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David Burton on Energy Tax Credits in the Inflation Reduction Act

In this illuminating episode, hosts Allen Hall and Joel Saxum interview David Burton, a partner at Norton Rose Fulbright law firm and an expert on U.S. tax policy for renewable energy. They dive deep into the intricacies of the Inflation Reduction Act and how it will impact wind projects, with David providing insightful explanations of production tax credits, investment tax credits, domestic content requirements, and more. With his extensive experience structuring tax-efficient energy deals and advising major corporations, David unpacks these complex new policies and delivers key knowledge that could save or make wind companies millions.

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Allen Hall: Welcome to the special edition of the Uptime Wind Energy Podcast. I’m your host, Allen Hall, here with Joel Saxum. And our guest today is David Burton. David is a partner at Norton Rose Fulbright, which is based in New York. David is an expert in US tax matters and has experience with structuring tax efficient transactions for renewable operations.

David was a managing director and senior tax counsel at GE Energy Financial Services, where he oversaw all the aspects for more than 21 billion in global energy projects. David, welcome to the program.

David Burton: Thank you, Allen. It’s great to be here.

Allen Hall: Okay. So the timing of this could not be better. And Joel and I were just up in Canada trying to explain to the Canadians what the IRA bill meant and why everybody is so confused as to what is happening in America.

So we thought we’d bring in the expert to help us with understanding the, all the tax incentives that are built in. Built up into the IRA bill. I don’t want to give you a couple of softballs to start with. How about that production tax credit? What is that in the IRA bill? And what does that mean?

David Burton: It’s $27.50 per megawatt hour for the first 10 years of production. If you transfer the project, the transferee steps into your shoes and does not get to restart the 10 year period. It’s a pretty powerful tax credit to get the 2750 megawatt hour. There are requirements you have to meet that we call the fine print that regard prevailing wage and apprentice requirements, which we can get into.

Allen Hall: That makes sense to me. That’s a really good explanation. I have not heard explained that simply.

Joel Saxum: That one’s easy. I like that one. I can follow that.

Allen Hall: All right. Investment tax credits. Let’s raise the heat up a little bit. What is an investment tax credit?

David Burton: The base of percentage for the investment tax credit is 30%.

Again, you have to comply with prevailing wage and apprentice to even get to 30%. And it’s a tax credit that accrues when the project is placed in service, basically operational. And it’s 30 percent of a tax basis. Which, you know, more or less is 30 percent of the cost of the project. Rather than having to wait 10 years, you get all, you get the tax benefit all upfront.

So, oftentimes the PTC may be a bigger gross amount but it’s over 10 years, so sometimes you’ll, you’re not opt for the ITC because it’s a better present value answer, but it’s just a question of math.

Joel Saxum: I want to touch one important thing here, and this is an important thing that I got from you, David, when we originally talked that I did not know.

And it’s huge for the tax code and huge for these all of this credits. You can only pick one. You do not get to choose an ITC for some stuff or like for, on a project for a little bit of this, a little of that, and then some PTC here and there. It’s like you either go PTC or you go ITC and you got to do the math to figure out which one you want to choose.

Allen Hall: Okay. Now let’s understand the little nuances here and what they apply to, because I’m not sure which one of, which of these protection or investment tax credits these apply to. Domestic content, which seems to be a large part of the IRA bill. And it seems to be oriented towards American steel and iron because most of the wind turbines made out of steel, what is the domestic content requirement?

And what does that mean? If I’m a company or an operator or developer trying to apply it?

David Burton: Well, first of all it’s not a requirement. It’s what we call an adder. So it’s a 10 percent adder. And so for the ITC, it’s 10 percentage points, so it would take you from 30 to 40. For the PTC, it’s 10%, so it’s 27, 50 times 110%, you know.

So it’s about $29 in change in in tax credit. So, so it’s additional opportunity for a bigger tax credit, but you could build your project with, you know, all Asian components of steel and still qualify for the base credit. It’s just an upside. If you qualify for it.

