LARGE POWER INTERVENORS. Utility Information Request

Transcription

1 LARGE POWER INTERVENORS Utility Information Request Docket Number: E015/RP Date of Request: March 14, 2013 Requested From: Minnesota Power Response Due: March 26, 2013 By: Large Power Intervenors (Andrew P. Moratzka, Chad T. Marriott) LPI 204 The useful life for Bison 1, 2 and 3 is stated as thirty-five (35) years. Please explain the basis for this assumption. Response: In Minnesota Power s 2012 Remaining Life Depreciation Petition (Docket No. E015/D ), the Company requested that as approved for Minnesota Power s Taconite Ridge I wind assets and Bison 1 (Phase 1 and 2) wind assets, the wind production assets for Bison 2 and Bison 3 be depreciated over a 35-year period upon being placed in service. In Minnesota Power s 2011 Remaining Life Depreciation Petition (Docket No. E015/D ), the Company requested that as approved for Minnesota Power s Taconite Ridge I wind assets and Bison 1 (Phase 1) wind assets, the wind production assets for Bison I (Phase 2) be depreciated over a 35-year period upon being placed in service. This was approved by the Minnesota Public Utilities Commission in an Order dated August 22, In Minnesota Power s 2010 Remaining Life Depreciation Petition (Docket No. E015/D ), the Company requested that as approved for Minnesota Power s Taconite Ridge I wind assets, the wind production assets for Bison 1 (Phase 1) be depreciated over a 35-year period upon being placed in service. This was approved by the Minnesota Public Utilities Commission in an Order dated June 29, Response by: Debbie Davey List Sources of Information: Title: Supervisor, Property Accounting Depreciation Dockets Department: Property Accounting Burns and McDonnell Study Telephone: (218)

2 In Minnesota Power s 2008 Remaining Life Depreciation Petition (Docket No. E015/D ), the Company requested that the life of the production assets of wind facilities be 35 years, based on the expected useful life of Taconite Ridge I, upon the facilities being placed in-service. An assessment of the expected life expectancy for the wind facility was undertaken by the engineering firm Burns & McDonnell with the conclusion that a 35+ year service life can be expected from the wind facility by following a structured maintenance program. This was approved by the Minnesota Public Utilities Commission in an Order dated January 5, See the attached file Wind Burns & McDonnell Study.pdf. Response by: Debbie Davey List Sources of Information: Title: Supervisor, Property Accounting Depreciation Dockets Department: Property Accounting Burns and McDonnell Study Telephone: (218)

3 August 24, 2007 Mr. Eric Norberg Vice President, Strategic Planning & Research Minnesota Power 30 West Superior Street Duluth, MN RE: Estimate of Life Expectancy for Taconite Ridge 1 Wind Farm Project Dear Mr. Norberg: Attached is an assessment of the expected life expectancy for the Taconite Ridge 1 Wind Farm located in St. Louis County, Minnesota. Based on a review of the project's turbine selection and our familiarity with other newly built wind farms of similar size and equipment, Bums & McDonnell estimates the useful life of this project to be 35 years or more. The Taconite Ridge I Wind Farm will be using Clipper 2.5 MW Liberty turbines to generate electricity. Clipper is also providing Minnesota Power with a 2-year maintenance and warranty program to help Minnesota Power establish the long-term maintenance program for the wind farm. We expect the principles outlined in the attachment to be reasonable and that a 35+ year service life can be expected from the wind farm by following the structured maintenance program to replace components as they near the end of their individual useful life. Please note the assumptions and qualifiers included in the assessment to arrive at a 35+ year project useful life forecast. Once you have a chance to review the information, please feel free to call me at (816) to discuss. Sincerely, 9400 Ward Parkway Kansas City, Missouri Tel: Fax: Attachments: Taconite Ridge l Wind Farm Project Life Expectancy

4 Attachment A: Taconite Ridge 1 Wind Farm Project Life Expectancy Background Minnesota Power has signed an agreement to acquire power from the Taconite Ridge 1 Wind Farm project in St. Louis County, Minnesota. Minnesota Power, the developer and operator of the project, is using Clipper 2.5 MW Liberty turbines to produce about 25 MW of energy. Minnesota Power asked Bums & McDonnell to estimate the useful project life of the wind farm project for purposes of financial due diligence. With the turbine types deployed by Minnesota Power, Bums & McDonnell believes that the wind farm project will have a service life of 35 years or more. In preparing this evaluation, Bums & McDonnell did not evaluate the wind resource of the project site, nor did it evaluate the array design of the wind project or specific design/engineering aspects of the project other than the turbine specifications. Wind Farm Project Life Expectancy The reliability and productivity of wind turbines and balance of plant components associated with wind farms have improved dramatically in the past twenty years. "Utility-scale" wind farms being built today are of much larger scale than their predecessors, typically 25 MW or higher. The rated capacities of individual turbines being deployed today in "utility-scale" wind farms have also increased compared to their earlier counterparts, with wind turbines designed for on-shore applications now rated at 1.5 to 3+ MW. The improved reliability of modem wind turbines has been largely due to advances in the design and manufacturing of more durable turbine rotors, gearboxes, and generators and the increased use of remote sensing/control and diagnostic equipment that help maximize turbine availability. While wind farms can be developed under varying financial scenarios, the electrical output from utility scale wind farms is often being sold by third party developers to utilities and other off-takers under long term agreements, often over 15 to 25 years. Today, the wind power industry in the United States is very strong due to rapidly accelerating interest in renewable energy technologies, which bodes favorably for long term continuity of wind turbine manufacturers and balance of plant suppliers, availability of spare parts, and the availability of maintenance personnel to service wind farm equipment. The major elements of a wind farm project are wind turbines (including tower), foundations, power collection system (including project substations), transmission interconnection (including utility substation), roads, other civil improvements, and project support buildings. Foundations, power collection systems, transmission interconnection systems, roads and other improvements/facilities associated with wind Page 2 of7

