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Private companies build turbines to generate their own energy

WORLDWIDE: Large, energy-intensive private companies such as Walmart, BMW, Methanex and Fujifilm are generating their own electricity by investing in wind power on a utility scale. Concerns over high energy prices, energy security and corporate responsibility could make this a trend that is likely to take off.

Turbines for business: A Dutch developer invested in Fujifilm’s on-site wind park

A survey carried out by Bloomberg New Energy Finance, whose Corporate Renewable Energy Index (CREX) ranks companies according to their voluntary renewable energy procurement, states: "Historically, the bulk of investment has been in large-scale clean power generating projects, particularly wind, due to its technological maturity and relative economic competitiveness. In the past few years, however, small-scale distributed generation projects have started to play a major role, accounting for about half of the growth in total investment since 2009."

In spring 2013, electricity generated by four Nordex 2.5MW turbines will come online to power car manufacturer BMW's Leipzig plant in Germany, where its first all-electric car is made. According to the firm, corporate social responsibility is starting to play a larger role in encouraging companies to invest in wind-power generation.

Jochen Mueller, BMW spokesman for the Leipzig plant says: "It is not enough to just offer an environmentally sound electric car. The whole process down the chain should be sustainable."

Working with developers

At Leipzig, BMW does not own the turbines. Instead, it has entered into an "intelligent co-operation" with wind-power developer WPD. The developer runs the turbines and BMW has a long-term contract to use the electricity. When there is no wind, the electricity for the plant must come from traditional sources, and when there is an excess it can be shared.

Mueller explains: "The turbines produce more energy than is needed to manufacture the electric cars - they produce 26GWh per year. If more wind is produced than is needed for car production it can be used immediately in other facilities on the plant, such as paint jobs. All the energy stays within the plant."

The car manufacturer's business model is similar to the one used by supermarket chain Walmart at a distribution centre and camera manufacturer Fujifilm at a plate-producing plant. In August, Walmart introduced its first on-site wind turbine as a pilot project at its distribution centre in Red Bluff, California.

A Walmart spokeswoman says: "The GE SLE 1MW wind turbine is projected to produce approximately 2.2GWh annually. Over the term of the power purchase agreement (PPA) the project will contribute to energy expense savings as well as provide price certainty for the electricity produced. Under a PPA arrangement, Foundation Windpower (a US developer) installs, owns, and operates the wind turbine and Walmart purchases the power produced under a long-term agreement."

If the technology at Red Bluff proves successful, Walmart will evaluate the potential for turbine installations at other distribution centre sites in the US, says Greg Pool, senior manager of renewable energy and emissions at Walmart.

Cost benefits

In the case of Fujifilm, Eneco, a Dutch energy provider and developer, invested in about 95% of the on-site wind farm. Fujifilm adapted its private network to make the feed-in of 10MW of wind power possible, and provided the required land and infrastructure for the turbines. This allows it to feed all of the generated power to Fujifilm's main power station on its site. The five 2MW turbines have been online since September 2011.

"The cost of the wind power is favourable for Fujifilm compared to the power from the national grid," says Jef Verboven, a spokesman for Fujifilm. "When wind power occasionally exceeds the company's demand, Fujifilm delivers it back to the grid by a separate contract with the grid supplier.

"About 16% of the annual electricity demand of the total site is provided by the wind turbines," he adds. The remainder comes through combined heat-power gas turbines and the national grid. "Our experience of this innovative construction, which is so far unique in the Netherlands, is very good, and has been proven feasible after one year. As a result, Eneco is rolling out the concept in other industrial areas," Verboven says.

Land availability is one obstacle to the roll-out of wind turbines at every manufacturing plant. Alfonso Vazquez Caro, head of commercial partnerships at manufacturer Vestas, explains: "Large-scale wind power is not something we can put up anywhere. There are many considerations that need to take place, such as wind conditions at a given site, proximity to neighbours and grid accessibility, among others. However, there are ways to overcome these issues."

At BMW, Mueller adds: "Leipzig was chosen because there was enough land to install the turbines and the wind conditions are conducive to generating sufficient power. At our plant in southern Bavaria this is not the case. However, BMW is considering installing turbines at its new plant in Shenyang in northeast China, which was opened in May."

Risk assessment

However, there are those who are sceptical about this trend becoming a major driver in the market. Caro acknowledges that while some companies, such as Ikea and Google, are making substantial commitments to direct investments in generation, many corporations are entering into long-term off-take contracts - where they buy in electricity generated by wind turbines elsewhere - in an attempt to manage costs in a world of highly volatile power prices.

Andrew Perkins, a member of Ernst & Young's energy and environmental finance team, thinks the self-generation phenomenon will stay on the periphery of the industry. "We've worked with lots of companies who have considered generating energy in this way, but most have gone direct to long-term power purchase agreements instead," he says. "Companies don't know how to assess the risk of installing wind turbines on an industrial scale."

However, with maturing technology and financial incentives making wind ever-more financially viable, consumer demand, corporate responsibility and the need for energy security could see more companies installing turbines to generate their own power.



Diavik Diamond Mines is using wind energy to reduce its dependence on diesel generation at its mining operation on an island in a remote subarctic lake in Canada's Northwest Territories.

The company brought four Enercon 2.3MW turbines online at the mine site, located about 210 kilometres south of the Arctic Circle, in September. The turbines, designed to operate down to -40 Celsius, are integrated into an existing diesel-powered system that until now was the only source of power in one of the harshest environments on the planet.

Economics were key to the decision, says Doug Ashbury, Diavik's communications advisor. The company expects the C$33 million investment to be paid back in fuel cost savings within eight years. It will provide 17GWh of electricity annually, shaving diesel consumption by 10% and cutting the mine's carbon footprint by 12,000 tonnes of CO2.

Diavik will also see a significant reduction in the risk and expense of transporting fuel to the mine site, says Ashbury. The company resupplies the mine across a 353-kilometre ice road that is open only 8-10 weeks a year, and diesel is the largest commodity it has to truck in. The wind farm will reduce its annual winter haul by about 100 truck loads, says Ashbury, and help protect against years like 2006, when above-average temperatures shortened the life of the ice road and forced Diavik to fly in fuel.

The project is the first large-scale wind facility in the Northwest Territories, but Diavik and Enercon are hoping it will not be the last as mining activity picks up across Canada in response to high commodity prices. With Diavik up and running, other firms are showing interest, says Marc-Antoine Renaud, Enercon's business development manager in Canada.

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