Show notes
Lene Hellstern, director of engineering at PEAK Wind, discusses the critical importance of thorough technical, commercial, and financial due diligence before investing in wind farm projects. She shares insights from her 24 years of experience on how developers can avoid common pitfalls, manage risks, and build better relationships with turbine manufacturers to ensure more accurate power production estimates.
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Allen Hall: Wind farm developers often face a challenging reality. Projected power output doesn't match actual performance. This gap can mean millions in lost revenue and unexpected challenges. This week we speak with Lene Hellstern director of engineering at PEAK Wind. With over 24 years of experience analyzing wind projects worldwide, Lene brings crucial insights about what developers need to know before investing millions in wind farm development.
This is a great interview. Stay tuned.
Welcome to Uptime Spotlight, shining Light on Wind Energy's brightest innovators. This is the progress Powering tomorrow.
Allen Hall: Lene, welcome to the program.
Lene Hellstern: Good to be here.
Allen Hall: We've been wanting to talk to you for a long time. So I'm glad you're on the podcast because your interaction with developers is remarkable and the process that you go through I think is eye-opening. 'cause I don't see that process happening at all wind sites and in Europe I think it happens more commonly.
But in the United States not so much. Why or when developers not consulting experts like you before, they spend hundreds of millions of dollars. What is the problem with that?
Lene Hellstern: It actually, it does happen, but yeah, sometimes it don't. And yeah, I might not be the right one of asking to ask this question.
Maybe you should ask them as well why don't you do it? But I, so for some it's it's budget constraints, right? Because you're a consultant and then they don't immediately see, how this money that I'm paying the consultant, how does that convert into a gain? Profit. It could be seen as some loose and money just because they're asking a lot of questions on technical stuff.
It could also be that they are unaware, many are more into the financial part of it. And they have this perception that it's not needed, the the technical due diligence or the commercial due diligence as the financial, because it's like buying a car. It is really not like buying a car.
So maybe that is, that's the reason. And that they think, the wind always blows, so it's gotta go the turbine. But that's just not how this world.
Joel Saxum: Would it be fair to say that some of your customers have felt the pain or they've gotten burned and that's why they're there?
Lene Hellstern: Yes. Yeah. Yeah. And you also, we can ask a lot of questions in the process before you buy the turbines. And then we can cover a lot of risks and you can mitigate before everything falls apart. Right. And that gives them a really good advantage, right? They can cover their themself and take all kind of scenarios into consideration, right?
And you get a much, if you ask kindly to the OE em, you do get some answers and you get a better collaboration with the OEM. If you conduct these technical due diligence, if you yell and scream at them, it's not gonna go well. No. Kill with kindness. That's much better than threats.
And I want this, and demand that and just ask, right?
Allen Hall: So what are they missing? Generally, when you're starting a due diligence and you're walking into a new situation, what are the highlights that a general developer just doesn't really think about that really needs expertise like yours?
Lene Hellstern: Oh, but they don't know the consequences of the selections they do in this process.
There is a not lot of things, technical topics that you need to make a decision on what kind of leading its protection do you want? Of course the OEM is guiding you you also on, on various technical topic, but you also as an owner, have some requirements you want fulfill and sometimes they don't, they're not even aware of what is it that is important to me.
They don't know, and then they don't know the technical consequences that they make. How does that end up, if you, let's say you, you can some people are not aware that turbines come with a design lifetime, but if you're smart, you can actually run it longer. But if you prepare early.
Then it doesn't cost so much to run it longer. And if you run the turbines for a longer time, the, your levelized cost of energy goes down. But they don't know what they need to do technically and what they need to cover. Let's say, I can give you an example. Without getting too nerdy. Let's say that you need, you wanna run your wind farm long, but you know that in this area, in order to get that, the authorities are gonna ask for track record.
They're gonna, they wanna see data throughout the years from your control monitoring system. But and you can provide that. Perhaps depending on if you, in the contract, made sure that you actually have access to the control monitoring system and that you can download the data because if you don't have that in the contract and have that settled upfront, it's gonna, either you won't get it because it's not your property, you haven't made sure that you get it, or the OEM is gonna ask you for money.
So if you have that sorted out before then, if the authorities come and say, Hey, I wanna see the track record for your condition monitoring system, you don't need to start paying for it. And you don't need to start digging. And so that, that's just one example that, where we can help them and say what is it you want?
We can also say what things is it you need to take into consideration?
Joel Saxum: Steer
Lene Hellstern: owner.
Joel Saxum: My question originally is, what percentage would you think your due diligence is commercial versus technical? But at the same time, I think that they fit together because the technical side of things will drive the commercial and the contract side of negotiation.
Lene Hellstern: Maybe it's one third each. Financial, commercial, and technical.
Joel Saxum: That makes sense.
Lene Hellstern: And can you live with on route one? Yeah. But then it's gonna, you're gonna be in pain.
Joel Saxum: Yeah. I boil it down to say if I was building a house, and I think I can generally as a, this is my, me as a wind farm developer, I'm building a house and I generally know how to do everything.
However, I may not be an expert on the foundation, but I tried it myself and now 10 years down the line, I've got foundation issues. So while I could have done it, I, there was a lot of things I didn't know specifically. So that's when I would call someone like the peak team like you have, because you have the relationships with the OEMs, you know how to deal with them, you know the questions to ask.
You've been through these processes a ton of times. So you're that subject matter expert. But can you focus a little bit and tell us how. The difference between having a good relationship with the OE em or a long standing one. 'cause I know when we were talking off air, you were saying, sometimes I walk into me and they go, oh, le, nice to see you.
Lene Hellstern: It's a small world actually. And I've been in this industry for 20. Four years soon. I know I don't look that old, but I have and people, go around and you don't know when you're meeting this person and then they sit on another side of the table, right? So always keep good relations.
Always ask nicely, give them your arguments because if they understand what you are gonna use the information. For then they are, they might be more willing to give it to you. Let's take a an example. The failure rates, right? That they really don't wanna give you that unless they understand what it is you they're gonna use it for.
Or I would use it for and sometimes I tell 'em, okay, can I please have the failure rates for your main components? And they say, go, no. And I go, okay, that's fine. But the problem here is then I am gonna guess them. And why not get it from you because. Then in my guessing I would, although I am getting pretty good at it, but I would put in, a, a sort of a risk, right?
So it, I'm automatically pumping it a little bit up, right? Because I'm not really sure, so I need to cover myself here. Where if I get it from the OM and they can tell me why did you come to this conclusion? And I can see, I can think, okay, this is, they've done a pretty good job.
They used, the background is God knows how many turbines, so this is, they've done their homework. I trust this. Then I, we can use it in our calculations. So that's that's and then you don't get that from them if they don't trust you and you started yelling and screaming at them.
And also, and when we have contract negotiations, you just you tell them, sometimes we don't reach an agreement, but, all wanna have things signed at the end of the day. And and tell them why is it you are asking these questions instead of just demanding left and right.
Why is it a value to you? And then make them, give them the arguments for internally in their organization to make sure that you can actually have the information you need.
Allen Hall: Yeah. It, it puts PEAK Wind in a unique position here. And I want to dive into this a little bit deeper. So you're walking into OEM,