The days when windmills were profit machines seem over

THE NETHERLANDS -- Okko Kaan runs at least once a week past the residence of Anna Pavlovna to Franeker, a route that goes through the head of North Holland, through the Dam and a small piece of Friesland. The terrain is flat, spacious, empty, and windy. Wind turbines are in abundance; all of different sizes, different owners. Kaan knows the models, types and the manufacturers. He is director of Green Energy Services, which performs maintenance on more than 250 windmills in the Netherlands. 

"If energy prices remain low, then the turbines will stop running," Kaan said as soon as he arrived at his premises in Franeker. Green Energy Services has been hit by the collapse of electricity prices. The market is becoming more challenging and clients are delaying paying their bills.
 
Double Blow

Kaan has not seen bankruptcies yet. Green Energy Services works pensions: farmers who have one or two turbines on their land. But older windmills now often need money for maintenance, insurance, measurement services, and in some cases the lease. The current electricity prices do not provide enough revenue. 

Wind should be a pleasure, supplementing the income of a farmer. Now such a mill is increasingly a burden. This is especially true for the dairy farmer who constructed the turbine behind his house fifteen years ago. The vaunted diversification - Milk and wind as sources of income - now acts as a double blow because the wind is unprofitable, and, following the abolition of the quota, milk prices have also collapsed.

Energy Companies

The larger energy companies have also been hit by low electricity prices, but they do not make public their figures on windmills. However, a Nuon spokesman says that "at current low energy prices, margins are razor thin." According to Eneco the "parks are running satisfactorily. All mills run a positive return." But Eneco is experiencing "pressure on margins due to low energy prices. We can absorb that pressure through the efficient operation of our parks." The Dutch Wind Energy Association (NWEA) recently warned that new projects for wind power "hardly are profitable to make.

For the smaller, so-called solitary turbines, operating costs per mill are often higher than in the large new parks. According to estimates by the Association of Private Wind Turbine Operators (Pawex) 'There is the potential to lose 500 to 750 megawatts of installed onshore capacity immediately, or whenever major maintenance arises," says policy advisor Nick Waltmans.

At the end of 2015 there were nearly 3,000 megawatts (MW) of wind energy on land in the Netherlands. Seventeen to twenty-five percent could be dismantled.

Wind Millers

Figures from Windunie, a cooperative of wind millers and wind farms are similar to those of Pawex. "Based on the price of the long-term market of 2016, € 26 per megawatt hour, 79 turbines are in the danger zone," said a spokesman for Wind Union. "That's more than 30% of our members. Because it concerns particularly smaller mills this represents about 13% of the production for Windunie. "

These smaller mills have been built under the old subsidy regime (MEP), which ran until 2006. The subsidy lasted about ten years. "At that time the repayment and interest was recovered," says Johan Top, founder of Topwind from Barneveld, a company that advises and manages wind turbine operators. After that period, turning a mill from the grant, as it is called in "wind jargon." With the investment paid back, the turbine was expected to be profitable at the current regular price, in theory at least.

Variables

Top could not say how big the problem is. Each turbine is different. There are many variables: a mill on private land in a place where the wind blows hard and frequently might be profitable. 

But expensive locations like Flevoland where farmers may have a mill often on private land that's leased mainly from the State Real Estate Company, costs are higher. According to a spokesman for Windunie. "In Flevoland, which is less windy, there are fewer full-load hours (hours when you're running full power, ed.) resulting in lower production. So per delivered MWh there are higher maintenance costs at the same mill. " The cost of a relatively small 850-megawatt wind turbine, according to Windunie could soon be € 33,000 per year.

"There is a chance that a damaged mill will not be repaired," said the spokesman. "Because at current energy prices, the costs of repairs cannot be recovered."

Demolition

Topwind is now involved in dismantling four wind farms. Trade-in of used windmills has existed since turbines were first constructed," says Summit. "Second-hand" turbines go to Eastern Europe or elsewhere in the world. "Dismantling has been happening for years," said Summit. Often it was associated with replacement where a smaller turbine was removed and a larger, newer turbine put in its place. "Now we are dismantling turbines for the first time for economic reasons."

It will "not be a surprise" for him when lower yields also lead to deferred maintenance, "though I have not yet found that." However, farmers who have a turbine on land might make other considerations. "Maybe you do not choose the most expensive maintenance contract. With such a pricey contract, a failure may be resolved within eight hours. Then the blades are turning again. With a cheaper contract it may take 48 hours for a repair." That is unfortunate in view of the sustainability objective of the government, says Summit. "But money is surely an important issue."

(Translation assisted using Google Translate.)