W3: IMPORTANT FOR WIND FARM OWNERS HAVING ACTIVE MANAGEMENT
(MONTEL) IT IS IMPORTANT FOR WIND FARM OWNERS TO GET ACTIVE MANAGEMENT IN PLACE EARLY FOR BOTH TECHNICAL AND FINANCIAL OPTIMIZATION OF PRODUCTION, PER OLOFSSON EMPHASIZES, PARTNER IN THE NEWLY FORMED PORTFOLIO MANAGER W3 ENERGY, WHICH IS TARGETING GROWTH IN THE SEGMENT IN THE COMING YEARS.
“With the rapid expansion of wind power, we are seeing major potential in growing and providing administration services to all types of customers in the wind power industry, as well as to investors, energy companies and other types of stakeholders,” he says in an interview with Montel.
It was earlier this year that project developer Svevind – which, among other things, developed the giant Markbygden cluster outside Piteå – chose to sell off its project optimization oreganization to two former employees.
“We have two legs to stand on. Firstly, technical administration aimed at increasing production at an installation.
Secondly, we have financial portfolio management where we start out from the customer’s needs regarding risk levels and returns.”
Per Olofsson’s experience is that stakeholders should develop their risk management early in the project phase.
“Many projects have tough calculations where nothing can go wrong. In general, the earlier we can get into a project, the greater the opportunities we have to optimize both operations and administration, as well as to secure revenues at an early stage. As turbines grow, it becomes increasingly important to have an optimization strategy. This is because even small operational disruptions can have major financial consequences for the project owner. There is often more to gain by optimizing production and fine-tuning the business model.”
What distinguishes portfolio management of wind power compared to other types of power?
“The complexity of the mix of investments. We have a combination of different international players that come with capital and we have banks that issue loans, and which often require assurances in the form of long-term agreements. There is also a mix of stakeholders negotiating the agreements. I think that mix is unique to wind power.
When electricity prices are low, producers can increase their earnings by participating in Svenska Kraftnät’s balancing markets to support the electricity system. However, as it is difficult for wind power to regulate production, opportunities for the sector have been limited. But Svenska Kraftnät is now opening up to adapting the balancing markets so that production that only offers down-regulations can participate.”
Market players have warned that the complex agreements signed for existing wind power projects are hampering the ability to bid on the balancing markets. Per Olofsson, however, downplays that problem.
“My experience is that a lot can be solved with communication and here it is very important that as administrators, we take advantage of new business opportunities. With good dialogue, I think it is possible to do this kind of business. In terms of profitability, I think all stakeholders want to do what they can.”
In the process of recruiting
W3 Energy is headquartered in Umeå and currently administers, among other things, significant parts of the Markbygden wind farm outside Piteå. In the portfolio there is a production volume of 1,600 MW, of which 850 MW is in operation.
Earlier this autumn, an office was opened in Skellefteå and the company intends to further expand.
“We currently have 21 employees, and we are in the process of recruiting more,” says Per Olofsson.
During 2020, price differences between southern and northern Sweden risen due to increased bottlenecks in transmission capacity. When asked if he is worried that the rising price differences between southern and northern Sweden will hamper the expansion of wind power, Per Olofsson replies that there is still major interest in investing in wind power in the north.
“To date, I don’t think it’s had much of an effect. However, we see that the lack of capacity is limiting many approved projects and this problem will persist for many years.”
08:52, Tuesday, 20 October 2020