Lessons from the Wind Industry

Dominique Barker: Welcome to The Sustainability Agenda, a podcast series focusing on the evolving complexities of the sustainability landscape with a view on addressing current issues in a concise format to help you navigate and take action. I’m your host, Dominique Barker. Please join me as we explore today’s most pressing matters with special guests that will give you some new perspective and help you make sense of what really matters.

Paul Judge: That’s going to drive a certain amount of wind and solar onto the grid. Subsidies are really being used not to drive that new capacity, but to incentivize incumbent generations.

Dominique Barker: Today, we welcome Paul Judge, the General Manager for GE Renewable Energy’s onshore wind business. Over the past decade, Paul has been focused on reducing carbon emissions through wind turbines, which are stable producers of renewable electricity. And I’m happy to say I met him at the Climeworks Direct Air Capture Summit and I was really impressed with how he described the wind industry and compared it to the carbon removal technology industry, which is the subject of today’s podcast. So Paul, thank you very much for joining us today.

Paul Judge: Thank you, Dominique. It’s a pleasure to be here.

Dominique Barker: Why don’t we start with the experience that you’ve had? You’ve been in the wind industry a long time. Can you describe your experience and GE’s experience? Give a brief history of the wind industry and how it has scaled to where we see it today.

Paul Judge: Yes. So I think the wind industry really started as a craft business with a large number of players trying to figure out how to bring renewable energy and solve the problem of climate change, but very much a garage and small shop business. And over time it’s moved much more to a large scale mass production business as it’s matured. And that’s been through a lot of iterations of technology, most of which have been, I’ll say, smaller incremental iterations rather than giant moonshot type projects. And it’s required a lot of different elements, partnerships between stakeholders and the actual people making wind turbines. It’s really an industry that requires a large amount of capital, which I think is going to be very similar to direct air capture to storage. And so it grew up with a set of third parties that have really helped make it very financeable and set some standards in what was originally a very Wild West sort of industry. There’s been a fair amount of industry consolidation. Now you have really four major Western OEMs, two Chinese OEMs that are playing outside of China and then a large number based on the deployment in China of local OEMs. There are multiple business models that have shown up in the wind industry, but it has moved much more towards a conventional power generation business where you sell equipment and then the services of that equipment is becoming a larger portion of each of the OEMs revenues. And all of this incremental improvement in the time that I’ve been in the industry has taken it, if you look at Lazard from a technology that in 2010 was $125 a megawatt hour or so, required a fair amount of subsidization to even get on the grid to something much closer now to $40 a megawatt hour.

Dominique Barker: Wow, yeah.

Paul Judge: Which makes it the very natural choice for any sort of new build.

Dominique Barker: Right. And so what technological innovations over that time period, I suppose over the life of the entire industry, where would you put some of the big success in technological innovation?

Paul Judge: I think the bigger innovations have been around, first of all, capturing the wind. And so this has been a combination of making larger and larger blades. When I came into the industry, the largest blades in the industry were 77 metre rotor diameters. And now in onshore we’re up to blades in excess of 160 metre rotor diameter. So just tremendous increase in sail area of the machine. And that’s been a combination of blade technology in terms of materials, whether it’s carbon, whether it’s air foils, right? When the industry started it used standard NASA air foils. And now I think everyone uses custom air foils because wind is very interesting from a loading perspective. When the machine is running, you want it to be very efficient. But if it’s off, you actually want the air foil to be very inefficient so you can reduce storm loads and that sort of thing. Now the OEMs have developed their own unique special air foils that serve the purposes of a wind turbine specifically. And then you have controls. I mean, obviously over the last 15 years, controls technology has been an important part of many, many industries. But wind has been a key adaptor of how do you control these machines and put a very large sail area for capturing energy out there, but minimize the loads that that puts on the tower. So, and then last has been making the wind turbine look more and more like a conventional power generation piece of equipment on the grid. And that’s fault ride through. It’s the ability to generate synthetic inertia. So a lot of grid integration that’s also been very important.

Dominique Barker: So, and just for our audience, who might not be experts in grids, so what you’re saying is to sort of smooth it out, which is has been an issue for the renewables industry. Maybe you could just put it in layman’s terms, that last comment?

Paul Judge: Yeah. In layman’s terms, we are trying to simulate a large turbine, whether it was a gas turbine or a steam turbine, right? Those machines have certain characteristics and the entire grid is built around the fact that you have this very large machine that’s spinning and generating power. And so that impacts its response to frequency dips on the grid, to voltage changes on the grid. And so now what we’re trying to use is actually machines that are using power electronics to create that interface to the grid and really simulate the same response as you would have from these bigger, older, conventional machines. And that technology really has been widely deployed in wind. It’s now the same kind of inverters that are in solar. So you see that you’re going to see it deployed with storage as well. So the technology there of making all of these renewable sources seem like a good partner of historic, conventional fossil generation and hydro generation has been a really important element for the wind industry.

Dominique Barker: And for our audience who may not be electricity experts, what’s really important to know is that in electricity, supply and demand needs to be even at all times on the grid. And so I think some of those aspects is what Paul has described. So speaking of storage, you and I had a really interesting conversation and it really actually blew my mind in terms of the idea of the use of batteries on the grid or potential rethinking of that. Could you just describe your view of the use of batteries to capture and store overflow energy from intermittent power?

