Net zero by 2050 hinges on a significant leap toward clean energy in this decade. That’s because 73% of the world’s emissions come from the energy sector. According to the International Energy Agency, by 2050, almost 90% of electricity generation will need to come from clean sources—with wind and solar together accounting for nearly 70%. This means that wind capacity needs to increase by 11x, while solar needs to rise by 20x. Successfully reaching these multi-decade goals will require a long-term view on the development and operation of power generation assets, and by extension, a long-term perspective on building value for investors.
As one of the world’s largest renewable power businesses, we see enormous potential in wind repowering as an essential step in greening global power grids. Repowering is essentially upgrading and refurbishing existing wind farms to create power at a greater scale, more efficiently and for a longer period of time. The idea behind it is simple: by installing new, larger blades and rotors and/or new software at an existing site, we can enhance energy capture at a fraction of the cost of building a new facility—between 30% and 50%—and extend the useful life of the wind farm by several decades.
Repowering one of the largest wind farms in the U.S.
In February 2021, we announced our US$700 million purchase of Shepherd’s Flat, an 845-megawatt wind farm in Oregon that is one of the largest in the U.S.—and an attractive candidate for repowering. We were the successful bidders on the asset partially due to our differentiated view on value—we understood the value of the in-place assets and contracts, but we were also willing to forgo some short-term cash flows for a couple of years while the asset was being repowered. We also had the operational experience to execute on the investment, thereby increasing production levels and extending the life.
We began the repowering project in June 2021, replacing the hardware of over 320 turbines with longer rotors and more efficient equipment. The new blades we are installing at Shepherd’s Flat are 27 meters longer (a 27% increase), as well as lighter and stronger. These extra-long blades are able to pick up low levels of wind that would have slipped by the older, shorter blades.
Since most of the existing infrastructure will remain in place (the land, the permits, the foundations and the connections to the grid), the timeline for repowering is moving quickly—we expect to complete the project in under 24 months. In addition, we are minimizing project risks by leveraging our existing relationships with equipment suppliers, financing partners, permitting authorities and power off-takers.
Once completed, the repowering at Shepherd’s Flat will have the impact of increasing power production by approximately 25% annually and extending the life of the facility by 30 years. While many investors would have chosen solely to maximize the asset’s current cash profits, we looked beyond that and invested for long-term value as well. Moreover, in addition to the current asset, we will have the option to build another 400 MW of capacity next to the facility—thereby contributing to the 11x increase needed in the IEA’s pathway to net zero by 2050.
A wide-reaching opportunity
The implications of wind repowering go beyond this one asset: In the next five years, we estimate that 200 gigawatts of global wind turbine capacity will age into being candidates for repowering around the world. That is the equivalent of about 240 Shepherd’s Flat assets over the next five years. The greening of global power grids is the single largest decarbonization opportunity around the world today. Fortunately, most of today’s carbon emissions are abatable by using existing technologies—like wind repowering—that are commercially viable at scale.