Improving Wind Project Profitability

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Guest Post by Michael Holm – Chief Marketing & Communications Officer at K2 Management.

Everyone wants to create more value in wind projects and drive down costs. At K2 Management, we believe we can contribute to that journey.

Developers and independent power producers want to create profitable wind projects.
Wind turbine manufacturers want to sell, install and service wind turbines.

However, those intentions on each side of the table do not always match. Wind turbine customers do not always have the experience or organization to develop a project. Instead, they lean on manufacturers causing a large pull on resources (wind analysis, education, training, negotiations etc.).

Asking 3-5 turbine manufacturers for a wind analysis report, calculation of a business case and a proposal, takes time. Negotiation and comparison of different offers, adds additional time and resources.
Additionally, banks will usually focus on EPC contracts to reduce risks forcing manufacturers to expand scope beyond core competencies and increase project risks.
As we all know, higher contingencies usually lead to higher prices.

However, an experienced, independent advisor on the side of the customer will remove many of these challenges for many reasons:

• Can faster and more easily identify optimal turbines for specific requirements and can handle communication with the manufacturers, further speeding up the process
• Can issue a transparent tender round making it fair for all parties (advisor or not, the customer will always ask several manufacturers for a proposal. Better to win or lose on fair terms)
• Educate and prepare the developer prior to negotiations. Or lead them directly on behalf of the customer
• Develop a bankable business case for the customer, for support in realising project finance
• In many cases, replace EPC with a multi-contracting approach (K2 Management has a bank approved concept). Manufacturers deliver and install the turbines. The customer hires local contractors for the rest of the Balance of Plant, improving the business case directly for all parties involved as all can focus on their core competences and deliver optimal quality at optimal prices
• Provide support for investment or lending, where independence and transparency, coupled with early involvement in the project is important

While understandably manufacturers are not in a position to advise customers on who to contact for support, merely acknowledging the need for external support and knowing it’s available, is of benefit to all parties. We are keen to discuss this further with interested parties, so do get in touch.

Contact me on mho@k2management.com or +45 50368517 if you want to discuss further.

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