Wooden wind turbines?

Carbon-negative construction materials derived from wood could be used to deflate the levelized costs of a wind turbine by 2.5 – 10%, while sequestering around 175 tons of CO2-equivalents per turbine. The opportunity is being progressed by Modvion and Vestas, as discussed in this short note below.

Introduction: the quest for lower-cost and lower-carbon wind?

Our roadmap towards net zero requires global wind and solar additions to treble from 160GW per year towards 500GW per year by mid-decade, so that renewables can reach 40-50% ultimate shares of power grids. The vast build-out makes it important to lower the costs and CO2 intensity of constructing renewable assets.

For onshore wind turbines, our model below captures these costs in detail. Our base case is a 6.75c/kWh levelized cost, for a farm of 100 x 3MW turbines costing $1,850/kW. Costs in the model are sub-divided into 30 distinct categories. A 10% reduction in capex confers a 10% reduction in levelized cost of electricity, all else equal.

The tower supporting the blades and nacelle explains c$300/kW of the cost, of which $60/kW is the cost of steel and the remainder is largely in fabrication, transport and installation. Moreover, producing 300 tons of steel likely has a CO2 footprint of 450T (data here). Supporting this heavy structure also requires around 1,300 tons of concrete, explaining another 150T of CO2 (data here).

Overall, we estimate that the embedded CO2 in a wind turbine gives its power generation a CO2 intensity of 0.02kg/kWh (data here). This is low by comparison to the 0.4kg/kWh CO2 intensity of today’s US power grid. Low CO2 intensity of the grid matters in itself, and for electric vehicles which will ultimately be charged from the grid (below).

There are also logistical challenges, which preclude the scaling-up towards larger and more cost-effective wind turbines. A conventional steel tower of 100+ meters will have a 4.5m diameter at its base, which is a size limit for road transportation in the US and Europe. 

Build the towers out of wooden not steel?

An alternative to lower both the costs and CO2 intensity of wind turbines is to use carbon-negative construction materials, such as glulam or cross-laminated timber. We are excited by this opportunity, featured in our recent research note (below), yielding 20-30% IRRs turning sustainably sourced forest products into alternatives for steel and cement, which together comprise 10% of global CO2.

To re-iterate, if mature forests are sustainably harvested, then it is ‘carbon negative’ to lock up their wood in construction materials, then re-plant younger and faster growing forests (chart below).

Modvion is a private company, based in Gothenburg, Sweden, founded in 2015 and with c20 employees. It is aiming to build wind turbines’ towers out of glulam, a material that is stronger than an equivalent weight of steel.

Three patents have been granted, for a fibre composite section (2018), a laminated wood tower and method for assembly (2020) and a wood connection used in a laminated wood tower (2020). An objective in the patents is to improve the strength and inter-connections between modular wooden tower components (below).

Advantages. Because the material is stronger and lighter, it could enable taller and more powerful turbines. Modvion cites that its technology “enables significantly decreased cost… [and] increased cost efficiency in the harvesting of wind turbines”. CO2 emissions in the construction of a wind turbine can be reduced by at least 25%.

Progress. A 30-meter prototype has already been built in Sweden, at Moelven’s glulam factory in Töreboda. Funding included a SEK69 ($8M) investment from the European Innovation Council in June-2020, as one of 72 companies that were granted funding, out of 3,700 applicants. The grant is being used to build a development facility for the first >100m towers. Preliminary contracts are in place to built a 110m tower for Varberg Energi and 10 x 150m towers for Rabbalshede Kraft. A collaboration agreement was also signed with Vattenfall in September-2020. In June-2020, Modvion stated “we are seeing enormous demand for our wooden wind turbine towers”. The first commercial structures could be built in 2022.

Vestas also invested in Modvion in February-2021 to accelerate the adoption of wooden wind turbine towers. Vestas launched a ventures fund in November-2020 to incubate disruptive technologies. This is a strong endorsement, as our patent analysis paints Vestas as the technology leader in onshore wind (below).

Elsewhere, Stora Enso, a large-cap materials company featured in our CLT screen (here) has supplied cross-laminated timber to Timber Tower GMBH, in order to construct the world’s first CLT wind tower, over 100m high, in Hannover, in 2012 (details here).

Disadvantages are that there is little established supply chain or prior experience with wooden towers. Some commentators may question their long-term durability.

Economic impacts: what cost savings?

70% materials cost savings? Ton-for-ton, cross-laminated timber and glulam is likely to cost 2x more than steel, at around $1,200/ton, in order to earn a 20% IRR building a CLT facility (mode below). However, the material is also lighter, and overall, we estimate that 85% fewer tons of CLT are required. This could cut the capex cost of a wind turbine by $40/kW, or around 2%.

Further savings are possible in fabrication and logistics, which are estimated to comprise $220/kW in our wind cost model. Ultimate savings here are less certain, but handling lighter modules might save 5-20%, which would be worth $11/kW, or 0.5-2.0% of total turbine costs.

Higher turbines could also be facilitated. As a rough rule-of-thumb, the power that can be harvested from the wind rises as a linear function of height (data below). Hence 5% taller turbines achieve 5% more power output, albeit incurring some higher costs in the process.

More details here: https://worldwide.espacenet.com/patent/search?q=Modvion

Conclusions: 2.5 – 10% cost deflation in carbon negative turbines?

If we add up all of the considerations above, we estimate there is potential to deflate the levellized costs of wind turbines by 2.5 – 10%, from 6.75c/kWh to 6 – 6.5c/kWh. The cost savings will be proportionately higher on challenging wind farms that have very high transport and logistics costs, but this is mainly a base effect. At the same time, around 175T of CO2-equivalents could be sequestered in each turbine.

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