Paul Judge: I think batteries will play an important part of problem solving on the grid, and there are a bunch of spots where storage will clearly get deployed in compared to what it is today a massive scale. But I think the forecast of wanting to try and capture all of the overflow energy from renewables, renewable energy generation is very inexpensive, so it’s actually okay to turn it down rather than try and build expensive batteries to store it. I think what we’re really going to see a lot of as we drive for the electrification of everything is storage being batteries, but also being thermal storage and I’ll say a form of battery storage in your car. But the world will very much move to a demand response. It’s entirely, for example, electric cars, if we fully electrified, that’s about a 25% increase in power usage on the grid, but it’s totally controllable when you charge your car. And the ability to turn that on and off will most likely be a service that is provided by the utility companies because it’s much cheaper to ask someone to pay someone not to charge their car than it is to build a battery. And so I think batteries will be an important part, but I think some of the studies likely overstate how large a presence storage will have.

Dominique Barker: And I think one of the things that’s so interesting is that it’s not likely to have a big impact on your enjoyment of your vehicle, for example, because you turn it off, say, in the middle of the night or you make your choices. And a similar thing could happen, for example, with heat pumps. Electric heat pumps, is that correct?

Paul Judge: Yeah, I think electric heat pumps are a very obvious the more control that you give outside of your home to a heat pump. If I know that I’m overproducing now, I can actually cool your house down more in advance of the peak shoulder hours where I know as an ISO that I’m going to need the power. And so just the ability to move the temperature in your house a degree or two early or let it ride up high is a huge amount of electrical load that moves into demand response in a way that I think as a consumer we’re broadly unaware of that it’s happening in the house and there’s already, I know in my house in South Carolina, Duke already does this with a nest thermostat. It’s already out there. But as we get to more and more electric heat pumps, this will be a large thing nationally.

Dominique Barker: Yeah. And Think Tank put out a report about how we need three times more electricity and I think that’s what blew my mind is that of course we need more electricity. So why are we trying to figure out the timing of when we use it and to moderate it? So that’s what I found mind blowing. So thank you for that. So we both attended the Climeworks Direct Air Capture Summit. You mentioned about how subsidies are not needed for wind. And you clearly mentioned how the cost of it’s come down so much since 2010, but that policy support could speed the implementation in the energy supply network. Do you want to just explain what that means?

Paul Judge: So I think wind and solar, for almost all situations now are the lowest cost form of new build. So as we electrify cars, as we electrify heating, that’s going to drive a certain amount of wind and solar onto the grid. Subsidies are really being used not to drive that new capacity, but to incentivize incumbent generation to come offline before the end of a power plant’s life and thus be replaced with wind and solar. So it’s the subsidies now are not about trying to make wind and solar cheap enough to use. It’s really about how fast do you want to decarbonize and how quickly do you want to turn over the existing stock of power generation assets and infrastructure that’s out there? And I think that’s a key thought process for policymakers, is that it’s not about subsidizing the wrong kind of technology. It’s about how do we go through the energy transition at the speed that we want to.

Dominique Barker: Completely make sense to me. Thank you. So looking forward, let’s talk about the wind industry and challenges and opportunities that the industry faces.

Paul Judge: I think the challenges are obviously policy. We had a spectacular year in 2020, putting almost 110 gigawatts of new generation on the grid globally. And that was just the result of a policy in the US and a policy in China that sort of peaked in 2020. And so you’re now down about 25% in installs and that’s sort of just waiting for a couple of things. It’s waiting for policy. It’s also waiting for developers to be able to rebuild the project pipelines that they had wound up towards the end of 2020. Now they’ve got to rebuild that stock of late development projects, and that’s taking time, getting through interconnection queues, environmental permitting. So there are a lot of challenges there that are just sort of slowing down the industry when there’s a lot of demand. You see, especially in Europe, a tremendous public appetite for more wind. But as you get down to the very local level, it’s still taking a long time to get permits through and get projects developed. The other challenge that really exists for wind is we continue to move projects closer and closer to the load. This means that the turbines need to be better neighbours, they need to be quieter, they need to not cast a shadow on a customer’s house and they tend to want to be bigger because you don’t want to have as many of them near residential areas. And then lastly, usually closer to the city, just historically the wind isn’t quite as good, so that drives them to have larger rotors. So there’s a lot of things that are a lot of challenges that the industry continues to invest in technology to overcome.

Dominique Barker: Great. And lastly, if you could draw parallels to the direct air capture industry, what lessons would you draw? What parallels would you see? And maybe what advice would you give to something like the carbon removal industry?

Paul Judge: So I think some of the parallels are around technology learning cycles, right? In the early stages of the industry. It’s very important to get multiple technology cycles in and a lot of these are incremental and you have to pick the right moment when you’ve made enough technology iterations to scale and to understand how that works. And then you make some more technology iterations and then you scale again. The biggest challenge to resist is giant steps. My experience has been any time you see a project or a technology that will only work if we make it really big and at a large scale, all that’s doing is giving you enough error in your assumptions to pretend it’s going to work out. And so there are those moments. You have to place a few of those bets. But if I look at the industry, whether it’s the GE 1.5 megawatt machine or the Vestas two megawatt machine, just a lot of cycles with incremental improvements are what really have driven the industry forward in reducing the cost of energy. And I think for direct air capture, reducing the cost of removing a ton of CO2 is going to come with a step and then some scale. And then I mentioned those two platforms I can think of, like the GE two megawatt and the Vestas is four megawatt, which are the two largest Western platforms now. They stand on the shoulders of that earlier technology and it’s going to be, I think, the same in direct air capture.

Dominique Barker: That’s great advice for some of our companies that are developing direct air capture. Paul, thank you so much for joining the show today and thank you to our listeners for tuning in.

Paul Judge: Thank you so much. It’s been a pleasure.

Dominique Barker: Please join us next time as we tackle some of sustainability’s biggest questions, providing different perspectives to help you move forward. I’m your host, Dominique Barker and this is The Sustainability Agenda.

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