Allen Hall: And how do you show that you have the proper amount of domestic content?

How does that work when a when generator, the generator itself, the generator is made from parts from all over the world, typically. Do you have to go all the way down into the component level to determine what percentage of this thing this generator is made in America.

David Burton: Yes, but it’s even more complicated than that.

So the domestic content rules were written about as complicated as they could be and about as on user friendly as they could be. You know, the industry has commented heavily and is lobbying for them to be, you know, simplified or improved the U S treasury may or may not be inclined to do that.

So the first requirement is relatively straightforward. Which is that structural component have to be made out of U. S. steel and U. S. iron. So rebar in foundations has to be, you know, U. S. steel and has to be 100%. You can’t say, oh, I’m mostly U. S. steel, but I’ve got a little bit of Korean steel.

Has to be all U. S. steel. So that’s the first requirement. And so that’s the first hurdle. The second hurdle is that the manufactured components, have to be 40 percent U. S. And that percentage will escalate over time. But it’s currently 40 percent U. S. And what they did to avoid gamesmanship, but to make it very hard on the industry.

But they’re really focused on gamesmanship, but they said they were going to measure that 40 percent using the manufacturer’s Direct cost, which is U. S. Tax speak for the manufacturers labor materials, right? So they didn’t want people selling stuff at hyped prices or, you know, playing games. They said, okay, the most basic measure we could get to is, well, what did it cost to manufacture and labor materials to make this component?

And that’s what we’re going to test for domestic content and of those components, you need 40%. Now, if you have any imported subcomponent, uh, unfortunately, of certain subcomponents, unfortunately, you don’t get to count your assembly cost. So, even if you are assembling the component in Colorado, the United States, if you have subcomponents in that component, certainly subcomponents that are imported, you don’t get to qualify.

And that was more about solar. I’ll just give you quickly on that. That was really trying to ensure that solar cells are manufactured in the United States. So Treasury was concerned that people were going to build solar module factories and just assemble the modules here, but not make the cells here where the real technology is.

So they said, okay, if you do that, you don’t get to count your assembly costs. You have to count that as imported, even though it’s workers in Colorado putting it together. So that’s why they made it kind of onerous and similar concepts apply to wind components. Treasury put out a notice that for onshore, offshore winds utility scale solar storage tells us, you know, how far you have to drill down for each component.

Joel Saxum: It’s a tough thing here for me to understand. And we talked about this a little bit before is. These percentage rules are going to be based on labor and materials, but what, at what level of success do you think anybody’s going to get their vendor to give up their actual goods costs and basically show what their profit margins are to their clients to get these credits?

David Burton: Yeah, so far, there’s not been a whole lot of success in that. Some manufacturers are saying they’ll disclose to an accounting firm on a confidential basis when the accounting firm can write you a generic memo.

You know, that says, doesn’t give you the cost, but says, we’ve looked at it and you meet the 40 percent test you know, and we’re going to count in terms of trust us. So that’s another approach people are taking, but you need not just, but you also need to know what goes into the denominator of this fraction.

You also need to know the imported direct costs. So you need to go to Japan and Korea and China and say, Hey, look, I didn’t pay you any premium for this. You know, I’m not giving you anything to this, but would you just tell me, you know, what your profit margin is so I can put this in my denominator. And then those companies are obviously like, Well, you didn’t pay me anything more.

I never promised you this. I’m not doing it. You can get around that by just saying, okay, I’ll use my own cost. So I use my retail cost and I’ll put that in the denominator, but you have to have a lot of headroom, you know, in the fraction to have to work if you’re right at, you know, 40. 5%. And when you put in your your retail cost, it.

you know, it’s going to be, you’re going to fall under it. So you’d have to have headroom to that to work. So that’s the, you know, that’s the other challenge is happy to ask your foreign suppliers for their direct costs and they got nothing out of it. Right, so.

Joel Saxum: Yeah, we’re wading into the weeds now.

