As the world's hungriest wind power market, the United States depends on a complex web of global transportation for getting generation equipment from factories around the world to project sites by ship, truck and railcar. In an economy where budgets are being stretched ever thinner, transportation is one area with room for cost cutting. GE Energy, the leading supplier during the unprecedented three-year US wind sector boom, delivered 3000 turbines throughout North America in 2008, primarily from factories in Florida and South Carolina. But although domestically manufactured, those machines frequently end up thousands of miles from their birthplace in the US Southeast. Meanwhile, GE's American projects receive blades mainly from South Dakota, Iowa and Brazil, while towers can come from a wide variety of domestic suppliers, as well as sources in Canada, China and elsewhere.
For a typical GE 1.5 MW turbine costing $2.5 million fully installed, transporting the machine, three tower sections and three blades, along with bulldozers, cranes and various other equipment, starts at around $250,000 per unit. "We think of our overall transportation cost to the customer as about 10% of the equipment cost," says GE's Pete Bierden. "But if you want them on top of a mountain or in a very hard-to-get-to location, the price goes up."
Modern logistics technology helps keep costs down. While truck drivers still call central dispatch twice daily, turbine makers -- which usually manage transport of equipment -- increasingly use computers and global positioning systems to track each transport vehicle and its bulky payload, much as is done in air traffic control. "What we've developed is a fairly complex model that is updated multiple times during the day," Bierden says. "It has all of the available components, so from the 14 different places that I get towers for US customers, I know how many are on hand today and how many are projected to be on hand for the next few months. Then we say, okay, what are my projects at delivery and how do I allocate each of those components to the projects?"
GE ran 20,000 truckloads of equipment last year alone, with a long list of factors affecting costs: rising highway permitting costs, fluctuating fuel prices, snowstorms, weigh stations, local laws, pilot cars, speed limits and more. "Everything down to the permitting process in Kansas and how many police escorts are on duty in Polk County, Iowa," says Bierden. "Because each of those things can be a bottleneck as I'm trying to meet my commitments to my customers and deliver to a project site. We have to find ways to go around that bottleneck."
Fortunately for GE, project developers have become less particular about which blades and towers they use, leaving shipping logistics and cost as the main factors to consider. "What my customers want is a predictability of delivery flow. So if I'm on the hook to give them ten turbines a week, they want two of everything Monday through Friday, as opposed to a whole lot of truckloads coming through at the end."
Forward planning
Logistics are becoming simpler as domestic component suppliers ramp up activity and locate factories near the largest pockets of projected development. Last year, GE began an exclusive blade deal with supplier TPI Composites at a new factory in Newton, Iowa, allowing for relatively easy transport to booming markets in Iowa, Illinois, Minnesota and other nearby states. "We work with our vendor partners as to where we think the trends are going to be in wind projects," Bierden says. "A lot of times people like TPI will open new facilities in those areas. So we get into some longer term contracts and set up how many we're going to buy in advance of when the customers are actually telling us where their projects are going to be. In some cases we're guessing."
Arizona-based TPI is well aware of the value of optimal location. While the company must pay higher salaries at US manufacturing plant than at its sites in Mexico or China, serving a 500-mile radius allows it to price domestically made blades competitively. "The total delivered cost of the blades to the wind farm site is what matters to the customers," says TPI's Steve Lockard. "So if we can pay a bit more for labour but offset by transportation savings and offset by local incentives, the formula can work." Such long-term planning is easier after the three-year extension of wind's federal production tax credit under President Barack Obama's $16.8 billion stimulus package. That extension and the administration's avowed support for renewable energy are expected to encourage development of the domestic supply chain.
Cost analysis
No matter how far components must travel or by what means, they almost always end up on a truck. For the two dozen or more haulage companies with the fleets of expensive, oversized trailers required to handle such highly specialised cargo as wind turbine components, profit margins can be thin. Contracts are loosely based on mileage, but longer trips and other factors can result in better rates. "Price is negotiated for each and every project," says Jim Orr of Energy Transportation Incorporated (ETI), a medium-sized haulage company based in Wyoming that has been carrying wind components for a decade. "If you're travelling 200 miles, it's maybe $30 a mile, versus if you're going 1500 miles from Texas up to Montana, it would probably be only $12 or $13 per mile."
Longer mileages, though, involve proportionately less downtime for loading and unloading. Meanwhile, moving 100 turbines commands a better price than moving five. Meantime, it matters how long the order takes to complete. "The longevity of the project also makes it easier for the drivers as far as the terrain and knowing where they're going," Orr says. "Once they've made two or three rounds they know where their stops are going to be; they know how far they can get each day. And because of that, my costs would be less."
Some costs are particular to wind industry needs. Pay for drivers specially trained to steer long trailers starts at around $20 an hour, more than that for drivers of standard rigs. Components' contours also play a role in cost. "Typically, these trailers for hauling the wind tower components are specialised to just that," Orr says. "You can't put anything on a blade trailer other than a blade, so it comes back empty. Every mile you run loaded, you're going to run a mile with nothing."
