Wind energy company Wigton Windfarm Limited is targeting March 2024 to commence the replacement of its aged-out collection of wind turbines installed in its early phase of operation two decades ago.
Managing Director Earl Barrett says having received the go-ahead from the Jamaican government to proceed with the project, the company is near the end of the iterative process of working out a tariff regime with Jamaica Public Service Company, to which its power supplies are sold under contract, and securing approval from utilities regulator OUR.
“They’ve asked us for some more (information) that we’re working with external consultants to provide, and we expect to go back to them within this quarter and get the final approval,” an upbeat Barrett told the Financial Gleaner.
He said the repowering project is primed and ready, with designs approved and financing already in place. Barrett says Wigton will be “using the latest proven technology for the replacement” of the units, but declined to comment on the total cost or scope of the replacement.
The wind farm was built out in three phases, in years 2004, 2010 and 2016. And the expected end of life of Wigton I equipment is looming. The typical lifespan of a wind turbine is 20 years, but with good routine maintenance every six months the lifespan could be extended by another five years, according to Barrett.
Wigton had therefore put shareholders on notice that it would need to replace or ‘repower’ phase one. The company may not need to replace all 23 wind turbines in that phase, since modern wind turbines that are available can generate two to three times more than the turbines in Wigton I. Already, each of the turbines in Wigton II and III are capable of generating more than twice the power of each turbine in Phase 1.
“It’s a credit to the maintenance team to be keeping these nearly 20-year-old units at the level of availability that we’re getting. Still, we don’t want to be pushing our luck too much,” Barrett said.
In late 2022, Wigton Windfarm got the nod from the Jamaican government to repower Wigton I. It will gradually replace the old units with more modern turbines that won’t require as much maintenance.
Mechanical reliability and wind availability are two critical components of Wigton’s business. Turbines must be ready to generate power when the wind blows.
In the most recent performance data reported by Wigton in its half-year report ending September 2023, the average plant availability for the period at Wigton was 7,682 hours, or 90.8 per cent, in 2023, down from 92.5 per cent for the similar period in 2022. Availability generally refers to the period in which the turbines are operational.
Based on the age of the turbines, the overall Wigton installation is not far from the industry standard of over 96 per cent – that is to say, of the 8,760 possible hours of operation each year, the turbines should be spinning for 8,410 hours.
Wigton is a 44-wind turbine, 62.7-megawatt complex located in Rose Hill, Manchester. It consists of three plants, with capacity of 20.7 MW for Wigton 1; 18 MW for Wigton II; and 24 MW for Wigton III.
Commercial wind turbines require six to nine miles per hour, or nine to 14 kilometres per hour, of wind speed to start generating electricity.
Despite the relatively good mechanical availability over April to September 2023, Barrett says the Wigton turbines were left idle for extended periods when there was no wind in an area of south Manchester noted for heavy winds.
“Even with a higher availability of the plant, the wind was just not there. This was quite unusual. Our neighbours [BMR Wind Farm] at Munro called us to say they’d never seen anything like it,” Barrett reported.
The privately funded competitor to Wigton started operation of its 36.3 MW plant in 2016.
“We were grieving together that the wind was not kind,” Barrett said.
Wigton Windfarm produced just under 68.25 million kWh of electricity over six months ended September 2023. This was down by 21.4 million kWh, or 23.9 per cent, when compared to the 89.64 million kWh for the similar period in 2022.
The decrease in production resulted in a $300.7-million, or 22.2 per cent, year-over year decline in sales revenue to just over $1.05 billion for the renewable energy company. Total revenue, a combination of sales and non-core income for the period, amounted to $1.25 billion, representing a $178-million, or 12.4 per cent, decrease when compared to $1.43 billion of flows in the prior year.
Barrett reiterated that Wigton is intent on diversifying its revenue streams in order to secure a better future for the company.
“A single source of income for a listed company could be a recipe for disaster; so, diversification is, for us, at the forefront,” he said, adding that the diversification of which he speaks has a broader focus than energy production.
Barrett is looking towards markets such as real estate or agriculture for new business, but says there would be an emphasis on technologies that promote energy efficiency.
“In agriculture, if we’re pumping water, it’s being pumped with renewable energy. If we’re putting up a roof, we’d make sure it’s a solar roof, and so on,” he explained.
The wind farm’s reduced production and consequent reduction in revenues slammed its earnings, but Wigton still ended up reporting larger net profits due to a reset of the tax rate for IPPs, or independent power producers, contracted to monopoly electricity distributor JPS.
The corporate tax rate for IPPs was cut from 33.33 per cent to 25 per cent, effective April 2023, following discussions with Tax Administration Jamaica. The higher rate is generally what regulated companies pay.
In a pre-tax comparison of the company’s most recent financial report, Wigton’s half-year earnings fell by nearly two-thirds, from $513.7 million to less than $187 million.
Nonetheless, its net earnings grew by 29 per cent, from $390.41 million to $504.22 million. But that’s because of tax credits. While the company paid taxes of $123.3 million at HY2022, its bottom line benefited from tax credits of $317.6 million in the 2023 period, leading to a higher net profit, its latest financial results show.
Wigton’s push for income diversification is showing positive results so far, leading to rising non-core income. That’s expected to continue into this year, buttressed by the new solar installation project at Sangster International Airport to be executed in partnership with Innovative Energy Company through the Wigton-IEC Joint Venture. The contract issued to the partners by Sangster operator MBJ Airports Limited is valued at US$7.78 million.
Wigton Windfarm Limited was owned by the Jamaican government at start-up, but was privatised through the stock market and became a listed company in May 2019. The renewable energy provider has been headed by Barrett since 2009, but it now has a new chairman, effective today, January 12. Dennis Chung replaces Oliver Holmes who retired on Thursday, January 11, after serving as chairman for five years.