Allen Hall: Yeah. Okay. So, but I think that’s a really valuable thing to know at the moment because it does. There’s a lot of talk about domestic content, but when you get down to the reality, there’s somebody trying to figure it out, and it’s probably a room full of people trying to figure it out. It’s not as easy as it seems, and we’re going to keep driving deeper and putting the heat on here as we go.

What is low income community… Indian land incentives. What is that part of the IRA bill and why does it matter?

David Burton: I’m not sure it does matter that much for your viewers. You have for two reasons. First reason is you have to be under five megawatts of capacity to even qualify for that. So I, you know, I get the sense, you know, most of your viewers are utility scale players.

So, you know, they’re not even going to qualify. So then let’s say you are under 5 megawatts capacity and you meet this low income or Indian land requirement, you then have the right to apply to the Department of Energy and the Department of Energy will review your application and rank your application against all the other applications and make a recommendation to the IRS as to which projects should be granted an allocation.

So most of these credits, you just claim on your tax return. If you qualify. This one is competitive, right? So there’s a limited amount per IRS and DOE to allocate and it’s competitive process to apply for it. So, you know, even if you’re serving low income Indians on brownfields, you know, if you don’t if you don’t get the allocation, you don’t qualify for it. And, you know, there may be a project that’s, you know, more compelling to the Department of Energy that they rank higher. They prefer projects that are further along, right? So the further along your project are, the more likely it is to be built, the higher they rank it.

That’s one of the components. But they don’t want you to place the project in service until they give you the allocation. So you can end up in kind of suspended animation, whereby, yeah, like my project’s really far along. I’m definitely building it. Please give me the allocation. You haven’t given me the allocation yet.

Okay. I’m just stopping everything. You know, I’m just going to continue to pay on my construction loan, you know, continue to pay my ground lease, my insurance, I’ll just stop everything, not have any revenue and wait for you, Department of Energy to decide whether I do or do not qualify. So, there’s a lot of practical issues with it, but again it’s five megawatts and below.

So not an issue for the utility scale market.

Allen Hall: You touched on brownfields and the brownfield condition and incentives around brownfields came up in a discussion from Ørsted of all people. Ørsted was going to use it in, I think it was Sunrise wind farm at the, where they were planning to run the cable onto the, on land in New York was a brownfield location.

Well, the soil sampling they have done indicates it would be brownfield. And so therefore they could apply for, I think it was up to 10%. aNd does, so for basically running a cable through a plot of land, probably not even that big a plot of land, they get a bump up of 10%. Does, is that just the generic rules around?

Like if you run into a brownfield in any part of your project that there’s a 10 percent bump up in the payment?

David Burton: Brownfield is one of the energy community criteria or definitions. That is a 10 percent bump again, 30 to 40 or 110 percent of $27.50. Both ITC and PTC qualify. You don’t have to apply for it, you just have to put it on your tax return and get comfortable that you meet the definition and be ready to be audited at the IRS ops to audit you.

The, that, that rule is for offshore wind, right? So. You know, they said, okay, we want offshore wind to be able to qualify for this, but brownfields and something in the middle of the ocean are kind of, you know, inconsistent, right? Not very common. Yeah. So they said, okay, they said, okay, you know, you look at your, you apply this by looking at the census track, you know, closest to where your project is.

So that’s what or said saying is that, you know, they’re building the project offshore of a brownfield. And so they think they should qualify. And that is, you know, in fact, you know, what the rule says, but it’s not like you can build a project in Nebraska and run a cable. You know, through you know, a toxic waste dump and say, Oh, I qualify.

Allen Hall: You know, it’s worth a try at this point, but okay.

So for our listeners that are not based in the United States Brownfield is a site that has been contaminated, not to the point where it’s not inhabitable, but there’s contamination in the soil that need to be reclamated, I guess. And when that happens it has limited uses. After that has occurred, so my guess in this particular case with Ørsted, that they would be forced to clean up the area in which they’re using or next to, so it sounded like Ørsted had done some soil drilling and sampling, so it sounds like they were talking about some sort of cleanup there.