The final approach to a site is often the hardest -- sometimes even requiring a crane to pull trucks through mud or snow and into final position. Orr rarely bids for a job without first visiting the site. "These wind farms aren't built on the side of a highway," he says. "Typically, they're up in tough, remote areas. It might take you three days to get a thousand miles and then you'll spend one full day getting the last three or four miles up onto a location. That all gets figured into your transportation costs."
Highway permit rates often rise to fund repair work. Last July, ETI's home state of Wyoming upped its rate from four cents per tonne per mile to six cents. "It maybe doesn't sound like a lot," Orr says. He notes, however, that a typical tower section racks up 50 tonnes of excess shipping weight and that there are three sections on an 80-metre tower. "We just did 250 wind turbines in Wyoming last year and when you multiply it out, this job alone was an increase of over a million dollars just for the towers. That doesn't include the nacelles and the blades and everything else." Sometimes truckers avoid states with higher tolls, increasing travelling time and distance, but that strategy isn't always possible. Added to all this, trucking companies must insure their entire fleet at the rate of the most expensive payloads they haul. "We carry three million dollars' worth and our insurance is for the whole company," Orr says. "Now, obviously, not every load is worth that kind of value."
Companies continually try to cut operating costs by experimenting with types of tires and adjusting engines. Last year, ETI's fleet ran 2.8 million miles and averaged 2.3 miles per gallon of diesel fuel. The company recently installed devices on its trucks that reduce the amount of diesel fuel burned overnight in parked trucks to three gallons from 15 gallons.
Portability
Foreign-made equipment is often collected by trucks at ocean ports in the Gulf of Mexico or along either coast. The Pacific Northwest, a region of active wind development, boasts several ports in the state of Washington alone and Tacoma, Vancouver, Olympia, Everett and Longview all deal extensively with wind equipment. Choice of port often comes down to cost, but can also depend on other considerations by manufacturers and developers, or guarantees to shipping companies that transport vessels can leave docks carrying wares rather than departing empty. Public utilities building projects sometimes insist on using a port in their territory to keep jobs and dollars closer to home.
Last year, the Port of Longview in Washington handled 39 ocean-going vessels containing wind energy components from Denmark, Spain, Korea, China and India. In general, equipment heads to sites in Washington, Oregon and other nearby states, but past deliveries have made it all the way to Tennessee, Ohio and even Quebec and Nova Scotia in Canada. Roughly 90% of the components leave the port by truck, with the remaining 10% by rail.
"We did a test load of some blades on rail here at the port," says Port of Longview's Laurie Nelson. "But it's very difficult to get clearance on a lot of that equipment here in the Northwest due to tunnels and curvature of the track. The blades lap over two railcars with an idler in the middle. And, unfortunately, you're never going to get the base of the tower cleared for rail, unless maybe you're in Texas or somewhere where it's flat and open."
Puget Sound Energy (PSE), a Washington-based utility and owner of wind projects, benefits from proximity to the coast, but to a limit. "We are within a day or two's driving time of deepwater ports," says PSE's Andy Wappler. "On the other hand, you're also talking about mountain passes and a lot of other things between our sites and that ocean. So we're lucky that the initial delivery point for, say, our Vestas turbines is into Vancouver. But getting them from Vancouver to central and eastern Washington is not always the easiest thing."
Now companies are girding themselves for even bigger equipment sizes. In recent months, GE has been testing a system of standardised packaging. "Right now all of that handling is inefficient and costly," says Bierden. "What we're working on is multi-modal fixtures, so that you can take something right off a boat, put it on a train, take it off a train, put it on a truck -- and it goes." For Siemens, a German power equipment company that manufactures wind turbines in Denmark, train transportation is expected to play a growing role in its US future. Last month, the company began its first foray into moving blades by rail, sending 42 units from its factory in Fort Madison, Iowa, to Pasco in south-central Washington, near the Oregon border location where Portland General Electric is adding 324 MW to its 125 MW Biglow Canyon project. If all goes well, Siemens will move blades for the entire expansion -- a total of 423 blades for 141 of its 2.3 MW turbines -- by railcar.
The Port of Longview, where wind energy business grew to more than a quarter of gross revenue last year, is working out adaptations of its own. Although volumes for this year are expected to dip somewhat below 2008 levels, the port recently bet on wind for the long term by investing in a $4.7 million mobile harbour crane, a pair of heavy-duty forklifts and a stacker for repositioning the oversized equipment. The port is also fashioning an on-site transporter system permitting easy transfer from dock to lay-down yard -- as well as expanding the yard itself.
As for the haulage companies, bigger trailers are being built that can be steered from the back end for enhanced turning radius and with frames that rise and lower to facilitate passage through varying terrain. "A GE 1.5 MW nacelle is an 11-axle load," ETI's Orr says, referring to the number of axles of the required transport vehicle. "Now, these 2 MW and 2.5 MW nacelles are 19-axle loads. That's a huge impact and I guess it's good for the trailer manufacturers that are building the equipment to haul this type of stuff. But, yeah, it definitely increases the price of getting all the pieces to the pad."
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