5 ; ; ~~n~- [ ;IHl 18H Attachment A: Taconite Ridge 1 Wind Farm Project Life Expectancy farm projects -while each requiring periodic inspection, maintenance, and component replacement- are expected to have design lives of 35 years or more. These elements are common to many other power generation projects and are not unique to wind power projects. The unique technical or hardware aspect of wind power project development that requires additional consideration from a life expectancy standpoint is the wind turbine (including tower). The life expectancy of a wind farm project is also influenced by the market value of its "renewable" wind resource, which would not be expected to diminish over time. In fact, the market value of a high quality, operational wind farm site is expected to increase over time as the site has already passed environmental and permitting hurdles and has been successfully connected to the transmission grid. Wind Turbine Life Expectancy The major individual components of modern commercial wind turbines are typically designed to last years, while the overall turbine assembly (including tower) can be expected to have a useful life of35 years or more. The expected useful life ofwind turbine components depends on the initial quality of the components used by a manufacturer, local climatic conditions [e.g. the amount of turbulence at the site, environmental conditions (dust, moisture, etc.)], and the level of attention devoted to required maintenance by the project operator. Certain wind turbine components are subject to more wear and fatigue than others. This is particularly true for rotor blades, blade pitch drives, gearboxes (gearbox bearings and torque arms), and power electronics. To maximize the life expectancy of the key individual components of wind turbines used at the Taconite Ridge 1 Wind Farm, Minnesota Power should have in place a multi-year plan (or agreement with a qualified O&M service provider) to perform scheduled and unscheduled maintenance and to maintain an adequate inventory of spare parts. 1 Scheduled Maintenance- The objective of preventive maintenance is to replace components and refurbish systems that have defined useful lives, usually much shorter than the projected life of the overall turbine assembly. These tasks include periodic inspections of the specific equipment, oil and filter changes, calibration and adjustment of sensors and actuators, and replacement of consumables such as brake pads and seals. The specific tasks and their frequency are explicitly defined in the maintenance manuals supplied by Clipper. ' With the exception of some switchgear and power conversion equipment, most turbine equipment is accessed via the tower. For safety reasons, a two-person crew is generally required for any up-tower activity. Although some major components may be reworked in situ, replacement often requires lifting the replacement component into the nacelle with a hoist crane and the use of an onboard service crane within the nacelle. Work outside of the nacelle requires working with a safety harness and lanyards. Replacement of rotor blades will require the use of a mobile crane similar to one used during the original installation of the rotor. Mobilization costs alone can make up a major portion of the repair cost. Page 3 of7

6 Attachment A: Taconite Ridge 1 Wind Farm Project Life Expectancy Unscheduled (Failure Related) Maintenance- A certain amount of unscheduled maintenance should be anticipated with any wind power project. Clipper 2.5 MW Liberty turbines contain a variety of complex systems that must all function correctly for the turbines to perform; rarely are redundant components or systems incorporated. Failure or malfunction of a minor component may shut down the turbine and require the attention of maintenance personnel. Spare Parts - Most replacement parts used on the Clipper turbines will be supplied by Clipper. Many smaller components such as electronic and hydraulic parts are stock items that may be available from multiple sources. The bulk of the power-transmission and rotor components, and most of the controller and power conversion equipment, are purpose-built items that are manufactured directly by Clipper. As Minnesota Power assesses that major individual components of the turbines are at or nearing the end of their technical design lifetime (i.e years), normal industry practice is to increase the service life of the entire turbine assembly by performing replacement or refurbishment of certain key turbine components (e.g. replacing rotor blades and/or conducting an overhaul of the gearbox). The future cost of a new set of rotor blades and a gearbox overhaul may be approximately percent of the price of a new turbine, yet can be expected to extend the life of the entire turbine assembly (and thus the entire wind farm project) to 35 years or more. Clipper 2.5 MW Liberty Turbines The following data is provided to indicate the market presence and financial strength of Clipper Windpower pic, the manufacturer of the 2.5 MW Liberty turbine. Clipper's turbine production was initiated in 2006, with the completion of the Group's first eight Liberty 2.5 MW turbines in December 2006 for delivery to the Steel Winds project in New York. Clipper assembles machine base, nacelle, gear boxes and hub assemblies at its facility in Cedar Rapids, Iowa. Revenue for the year ended 31 December 2006 was $7,263,647, which reflects the sale of wind project development rights and services. This compares to $2,725,678 for the previous year, comprised primarily of grant revenue. No sales of wind turbines were recorded in 2006 or The Group recorded a profit on sale of subsidiary undertakings in the 2006 totaling $19,526,743 in transactions that also included turbine supply agreements for Clipper 2.5 MW Liberty turbines. The loss on ordinary activities after taxation for the year ended 31 December 2006 was $20,879,563, versus a loss of $20,555,917 in the previous year. The 2006 results reflect the ramp-up in activities to support the production and delivery of wind turbines that commenced in December Page 4 of7