But it, it sounded like a landing cable, it’s what it sounded like to me.

Joel Saxum: An export cable, yeah.

Allen Hall: Yeah. So, in the United States, in that particular condition, they’re going to give you a bonus for using a land that is being contaminated for another purpose. Putting a cable through it’s a really good concept, right?

Because it’s, it doesn’t involve any people being on it, but it’s still useful land. So there’s the incentive. Now, okay, so that’s the foundation. In wind, where are Operators, developers going at the moment, are they headed towards PTC or ITC for the most part, or what’s your feeling on that?

David Burton: So the rule of thumb, and it’s just a rule of thumb, it’s not a hundred percent true, is that onshore wind is PTC and offshore wind is ITC.

And that’s because onshore wind is relatively low cost of all the improvements in the technology and the construction and the efficiency. Much higher efficiency than it used to be. The capacity factors have gone up. And therefore you do the present value of a 10 years of PTCs and you say, okay, that’s greater than 30%.

The map tells me I want PTC. Offshore wind. It’s obviously very expensive to build because you’re constructing it in the ocean, and you’ve got all those challenges and very expensive equipment, and you got to transport it all out the middle of the ocean, and there’s limited number of vessels that can do that and all those good stuff.

Right? So for offshore wind, it tends to be that it’s so expensive that the ITC is the better option. And that’s what the sponsors are planning to claim. But on a project by project basis, it could be a different answer.

Allen Hall: So on offshore, if they’re going for ITC, that then affects what they’re asking for in terms of, uh, purchase price agreements, the PPAs, right?

On onshore, it’s the prices are sort of PPA plus PTC that’s how they tend to look at the business case, right? Right. So on offshore, then it’s ITC plus tends to be larger PPAs because like you’re explaining, it’s just sort of a difficult environment. Okay. That explains a lot about what’s happening with the developers off the coast of New York at the moment.

Now, what are energy tax credit transfers? And Joel and I have seen a number of big press releases about this energy tax credit transfers and how there’s a new financial instrument to. Transfer future PTC. To to or to buy, to swap that for current value. Is that present value is that what it is?

Joel Saxum: And there’s a commu, there’s a communication kind of guff there. And I think in the industry, ’cause a lot of people are reading this, not having an economic or legal mind, and they see like tax equity financing and PTC swaps and everybody kind of assumes it’s all the same thing. That’s, oh, that’s just how they finance the project.

But nobody knows or I’m not gonna say nobody knows, but a lot of people are. They just kind of blanket over it and they go yeah. They’re financing the project that way. But can you give us an outline of the difference between tax equity financing and people actually selling the PTC revenue and some of these things that we’re seeing in the news?

David Burton: Sure. Sure. So for a hundred years, the U S federal income tax law said you cannot sell tax credits. And when you did A structured kind of cutting edge transaction, what you would worry about is that the IRS would come in and say, Nope that’s not an equity investment. That’s actually a sale of tax credits.

You’re not allowed to sell tax credits. You lose. Right. And that was the law of the United States for a hundred years. Right. In the, in and that led to tax equity whereby through partnerships and sometimes leases. We were able to transfer much of the tax credits to a relatively passive financial investor who contributed cash upfront in exchange for being allocated those tax credits.

But it was, it’s still a pretty complicated transaction. You still have to deal with hundreds of pages of documentation. You still have to take some project finance, operational risk. It’s still an ongoing investment. You know, it’s a multi year very long investment. And so there was a limited universe of tactical investors and it tended to be big banks, some insurance companies, some corporates like GE and Berkshire Hathaway but, you know, really kind of the most sophisticated go getting kind of, public companies out there that had teams of people lawyers, accountants, engineers underwriters figuring out this stuff and many companies were just like, yeah, that’s not our core business.

