Willmar Utilities prepares for end of turbine warranty, future maintenance 

WLLMAR – As the September expiration date on the extended warranty nears for Willmar Municipal Utilities’ two wind turbines, utility staff created a list of activities and tasks required to perform normal scheduled turbine maintenance, according to a four-page report submitted Monday to the Municipal Utilities Commission.

Also, staff has created an end-of-warranty inspection list for a third party to perform, including a schedule of tasks, normal activities and check-off lists that will accompany workers as they inspect the units.

The utility has contacted several vendors who are interested in signing a contract to do the work. The utility anticipates the need will continue to have a repair crew on contract to work on future issues.

The plan is to have a greater frequency of visits to reduce the impact of failures and reduce down time; and to have a greater presence at the units with a combination of staff and vendors than has been done by turbine supplier DeWind Company of Round Rock, Texas.

The annual $200,000 warranty budget that had been paid to DeWind will be allocated to staff and contractors. The final amount depends on the amount of the contracts.

Also, staff is creating a list of vendors for procuring parts, but some DeWind-only sourced parts will also be needed.

The report said the utility anticipates funding any large expenses through the generation reserve fund.

Willmar Utilities will assume full operation and maintenance responsibility for the units and anticipates that the impact of a majority of issues that arise in subsequent years will be caught and repaired in a timelier manner, thereby reducing downtime and increasing production.

Background

Minnesota has a renewable energy standard goal of 25 percent of energy produced by 2025 to be sourced by renewable energy.

On Aug. 4, 2008, the Utilities Commission approved an agreement with DeWind Company to purchase two D8.2 model wind turbines for installation at what is termed the “high school site’’ within the city limits. The turbines were delivered in May 2009, were installed by July 7 and were commissioned Sept. 3.

Before the purchase, a wind study was commissioned to model the projected output of the turbines over time, based on wind speed data collected at the Ridgewater College site by the Minnesota Department of Commerce from 2002-2004.

The study was completed by EAPC Engineers Architects of Grand Forks, North Dakota. The results indicated that the turbines’ combined output should average approximately 8.3 million kilowatt hours per year, with a capacity factor (percentage of time when the wind is blowing) of 23.7 percent.

A financial projection was prepared by Folkedahl Consulting, Inc., of Willmar, to estimate the total cost of the turbines, based on a 20-year project life. The estimated cost of electrical energy – 7.4 cents per kilowatt hour – was based on the bid price of the turbines, estimated balance of plant costs, and projected production. Using a 6 percent discount rate, the estimated new present value equated to a 20-year average per kilowatt-hour energy cost of 4.7 cents.

Performance

Review of energy production combined with warranty payments received and pending since 2009 show that the turbines have performed as projected. The estimated 20-year average cost of electrical energy has not varied significantly from original projections. Sales of 2012 energy production exceeded cash flow expenses.

Availability percentages have improved each year in the time period 2009 through 2012, with actual energy production climbing from 6.6 million kilowatt hours in 2010 to 7.7 million kilowatt hours in 2011.

In 2012, combined production reached EAPC prediction of 8.3 million kilowatt hours with a capacity factor of 23.7 percent. In 2013, production was 5,922,044 kilowatt hours and as of June 30, 2014, production was 4,329,015 kilowatt hours.

Monthly production and availability data are found on the utility’s website at www.wmu.willmar.mn.us/.

Value of wind production

The value of the energy produced by the turbines is not based on the fuel, which is free, but the cost of the capital and maintenance. Included in the calculation is insurance, lease cost, maintenance and debt service. While the bond is being paid off, the cost of the energy will be above 10 cents per kilowatt hour. After the bond is paid off, the energy should be the least cost of the utility’s portfolio.

Maintenance

Heaters in addition to those provided originally have been installed by both DeWind and Willmar Utilities, and have improved the turbines’ cold-weather performance considerably. Various adjustments to the control systems have also been responsible for much of the production improvements.

From Jan. 1, 2010, through Dec. 31, 2012, scheduled maintenance was performed on turbine Nov. 3 (north tower) 31 times for a total of 389 hours. Unscheduled service was performed 158 times for a total of 969 hours. Hydraulic pressure errors were the most frequent problems and low temperature conditions were the most time consuming.

During the same period, scheduled maintenance was performed on turbine No. 4 (south tower) 40 times for a total of 443 hours. Unscheduled service was performed 164 times for a total of 2,195 hours. Hydraulic pressure errors were the most frequent and time consuming problems with turbine No. 4.

In May 2013, the 15-kilovolt breaker in No. 4 failed. In August 2013, the No. 3 15-kilovolt breaker also failed. These devices tie the output of the machines to the grid. In November 2013, both breakers were installed and commissioned. From November 2013 to April 2014, both units performed as expected. In April, the nose cone on No. 4 fell off and the unit was shut down for safety. Total hours of unavailability equaled 4,631 for the 15 kilovolt breakers and 1,643 as of June 30, 2014 for the nose cone.

In 2013, scheduled maintenance was performed on No. 3 13 times for a total of 485 hours. Unscheduled service was performed 21 times for a total 76 hours. Hydraulic pressure errors were the most frequent and time consuming problems with No. 3.

On No. 4, scheduled maintenance was performed 14 times for a total of 814 hours. Unscheduled service was performed 41 times totaling 2,278 hours. Generator bearing errors were the most frequent and time consuming problems with No. 4.

Contract update

The original 2-year warranty included a performance warranty. In early 2011, the utility exercised the option to extend the warranty an additional 3 year at a cost of $65,000 per year per turbine. The extended warranty included requirement to extend the maintenance agreement with DeWind also. The annual cost for both is $200,000 per year.

Availability warranty

The contract included an availability warranty of 90 percent for the first 6 months and 95 percent for the remaining contract. If the units fail to perform, a formula calculates the lost revenue that Willmar Utilities is due.

In the first year, DeWind credited Willmar $73,349 for lost production through early 2011. In 2013, Willmar submitted a statement to DeWind for lost production. In June 2014, DeWind submitted a check to cover the cost of the claim.