One of the obstacles preventing wind plants from becoming a first-rate electricity resource is the inability of wind farm owners and developers to accurately predict and guarantee wind energy delivery. Wind energy resource assessments typically use several years’ worth of wind data. These assessments typically develop estimates of long-term mean wind speeds based on on site anemometer data or on reference anemometer data from a nearby location.
Once estimates of wind speeds have been made, they can be used to create power curves that estimate the electrical energy that wind turbines would produce at each speed. The resulting forecast, based on both estimates, is a probability-based energy production level for a wind farm. For example, “P99 energy” is the term used for the annual amount of energy predicted to be available at a point of delivery with a probability of 99% or greater.
“P50 energy” describes the (larger) amount of annual energy expected to be available at a probability of 50% or more.Since P99 energy has a 99% probability of meeting the expected energy production level each year,it typically becomes the “annual guaranteed energy” expected of a particular wind farm. Accordingly, a wind farm’s P99 level is calculated and certified by an industry wind assessment expert.
Performance damages are sometimes sought if the plant fails to deliver the guaranteed generation. Sometimes, a “failure to perform” clause in a contract is triggered at a certain percentage of the P50 level or of another P level. It all depends on the negotiations between the utility customer and the owner of the wind farm.
Probability-based energy production levels also affect the building of wind farms because, as part of their financing, the level of expected revenues is based on substantiated generation numbers. If a wind farm’s guaranteed generation is from P99 wind, any revenues from additional sales of wind power with a lower P level are not used toward capital recovery or to meet investors’ return on investment targets. For this reason, the price of wind power at other P levels is usually substantially less than that of P99 wind.
Since the only real costs incurred by the seller are incremental operation and maintenance costs, the prices paid for wind energy at levels other than P99 are typically 60% of that paid for P99 wind. This bracketing combination of minimum annual energy guarantees and lower prices for non-P99 wind encourages wind farm developers to accurately present the generating capability of their plants. If the guaranteed generation is set too low, then more energy would be sold at the discounted rate each year.
Conversely, if the guarantee is set too high, performance obligations might not always be met and could possibly result in the assessment of costly damage payments. In planning their renewable resource portfolios, utilities typically choose suppliers willing to guarantee wind energy generation with low levels of uncertainty. The ability of wind farm developers to offer and meet an annual level of guaranteed generation is a significant milestone for an industry on the cusp of maturity.