We don’t want to learn project finance. We don’t want to learn any more tax law. We don’t want to read 300 pages of documents. You know, we know it’s profitable, but not for us, right? So there’s a limited universe. So then Congress said, we’re going to subsidize our clean energy and deal with climate change through the tax code.

But there’s not enough tax equity investors to monetize all these tax credits. We need something else. The first proposal was what we now what’s called direct pay, whereby you could just go to the IRS and say, I qualify for these tax credits, but I don’t owe any tax. Please cut me a check, you know, a hundred cents of a dollar for these tax credits.

Senator Manchin and others said, oh, that’s too much government involvement. We don’t want the government playing that role. We think this should be more private sector driven. So to get Senator Manchin’s, you know, tie breaking vote on board, they said, okay, we will shift towards transferability whereby the credits can be sold

to corporations banks, insurance companies, et cetera for cash and just a simple sale. So it’s, you know, you call it a financial instrument, that’s a little bit of an overstatement. It’s really just a bill of sale. It’s not that different than the bill of sale you used to buy and sell a car, you know, so you want to go buy a new Ford.

It’s a bill of sale, right? It’s the same kind of thing right now. It is. It is, you know, 10s of pages of documents as opposed to 300, maybe 20,30 pages of documents. So it’s more than a bill of sale for a Ford, but that’s basically, you know, that’s basically what it is. It’s not a lease. It’s not a partnership.

It’s just a. And it’s cash in exchange for tax credits. You don’t have any equity investment in the project. You’re not a member of the project. You’re not voting on whether or not to, you know, buy a new inverter, you’re, you’re not paying the property tax and it’s not doing any of that stuff.

You’re just buying the tax credits, extremely passive and we are seeing the market for that expand from the traditional tactical investors. We are seeing parties who. You know, pharmaceutical companies entertainment companies, retailers who pay a lot of tax have a savvy treasury and tax department saying, yeah, like, we’d rather pay 90 cents of a dollar than 100 cents of a dollar prior taxes.

We don’t have to have an ongoing investment. We don’t have to invest equity. We don’t have to deal with complicated accounting issues. You know, let’s do this. We are seeing it expand. But again, everybody wants to wants a profit, right? So no one, you know, nobody’s going to pay 100 cents of a dollar.

So it actually means that it costs the U. S. Treasury the same amount. It’s still a dollar of tax credit, but the developers only put a, you know, whatever, 90 cents in its pocket. While if they did direct pay was they don’t qualify for mostly they get to 100 cents on the Dollar so. Manchin is taking you know ten cents and away from developer to put into new projects and giving it to these corporations by tax credits. Which you know is work for me and I don’t complain about it but I’m not sure it’s the right. You know, the ideal policy from a climate change perspective.

Joel Saxum: Yeah, because I mean, the companies that do this are engaged within that trade basically market, they could take that capital.

They get up front, say a developer gets some cash up front for their future PTC funds in the grand scheme of things. They could take that money and invest it offshore. If they wanted to, right? It could be a like a CIP COP type. Are they doing some work here? Yes, but they have a large portfolio in Taiwan or offshore Japan or something like that.

And that money that’s a tax benefit within the states could actually be used to spur on renewable energy transition offshore or elsewhere.

David Burton: Well, it’s not so easy to get the money out of the U. S. without triggering withholding tax. So. I mean, you know that the U. S. tax law does, you know, is savvy about that.

So I’m not terribly concerned about the proceeds going to develop, you know, offshore wind in Japan. You know, and so, that’s not such an easy thing to do.

They’re more likely to leave the money here.

Joel Saxum: You know, there’s one other thing I wanted to kind of touch on here from competitive versus non competitive standpoint.

Now we talked PTC, we talked ITC, but there are other things in the IRA bill that we’ve, we spoke about offline. And one of them being the 45X and 48C. And then the idea that some of these are competitive, some of them are non competitive. Can you touch on that a little bit?

David Burton: Sure. So 45X and 48C are both to stimulate manufacturing of energy components, right?

