Sustained Winds

Sunset Shouldn’t Dim Wind Cargo Outlook

By Paul Scott Abbott

As expiration of tax credits looms, the rush to move U.S. wind energy project cargoes into place is testing logistical capabilities and, while perhaps somewhat diminished, post-sunset demand is expected to be sustained.

Trucking, rail and port logistics providers – as well as a prominent energy intelligence consultant – tell Breakbulk they expect the supply chain to stay plenty busy meeting the challenges of moving these oversized units, even as U.S. production tax credits go away.

Many anticipate the biggest push in the final month of 2019, just before scheduled expiration of the production tax credit, known as PTC for short, for projects for which construction has not yet begun. But 2020 might be even busier.

Industry efforts to renew the PTC are likely to fall short under an administration bent on attacking renewable energy production with sometimes erroneous rhetoric.

Demand Intensifies

“As developers push to have projects operational within the current window, the demand for support for these projects is outstripping the availability of equipment and manpower,” said Mike Meyer, principal of Colorado-based TLG Transport, which focuses on moving wind components and other specialized cargoes.

“Wind energy will continue to develop within the U.S. after the 2020 expiration of the current PTC due to the development of new and more efficient turbine designs, but implementation will not be as robust without a renewal of the PTC,” said Meyer, who has been in the specialized trucking business for more than 40 years.
“What 2021 and forward will look like for wind transportation logistics is largely unknown, but we remain optimistic.”

Meyer said many transport companies have been hesitant to invest US$750,000 or more in a specialized truck-and-trailer combination in fear of a precipitous post-sunset drop-off in demand – a fear Meyer sees as unfounded.

“As the grid further develops, and efficient methods are created to store this energy, the potential for generation and utilization of clean energy will grow exponentially,” Meyer said. “My hope would be that, with the development of more efficient turbines, the grid to move this power to where it is needed, the ability to store power, as well as a well-thought-out and pragmatic national policy, we can levelize implementation and move away from the boom-and-bust cycle we have experienced, driving confidence and thus further investment in the industry and those services that support it.”

History to Repeat?

Federal figures support Meyer’s boom-and-bust assessment, with the U.S. Energy Information Administration, or EIA, making a mid-2019 projection that U.S. wind capacity additions in 2019 will total 12.7 gigawatts, surpassing annual capacity additions for each of the preceding six years, but falling shy of the record 13.3 gigawatts of capacity added in 2012 – just prior to initial PTC expiration. Activity picked up again following retroactive renewal of PTC in 2013, under the Obama administration.

According to the EIA report, December is expected to see completion of 44.7 percent of all U.S. wind capacity coming online in 2019 – precipitating a demand crunch similar to the one experienced as 2012 drew to a close.
This time, however, the post-sunset decline is not seen as so precipitous as that experienced from 2012 to 2013, when U.S. wind capacity additions plummeted from the still-record 13.3 gigawatts in 2012 to fewer than a single gigawatt in 2013.

Aaron Barr, principal consultant for wind power and renewables with the natural resources research firm of Wood Mackenzie, said he expects the extra-high level of activity to continue through 2020, as companies hurry to get their operations underway.

U.S. wind project developers who want to receive full value of the PTC must begin operation by the end of 2020, according to the EIA.

“The phaseout of the PTC has created a rush to complete projects by the end of 2020, in order to qualify for the full value of the PTC,” Barr said. “Wood Mackenzie expects 2020 to be a record year for the U.S. wind market, and the ultimate volume of realized projects will be defined by supply chain and logistics constraints, rather than the volume of good wind project developments.”

Barr said he anticipates long-term U.S. demand for wind energy after PTC expiration to stabilize at between 4 gigawatts and 7 gigawatts a year.

“Corporate offtake agreements, state-level renewable energy goals, utility-owned wind projects and the ever-decreasing cost of wind power are significant drivers of this demand after federal subsidies are phased out,” Barr said.

Logistics Remain Constrained

The latest generation of turbines uses blades that are longer than 180 feet, Barr said, and the supply of purpose-built trailers to carry them is limited, as is the contingent of specially trained drivers to guide such units. Also, the longer blades present permitting and escort requirement hurdles.

Segmentation of super-big wind energy components such as blades and towers, while deployed on a limited basis for more than a decade, may only provide a partial solution, according to Barr.

“The challenge with segmented blades and towers are the added weight, cost, reliability risk and field assembly that are imposed by a joint,” Barr said. “The logistics industry has continually pushed the threshold for transportable components, but practical limits are being reached. Wood Mackenzie anticipates that segmented components will be offered as options for next-generation wind turbines that are being installed in logistics-constrained sites, such as ridgelines, populated areas and regions with poor logistics infrastructure.”

Barr said transportation and logistics planning will become imperative to completing wind projects in time to qualify for the PTC, commenting, “The entire industry will need to work together and utilize all available transport modes to meet a very ambitious build plan. Innovative approaches to logistics will be required, including forward staging of turbine components, maximizing utilization of rail infrastructure and looking to barges to transport equipment to the interior of the country.

“Business opportunities are significant in wind logistics for the next two years, including significant opportunities for qualified drivers, as the industry is currently facing a significant driver shortage,” Barr said.

Collaboration is Key

Greg McComas, BNSF Railway’s manager of dimensional clearance customer support, who chairs the clearance committee of the Railway Industrial Clearance Association, echoed the call for a cooperative approach across modes.

“The collaboration of other modes of transportation working toward a multimodal solution is paramount to growing the accessibility of wind energy equipment,” McComas said. “We believe this collaboration can lead to more opportunities.

“We’ve seen exponential growth of wind energy project scope with our customers,” McComas said. “This dynamic encompasses heavier, longer and wider equipment. These modifications to wind energy equipment create unique challenges for rail transportation providers. We work with our customers to evaluate how we can move the equipment safely and efficiently through our network. Oftentimes these unique challenges lead to longer evaluation periods to find a transportation solution.”

Whereas precise solutions are typically proprietary, McComas said rail approaches often are centered upon use of 89-foot-long flatcars.

Seaports also have geared up to handle a burgeoning flow of wind energy components, and a leader in imports and exports is the Port of Brownsville, just across the U.S. border from Mexico.

Steve Tyndal, the Port of Brownsville’s senior director of marketing and business development, said the South Texas port not only is positioned as a gateway to installations in Texas – which has far more generating capacity than any other U.S. state – but also safely and efficiently serves Mexico, where both Germany-based Nordex and Arizona-headquartered TPI Composites are developing wind blade factories within 20 miles of Brownsville.
Within one two-week period this summer alone, the Port of Brownsville landed four wind energy component projects anticipated to combine for moves through the port of about 200 completed units, according to Tyndal. The port last year brought online 20 additional acres for fortified outdoor storage of wind components, and is adding more such acreage this year.

Asked if he believes PTC expiration will stem the flow of wind units, Tyndal responded: “The demand is not going to go away. Because of the affordable land and demand in the region, I don’t really see activity slowing down anytime soon.”

U.S. Department of Energy figures show Texas having more than 20 gigawatts of wind capacity already installed, with that number projected to nearly double by 2030.

As technologies for storage of wind-generated power continue to evolve and corporate power purchase agreements enhance viability of smaller projects, some see demand being further propelled.

TLG Transport’s Meyer said: “If a viable means to store the energy generated by wind turbines is developed, the power generated can be utilized in a far more economical manner, driving the cost downward, which will result in more demand for turbines – and the logistics that will follow.”  

A professional journalist for nearly 50 years, U.S.-based Paul Scott Abbott has focused on transportation topics.since the late 1980s.

Image credit: BNSF Railway