reach average wind conditions).

What I don't see them doing is to adapt our wind farm to the existing wind conditions (instead of waiting for an average which might never eventuate) - and as others already stated on this thread - it wouldn't be rocket science to do that.

Some changes might be quite cheap ... and others (e.g. modifying blades / different gear boxes) quite expensive. However - given that we have 97 turbines ... nobody would stop them to at least trial promising solutions with initially a small number of turbines. I hear Windflow developed in the meantime an improved generation of turbines (PSE pointed this out when he was still around) - maybe something worth a trial or an opportunity to learn from?

[BlackPeter]

Operational data for the first quarter released:

https://www.nzx.com/files/attachments/222651.pdf

Electricity produced down compared to last year (-0.9%)
Power price down (-3%)
however - pleasing to see the
Turbine availability up to 97.3%.

Glad to see availability going up - I think this is the best number ever ... sort of indicting that they might be on the right track with replacing key turbine components ...

However - another quarter with below average wind flow ... it might need a lot of wind to get this wind farm at any stage into the calculated "average" conditions. Reducing the cost (e.g. for the huge administrative overhead, reviewing alternative solutions to ongoing litigation and reviewing the need for ongoing NZX listing) might be a safer option to bring the company into the black.

[Jantar]

......
Sure - apparently the wind came over the last 4 years from the wrong direction ... apparently not long enough to establish a means value - and who knows how long this ill-spirited mood of mother nature might continue. The board didn't tell us which period of time is long enough to reach "average" wind conditions - i.e. as far as I am concerned they can tell us the next 10 years (or until they exhausted all shareholder funds) that unfortunately the time period is not long enough to reach average wind conditions).......

This is where the board and management of NWF keep making the same mistake in their planning. In anything to do with climate or hydrology (wind is from climate) then mean data should never be used. It is median data that is important. I do not have the operating parameters for the WF500 turbines, so I shall use Meridians Vestas as an example.

The Vestas start producing power at a wind speed of 5 m/s and self feather at 20 m/s (18 - 72 kmh) and produce their best output at 19 m/s. The site has a median wind speed of 15 m/s. So lets say that over a 10 day period the wind speed in m/s is 75, 10, 10, 10, 10, 10, 9, 8, 5, 0. That would give a mean wind speed of 15.1 m/s which is perfect and should have produced 4900 MWh. But there would only have been 720 MWh of electricity produced as the wind was only above mean a single time and even then was too strong. On 2 days it was too light. The median wind speed of 10 m/s would have shown this much better as 720 MWh produced.

I admit I have cherry picked numbers to illustrate the example, but in general terms the true mean wind speed will only be exceeded on around 33% of occasions and will always overestimate the median by a significant amount. So it doesn't matter "which period of time is long enough to reach "average" wind conditions ...... that unfortunately the time period is not long enough to reach average wind conditions" The wind farm will never perform to average wind conditions.

I should add that Meridian and Trustpower both employ full time hydrologists/climatologists and do not make this rookie mistake. NWF is not big enough to employ someone in this capacity full time, but they should at least ask for assistance in this matter.

[Harvey Specter]

I should add that Meridian and Trustpower both employ full time hydrologists/climatologists and do not make this rookie mistake. NWF is not big enough to employ someone in this capacity full time, but they should at least ask for assistance in this matter.

Given the turbines are already installed, is there any point. The wind will blow or it wont. A climatologist will just be another cost.

[Jantar]

True. But a one-off consultation on wind speed measurement, forecasting and statistical application may allow the board and management to get their forecasts, and hence planning, more accurate. They will continue to make a loss if they are planning on xxx MWh per year when the real number is 20% less than that.