So they’re not for projects. They’re not for, you know, Nebraska wind ABC project, right? It’s it’s for a factory, right? It’s for a factory.

Joel Saxum: Building a vessel or something like that.

David Burton: Maybe building a vessel. So for 48C, it’s kind of broad. DOE has some discretion as to how they grant it.

48 C is an investment tax credit again, right? So it’s money up front a percentage of your cost. And it does qualify for some of the adders, not all the adders, but some of the adders and it’s competitive. So you have to apply to the Department of Energy. There’s a limit as to how much the Department of Energy can allocate.

Congress put a cap on 48 C and the Department of Energy has been accepting applications is reviewing them. And we’ll rank them and then, you know, allocate based on how much capacity they have going down their list, giving it to what they perceive to be the best projects. And what they think of as the best project is kind of similar to what you said before. Both you know, impact on climate change or importance for like, climate change, but also the likelihood of it getting built, right? You could have like some genius solution, you know, build a new widget, but if there’s a 1 chance in 1000, you know, it actually gets built deal. DOE’s probably not going to want to fund it because they’re going to say, we’d rather have something more likely.

So, so that’s 48. H C. And then there’s 45X. You can’t do both. It’s either or. 45X is a production credit based on you know, making components. Making blades. Making modules. Making batteries. Each component has a different amount of credit that it qualifies for. And you get it for you have to make it and sell it to an unrelated party, right?

So you can’t sell it to your subsidiary. You have to sell it to an unrelated party. Right now, there’s lots of interesting negotiations going on in the market about how manufacturers and their customers share that benefit. Right? And both of these credits qualify for direct pay.

So, for both of them, you can say, oh, I don’t know any tax. I’m just going to go to the Treasury, the IRS say. I don’t earn any tax. Please cut me a check for 100 cents of a dollar. And you can do that. So it’s very clear that you can capture the benefit, and so then some customers are saying, oh, well, manufacturer, you’re going to get this big, you know, check from the IRS, you know. So therefore I want a lower price because you’re going to put this money in your pocket and that’s a windfall for you.

And I want a lower price. Manufacturers say no, we’re just barely getting by, you know, this is saving us, you know, we, we need this. You know, you’re making all this money, you know, leave us alone, let us keep it. That’s an ongoing discussion between the manufacturers and their customers.

Allen Hall: That same relationship though happened between New Jersey and Ørsted, right? On the ITC credits that they, the state of New Jersey smelled money and said, Ørsted, you owe us that. And that’s what happened in simplistic terms, right? Okay. All right. So it sounds like it’s happening even at state levels, not company to company, but even sort of bigger players.

David Burton: Everybody’s making sure their counterparty is not getting a windfall and everybody else at and also at the same time having their own handout and say, you know, I need this to survive, please, you know, that it’s not a windfall. So everybody wants a piece of it.

Allen Hall: Okay. So, I Want to just take it one, I guess one level up, which is there’s a lot of the details of the IRA bill.

They get thrown to the treasury department and the IRS. That they actually write the code that the manufacturers, operators, developers have to follow. And there has been a number of news articles from developers saying we don’t know what the IRS ruling is. So we’re not really sure what the percentage is and what we’re going to get.

So we’re still trying to get clarity there. Is, are some of these things going to become clearer in the next 6 to 12 months as particularly offshore gets developed?

David Burton: So, treasury has done a good job meeting the timelines to get the guidance out. And we now have guidance, at least proposed guidance on everything except for 45X, again, that manufacturing production credit we just talked about, and for hydrogen, 45D, the hydrogen credit which is, In a quagmire within the government because different departments within the government have different views as to whether, you know, you should be making it better for hydrogen or for renewable energy project owners.

So, there’s a, there’s an arm wrestling match going on over that. And they missed the statutory deadline congress gave them to get those rules out. They just said they couldn’t do it. And they haven’t resolved it yet. So who knows when we get that guidance that we could be tomorrow.

