Emerging hazards

The community of Caithness might be up in arms about a recent small-scale turbine blade break but spare a thought for the Chinese coastal city of Guangdong.

Here, the local community is not only battling to recover from the strongest storm to hit the western pacific this year – it’s also faced with an increasingly expensive operation to restore vital power and transmission lines to the area.

To date, best estimates place the damage from Typhoon Usagi at a little over $500m.

That bill – which continues to rise – includes the loss of three major power lines brought down within the region. Damage to the local nuclear facility. And significant operational losses at the Honghaiwan Wind Farm.

Indeed, on the wind farm alone – a site that utilises 25 of the early Vestas V47 units – eight of the wind turbines have been blown down, with a further nine having suffered blade breakages and failures.

That, according to the wind farm manager, puts the total repair bill at $16m, which, despite the ageing turbines, presents a not inconsiderable loss.

But here’s the thing. Typhoons are commonplace along that part of the Pacific coast. And this particular wind farm was hit exactly ten years back, when a smaller categorised storm knocked out 13 of the units, leaving the developer and insurer to foot the unexpected cost.

So the threat of typhoons is nothing new. And while the wind yield might for the most part be high, the site’s position presents ongoing opportunities and threats.

However, the story of Honghaiwan is also indicative of a wider market trend.

For, as wind developers proliferate into natural catastrophe zones – tempted either by the prospect of good returns, cheap development costs or the opportunity to plug a hole in a local energy mix – delivering stable investor returns can become a tricky game to predict.

It’s a similar story for many of the Caribbean islands that have, until recently, relied almost exclusively on expensive imported diesel fuel to power an ageing energy fleet.

For wind and solar energy developers, the opportunity is often too great to overlook. And many local operators have been quick to deliver some impressive returns and build out near monopolies in undisputed local waters.

However, as portfolios grow and as developers take increasingly large chunks out of the domestic energy mix, the necessity to safeguard and protect the fleet – not just in terms of investor outlay but also as an energy generating asset in its own right – has become increasingly critical.

Opportunistic local developers may well have made some early gains but if they are to truly secure their dominant local positions, they’d do well to learn lessons from the likes of Typhoon Usagi, and take heed.