From artificial intelligence to new energy storage options, innovation is driving change in wind energy. Technological advancements are having a positive impact on the industry by increasing market opportunities, efficiencies, and profit. However, industry players must be flexible, adaptable and have strong relationships to thrive in a rapidly evolving environment.
We sat down with David Hickey, Head of Business in Canada at Siemens Gamesa Renewable Energy and panelist in the opening plenary, Wind Energy of the Future Electricity Grid, for his insights into trends impacting wind energy and how industry leaders are managing change.
*This interview has been edited for clarity and length.
What can attendees expect from your session, titled Wind Energy Leaders Preparing for the Electricity Grid of the Future?
David Hickey: In this panel, audience members will hear a well-balanced perspective on the energy grid of the future. There’s a good mix of experience from a variety of generation types. Combined with this, the panelists have both global perspectives and strong regional knowledge. We can expect a holistic perspective of where the industry is today and thoughts on where it is going.
You spoke at the conference last year – what are the most significant developments in wind energy since then?
David Hickey: A major positive in the wind industry this year was the winning prices for Round 1 REP in Alberta at $37/MWh. That is a solid stake in the ground for the wind industry and proves that wind has the lowest cost for new generation. This result positively surprised many people and made the power industry in Canada realize that wind is here to stay and deserves its place in a cost-focused, low-emitting Canadian electricity industry.
Less fortunate news revolved around the decision in Ontario regarding the cancellation of a wind project that was already in construction. Sanctity of contracts is essential for all business relationships and investors need to be confident that there are no increased risks when contracting in certain jurisdictions. This should be a concern not only within the energy space but for all public contracts.
From a global perspective, wind energy is one of the fastest growing major sources of new electricity. In Canada, we are continually setting new records for low prices, Alberta being an example. Technology innovation and effective utilization of digitalization and artificial intelligence (AI) continue to drive down operating costs.
What key trends are you keeping your eye on?
David Hickey: I mentioned digitalization and AI. Harnessing the benefits of data can help increase our availability and capacity factors on wind farms, which in turn increases energy production and revenue for our customers. This helps drive down the cost of electricity for consumers. Manufacturers like Siemens Gamesa have an immense amount of data from our global fleet. We can use this data to help predict and plan maintenance for reduced downtime. The next phase is to optimize production using site data, right down to turbine-specific settings to maximize production.
Next is energy storage. It has been discussed for a long time and is now finally becoming a reality. This could provide the ability to smooth out the variable production of renewables on an operational level. Batteries seem to be leading the charge but there are many more options and the race is on to see which storage technologies succeed.
What are the impacts of these trends on wind energy companies? What challenges and opportunities are wind energy companies facing?
David Hickey: Overall, technology trends are having positive impacts on the industry. Right now, wind accounts for about six per cent of all generation in Canada. Many studies have shown that grid systems can handle up to 30 per cent renewables and many places – such as Iowa, Ireland and Denmark – have exceeded this already. I see storage as a facilitating technology to help drive larger penetration of renewables beyond the 30 per cent. On the digitalization and AI side, technology is helping our customers to run wind farms more efficiently and with increased profits.
As for challenges, on a macro level, we all love to see record low prices as it helps increase the market potential for wind and motivates the industry to innovate. On the flip side, it becomes harder for businesses in the industry to make acceptable profits, especially as prices/revenues drop and the need to fund R&D for innovation continues. The auction system has been a great success in realizing record prices and has increased transparency and fairness in many procurements, which is great to see. It is also giving a clear indication of how competitive the market is. In Alberta Round 1 we had over 20 bidders with only three winners. In Saskatchewan Round 1 we have 15 bidders and will have one or possibly two winners. These are challenging odds and bidding comes with a cost to each developer. With this increasing competition and with reducing prices, further consolidation in the market is a natural outcome.
However, for the most innovative and successful companies who can win in these auctions, this is a really good market with highly desirable 20/25 year contracts. This brings long-term stability – an element that is attractive to many developers and investors.
How do you think the conversation will evolve over the next year? What will we be talking about at the conference in 2019?
David Hickey: My hope is the focus will be on ensuring the best cost for the ratepayer. The good news is that the most cost-effective electricity is renewable. We already see some success from this perspective with different procurement styles, such as the auctions used in Alberta and Saskatchewan.
