The wind repowering market in China is expected to take off from 2023, with more than 21GW of the country’s turbine fleet expected to be repowered to 2028, according to a Wood Mackenzie study.
While China’s near-term repowering activity is limited, repowering demand should accelerate post 2023, resulting in a compound annual growth rate of 83%, the new report found.
Factors driving repowering demand include an aging of installed base, from when the country’s wind market experienced “tremendous growth” during the 2007-2010 timeframe.
Repowering refers to complete dismantling and replacement of old wind turbines at the original wind site. Wind farms older than 15 years are generally ideal candidates for repowering as the operation and maintenance (O&M) cost is 50% higher than that of wind farms younger than five years.
A second driver of the repowering market boom is declining availability of good wind resources for new wind projects. Most new projects after 2023 will be in regions with wind speeds below 6.5 metre per second (m/s) and have an internal rate of return (IRR) of no more than 10%.
Repowering at 9-10m/s sites could provide an IRR of over 15%. As subsidy cuts take effect and the new-build market slows, developers will increasingly focus on the repowering market for new investments, according to Wood Mackenzie.
Wood Mackenzie consultant Kevin Han said: “There is an early mover opportunity for forward thinking OEMs and service providers able to develop repowering solutions for at-risk turbines prior to this rapid acceleration in demand.
“Despite the potential, the market is likely to pay little attention to the repowering market in the near term due to the limited capacity of aged wind turbine fleet, lack of supporting policies and near-term focus on fulfilment due to expiring FITs.”
State-owned asset owners (SOEs) are expected to be “key players” in the repowering market, as they hold more than 83% of operating wind assets.
SOE exposure to aging wind assets will “strengthen their motivation” to engage in repowering activities with an eye towards enhanced cash flow and higher profits, according to the study.
Han added: “In addition, SOEs are better positioned to overcome barriers to repowering, including negotiating terms with local governments and grid operators on issues such as land-use rights and operating hours.
“SOEs will dominate the market, commanding a repowering market share in excess of 96% in 2028. The remaining non-SOE segment is mainly composed of private companies, which are likely to exit the market when their turbines retire due to low risk tolerance and lack of subsidies.”