7 Attachment A: Taconite Ridge 1 Wind Farm Project Life Expectancy In July 2006, Clipper and BP Alternative Energy North America Inc. announced a strategic alliance for a long-term turbine supply agreement and the joint development of five of Clipper's wind energy projects in the USA. The five wind projects, with an anticipated generating capacity of 2,015 MW, will be jointly owned by the two companies and will deploy Clipper's advanced Liberty wind turbines. Additionally, in recognition ofthe long-term strategic relationship between Clipper Windpower and BP Alternative Energy North America Inc., BP acquired a five-year share option to purchase a 10% equity interest at 3.77 per share in Clipper Windpower Pic. As part of the long-term turbine supply agreement, BP Alternative Energy North America Inc. committed to the purchase of 1 00 MW of Liberty turbines in 2007 and 200 MW in 2008, which it will use in other projects in its global wind business. These orders represent the initial firm deliveries under the long-term supply agreement for up to 900 Liberty turbines (2,250 MW) over the next five years. Overview Type Power Components Primary brake Operation Yaw Hub height Horizontal axis, 3 blades, upwind 2500 KW system power output Purpose designed by Clipper Blade pitch (aerodynamic) Variable speed 9.6 to 15.5 rpm Electromechanical 80m standard I other options available Tower 80m hub height, optional to height available Type Tubular Material Steel plate Sections 4 (80m hub height) The Liberty Turbine costs less to transport and install because it weighs less and is more compact than other turbines available in the same size class. The Liberty Turbine is installed with the same crane capacity as most 1.5 MW turbines. Page 5 of7

8 . Attachment A: Taconite Ridge 1 Wind Farm Project Life Expectancy Rotor Wind Class Diameter Swept area Blades Tilt Tip rated output Rotor lock Rotor turning Gear Class la* Class lla Class lib Class Illb 89m 93m 96m 99m 6221m m m m m 45.2m 46.7m 48.2m rnls Integrated into base, hydraulic Manual, high torque *Class Ia - all parameters same as IEC Class Ia except 50- year return gust value is 64.5 rnls instead of 70 rnls Generator Type Number of units Rated power (each) Voltage Enclosure Cooling Windings Operation Synchronous Permanent Magnet kw at 1133 rpm 1,320 VDC at rated power 1P54 TEWAC (IP54) options available Form-wound, insulation class H Continued operation with one generator outage Advanced generator control technology enables wide range variable rotor speed, improving turbine aerodynamic efficiency by adjusting to variable wind velocities, briefly storing and releasing energy from wind gusts while also reducing torque spikes resulting in more production and extended life. Four high efficiency permanent magnet generators provide continued operation even with a generator outage, which is a different design from other turbines with single generator drivetrain. Page 6 of7

9 - '..B!M r~ ~- L Attachment A: Taconite Ridge 1 Wind Farm Project Life Expectancy Controller Voltage Computer Operator interface SCAD A 3 phase 480 V AC Embedded Motorola power PC Palm Top or Laptop PC Fiber optic connections, serial interface Maintenance interval Post commissioning, maintenance is scheduled for once at 700 hours and every 6 months thereafter. The Liberty Turbine's onboard crane provides access to the brakes, generators, yaw drives, and power-train components quickly, and with minimum intenuption of production. Nacelle access through the power rolldown hatch at the rear affords servicing convenience thus helping to support a regular maintenance program. Turbine Certifications Germanischer Lloyd WindEnergie GmbH: Statement of compliance for design assessment of the wind turbine: WT A-2006 (C-93) I WT A-2006 (C-96) I WT A-2006 (C-89) 2 USDOE's NREL Accredited Lab /05 : Drivetrain dynamometer test 1 Certification is obtained by a wind turbine manufacturer to demonstmte that its wind turbine meets specified standards for key elements such as design, power performance, noise emissions, and structural integrity. Certification is not a warranty, but it does provide the purchaser of a wind turbine with proof that a particular wind turbine model has been tested and evaluated by an accredited certification test organization and is intended to provide assurances that the investment in the wind turbine is sound and safe. Page 7 of7