Over time I expect procurements will potentially evolve into procurements for attributes instead of generation types. This will encourage the energy industry to evolve and innovate to meet grid operators’ needs. I also hope we will see some clarity on market reforms. System operators are trying to adapt to the rapidly changing technologies and trends in our sectors, and having clarity on this will again allow our industry to focus on solutions to market needs and structures.
What key steps are wind energy leaders like yourself taking to prepare for the electricity grid of the future?
David Hickey: Flexibility, adaptability, and relationships are key to success in the industry today. As the industry evolves at such a rapid pace, the ability to keep up and drive this pace is critical. Product cycles used to be five or more years. They are now down to three years and sometimes less. The need to constantly innovate and get products to market quickly is critical as an OEM, all while maintaining or improving product quality and reliability. We need to maintain and build close customer relationships so we can take their feedback to ensure our next generation products meet market needs.
Another critical area is the need to anticipate technology trends in the market. For Siemens Gamesa, storage is a perfect example where we are prototyping ETES, a thermal storage system which works extremely well for repurposing conventional power plants. For companies to be successful, they need to look for these types of opportunities and move fast to maximize them.
How does Canada’s wind energy outlook compare to other global markets?
David Hickey: Globally, the peaks of wind growth are coming through emerging markets. Canada has been through its growth phase and is now evolving into a more mature market, which typically results in a more consistent volume. With long-term power purchase agreements (PPAs) available from many jurisdictions, Canada is considered a relatively low-risk country in which to invest, which makes it very appealing. We also see that as wind prices go lower, there is potential for a C&I market to establish itself in Alberta. Hopefully, this will open the door for other provinces to look at market structures to accommodate such investment opportunities.
Why is it important for Siemens Gamesa Renewable Energy Canada to be at the CanWEA Annual Conference & Exhibition?
David Hickey: The Canadian wind market has been a huge success story for Siemens Gamesa. Our strong history here is built on solid relationships with regional and global customers. This allowed us to establish a 2.8GW fleet across five provinces. Most of these customers and many more will be at the conference. It is a great event to meet up with our customers to ensure we continue to understand and support their needs for both existing and future projects.
The Canadian wind industry is unique in that it is very competitive and still manages to remain very friendly in a truly Canadian way. The conference is the one time of year we as an industry all convene to network and discuss markets, challenges, and opportunities while hearing diverse perspectives on technologies and future outlooks. Most importantly, we have fun.
For information and new ideas, I always have at least a couple of sessions that I plan to sit in on as the panelists and speakers are excellent. It is truly one of the few events I put into my calendar at the start of the year. I consider it a must-attend event.
David will share more insights onstage as a panelist during the Opening Plenary – Wind Energy of the Future Electricity Grid, sponsored by Siemens Gamesa. The plenary takes place on October 23 from 2:00 to 4:00 pm.
As the Head of the Siemens Gamesa Business in Canada, David Hickey is responsible for the overall strategic management, direction and leadership for all of Siemens Gamesa’s Onshore, Offshore, and Service business units in Canada. Mr. Hickey joined Siemens in 2001, and has held various leadership roles across the wind power and fossil power generation portfolio with an emphasis in Project Management in Canada and the United States, including Head of Proposals for the Americas region with Wind Power and Renewables headquarters, based in Orlando, Florida.
Mr. Hickey holds a Bachelor’s degree in Quantity Surveying from Glasgow Caledonian University in Scotland. He is a strong advocate of clean and affordable energy, and a supporter of Canada’s efforts to reduce our carbon footprint due to the environmental, social and economic benefits it brings. Mr. Hickey currently serves on the Board of Directors of the Canadian Wind Energy Association (CanWEA), and the Wind Engineering, Energy and Environment Research Institute (WindEEE RI) at Western University.
Looking for more wind energy insights?
The Annual Canadian Wind Energy Conference & Exhibition is the meeting point for all members of the wind energy industry – top business executives, technical experts, decision and policy makers, and government representatives – to come together and address the key issues facing the industry today. Join us October 23-25, 2018 at the BMO Centre in Calgary, Alberta.