Interview: Scott Mackenzie, SUSI Partners

Scott will join us at Financing Wind Europe in London on 26th May to discuss the future of the European onshore wind sector.

A Word About Wind members can register here.

How have you found the move to SUSI Partners?

Since joining in 2020, I have been building a team to ensure excellent international asset management across several funds.

I also use my broad renewables knowledge and engineering experience to help the SUSI team make good investment decisions. As an infrastructure fund manager with an exclusive focus on investment opportunities arising from the global energy transition, the managed asset base of SUSI Partners consists of onshore wind and solar investments across Europe and Australia, battery storage in the UK, Canada and California and energy efficiency investments. The broad range of different investments makes the role particularly interesting and rewarding, and the Zurich lifestyle is pretty good too!

What are the biggest issues for wind in Europe now?

There’s a lot going on with the situation in Ukraine and the energy crunch. That means there is more regulatory risk around government backed support mechanisms: we have already seen government interventions in Spain and Italy.

Clearly, with record power prices across most of Europe, merchant exposure is good to have but only 18 months ago the prices were ultra low. The Ukraine situation saw gas markets manipulated by Russia in advance of the invasion to run down European gas storage and the fallout has turned the market on its head creating significant volatility.

There’s also inflation in the system that we haven’t had to deal with as an industry for a long time. It isn’t of great concern at the moment because of the higher energy prices, which outweigh any higher operating costs, but inflation is coming down the line and it makes predictions mode difficult.

What else should we be discussing at Financing Wind Europe?

There are a couple of other big trends we see.

One is life extension on existing projects. Through engineering analysis we can confirm extend life expectancy and additional operating costs to increase the lifespan of onshore projects, generating more green MWh for no new carbon footprint and opening the potential to refinance projects for a longer period.

The other is hybrid projects. Right now, a good onshore wind farm might be fully utilising the grid connection at best to 35%. Projects are paying a lot of money for underutilised capacity particularly under the UK charging system. We need to look at different ways to manage this, which includes a leap towards more storage and hydrogen. We see it being piloted by Scottish Power at Whitelee wind farm in Scotland, and it seems to me that some new and existing projects will start to deploy storage onsite in the next few years.

Can more industry collaboration help unlock these opportunities?

Yes. The old system is broken. Given what we need to achieve our climate targets and enhance security of supply, we must do something different.

If you keep building more wind farms, you can’t expect the grid to keep growing capacity to accommodate high wind periods, so we end up with more curtailment in high winds and still need carbon-based generation in low winds.

A big hack is if we can get hydrogen working commercially. If you can co-locate hydrogen generation on your wind farm, you can capture energy in the high wind periods when prices are typically low and curtailment is frequent. Then convert it back into electricity when the wind is low or export it off-site for use or long-term storage and use elsewhere in the new hydrogen economy.

Regulators need to catch up quickly and give incentives to construct hydrogen infrastructure in the same way they supported onshore wind in the early days when it was more expensive. There are huge potential benefits in reduced investment in the grid infrastructure; and we also need flexibility from lenders to allow owners to start exploring these options on existing sites if we are to make quick progress.

What questions should we ask in your session about onshore wind?

The challenge for onshore wind right now is to demonstrate it has value at a time when everyone keeps talking about offshore wind. It needs to be easier to upgrade projects with larger turbines on existing sites and extend permitting. We need governments, regulators and planners to help facilitate this, and we need the industry to finance this.

Unfortunately, we are also seeing very strong anti-wind lobbies in some countries particularly the UK and Norway, and governments may ignore onshore wind in favour of other (more expensive) technologies. There will be European markets which the value of onshore wind. However, if you can’t get onshore wind moving in problem countries even now during the energy crunch, then it will be difficult to ever get it moving again.

Finally, I’d like to see more flexibility in the corporate PPA (power purchase agreement) market. Off-takers are currently not interested in existing projects as they only want the additionality of new projects, but there are only so many to go around. I think we need a more mature conversation on the benefits of PPA to secure the future on existing sites.

Want to hear more?

A Word About Wind members can click here and use their exclusive code to register for FW Europe 2022. If you don’t know your code or if you'd like to enquire about attending the conference, get in touch with the team at +44 (0) 20 7100 1616 / +1 917 310 3307 or email membership@tamarindogroup.com.