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The Business of Concrete Foundations

RUTE thanks Dave McFeeters-Krone and Chris Fernandes for WindTech Intl Sept 2019 editorial. Full article:

The Business of Concrete Foundations And the Modular Case

The wind industry is primed for precast tower foundations. The economics point to significant returns to wind farm contractors and owners as the focus changes to longevity and expanding the construction and OEM delivery season.

By David McFeeters-Krone and Chris Fernandes, RUTE Foundation Systems, USA

Standard Wind Tower Foundation Economics

Wind farm contractors use some rules of thumb when estimating project economics. For example, the capital expenditure (capex) to build a wind farm averages $ 1.4 million per megawatt of nameplate capacity. Then, a 100MW wind farm costs $ 140 million to build. Most wind tower foundations are the inverted T, ‘spread’ foundation. Each spread uses about 125 cubic metres of concrete for each megawatt of machine size (i.e. a 2.5MW machine has 310 cubic metres of concrete in the foundation). Then, a 100MW wind farm will use about 12,500 cubic metres of concrete for foundation works, regardless of the size of the machines. This is consistent for 80% of wind projects. The other 20% might need foundations twice as large due to factors such as weak soils or high groundwater buoyancy effect. The new generation of tall towers with the same nameplate capacity will also use about double the concrete volume since the foundation needs a wider diameter.

But those projects are still few at the moment.

Foundation Costs

The cost to install the complete foundation varies widely, but $ 600 per cubic metre is a common unit cost. Then, a 100MW wind farm would spend about $ 7.5 million on foundations – or $ 75,000 per megawatt. Foundations thus represent about 5% of the wind farm cost ($ 75,000 divided by $ 1.4 million). The costs are variable depending on materials, markets, etc.

Modular Foundations Offer Speed and Safety

The business case for modular foundations follows the same economics as for any prefabrication construction. Prefabrication has the obvious advantages common to all construction work: speed, and safety, which is normally equated with shifting the work to an off-site, controlled, safer environment. In fact, the visionaries at the beginning of the utility-scale wind farm era also planned modular precast foundations being delivered to the job site in precast components by truck.

Value of Construction Time and Commencement

Identifying the value of the construction speed at a wind farm site requires precision and careful analysis. The estimate employs complex financial models impacted by negotiations between the investors, owners, builders and OEMs. $ 500,000 per megawatt is a standard construction unit cost. The variable portion of construction costs (e.g. per diems, truck rental, construction loan expense, etc.) suggests savings of 5% of the general expenses if the project saved two months by switching to the prefabrication of foundations off-site.

Why Now?

Wind farm people are smart, and the change to modular prefabrication has not happened yet; so then why might the industry be ready for the change now? Is it just a function of the towers getting so big? Not really. The change would happen now even if the machines stayed at 2.5MW on 90-metre hub heights:

1. Longevity. The industry has matured and is nearly through one life cycle since the modern era started in the early 2000s. The facility owners see that getting 30–40 years out of the machines, roads and electrical cable investments allows them to compete for lower electricity cost compared with two 20-year projects. ... In addition, old-school energy facility operators, like utilities, have life-cycle cost and residual asset value in their DNA. So, they are now receiving the baton from the transactional side of wind deals. It helps that wind power is now the cheapest source of energy.

2. Speed to revenue. The second biggest payoff of modular foundations for wind farms is getting the facility generating revenue sooner. ... The average production revenue worldwide for a wind tower is about $10,000 per month per megawatt. Thus, $ 20,000 over two months is a significant rise for the project, in the 1% internal rate of return range.

3. Inspection...Validation gives investor confidence in the performance and the residual asset valuation.

Precast and CO2

When RUTE Foundation Systems started designing and marketing precast foundations with post-tensioning in 2015, the economics of wind were quite different. At the time, a key differentiator was the carbon dioxide (CO2) savings. RUTE foundations, for example, use half the concrete and last twice as long. That is about 4.5 kilotonnes of CO2 savings for a 100MW wind project. But in the big picture, getting wind farms and solar plants online faster and displacing the emissions of fossil fuels has a much bigger CO2 impact, as it takes only a single month of operation for a wind generator to compensate for the concrete CO2.

Remote Complex Precast Work

In addition, modular foundations can be delivered and assembled at any time of the year. Mitigation of weather risk opens the calendar to OEM deliveries and balance of plant work. RUTE’s technology is inspired by the segmental bridge industry. RUTE makes the precast concrete segments in a precast plant near the wind farm and trucks in the components when the balance of plant contractor is ready. Segmental precast construction is a complex industry: it necessitates high strength concrete and a unique system of precast manufacturing. Combining those two specialised fields in a remote wind farm setting is tricky and requires unique manufacturing skills and knowledge of the wind industry. This explains why it took some time for the technical risk to be accepted.


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