They could. They could settle their internal disagreement, or it could be, you know, years so, but that’s hydrogen, which is not your, you know, audience 45 X. We’re still waiting for, you know, the other thing we’re waiting for, which does matter, particularly to offshore wind is in 2015. So, 8 years ago the IRS and treasury put out a notice saying we have these really old investment tax credit regulations from the 1980s.

The technology has changed. The law has changed. Market practice has changed. We need to update them to reflect new technology, et cetera. So that was right at the end of the Obama administration. They they asked for comments. The industry set in, you know, thoughtful, detailed comments. Trump won the election.

Trump said, nope my IRS is not spending time on this, you know, bury that in a drawer somewhere and forget about it. Which they did and then Trump lost the next election. We get Biden. Biden’s like, yes, I want you to do this. This is great. Please, you know, work on this. Then we get the IRA, which changes the rules again.

So, like, okay, we have to go back and revisit some of this and tweak some of it and rework it. The iRS and Treasury are saying that we will get those regulations. They’re saying informally, Yeah, We should get those regulations by the end of the year, but it’s been 88 years. So, you know, who knows? But there are a number of issues that are important to the offshore wind industry. Pending in those regulations and that they, those will answer some questions that the offshore wind developers have been holding their breath about.

Joel Saxum: So from the industry, we all need to sit here and cross our fingers that we get these done before the next election cycle so they don’t get pushed off again.

David Burton: Yeah. It’s a political football. Absolutely.

Allen Hall: David, this has been really insightful. Joel and I have learned a tremendous amount about tax law the United States, which is a shocker for an engineer because that’s not something we

plan on doing anytime. But it’s coming up more and more in the news and it is becoming a decision point for a lot of operations, particularly offshore. So this has been a real pleasure to learn some of the fundamentals here. And if people that are in invested in wind want to find out more and learn more about the tax law that’s happening right now, particularly United States, how do they pull some of this information. Where can they find you?

David Burton: Yes. So I have a blog. It’s called taxequitynews. com. And you can follow the blog and you can also reach me via LinkedIn David Burton, Norton Rose Fulbright.

Allen Hall: All right, David, thank you so much for being on the program. We would love to have you back. I feel like in six month timeframe, when things get wrapped IRS, we’re going to need to have you back to explain what’s happened in the industry because This is, this has been great. I really appreciate it.

David Burton: It was fun guys. I enjoyed it. Good questions. I’m impressed by your your sophistication about the topic and your podcast sophistication. And it was great.

Joel Saxum: Thanks, David.

David Burton on Energy Tax Credits in the Inflation Reduction Act

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Is Tesla Powerwall Worth It For Australian Houses In 2025?

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Australia, a country of vast open space and abundant sunlight, has firmly established itself as a global leader in rooftop solar adoption.  

According to recent data, the country has over 3.9 million rooftop systems installed, yielding a combined capacity of approximately 37.8 GW of PV. This remarkable achievement reflects the country’s strong commitment to a sustainable energy future. 

But what happens when the sun goes down or when the grid fails?  

Yes, that’s where home battery storage steps in, and no name resonates more loudly than Tesla Powerwall! 

With the release of the Powerwall 3 and evolving energy landscapes, many Australian homeowners are asking: Is a Tesla Powerwall still a worthwhile investment in 2025?  

If you’re an Australian looking for a home solar battery, Tesla Powerwall is arguably the most popular home battery on the energy market right now.  

So, here’s why Tesla Powerwall could be worth it for your Australian home!

But First, What Is Tesla Powerwall?

Back in 2015, Tesla ventured into the energy storage market with the Tesla Powerwall, a home battery system. This battery system is specially designed to store energy, mitigating the intermittency of renewable energy sources. 

Although Tesla was globally recognized for its electric vehicles, the launch of the storage battery, the Tesla Powerwall, marked another bold leap for the company.  

This home energy storage is a rechargeable lithium-ion battery that can keep your home illuminated 24/7 with reliable power and significantly reduce your electricity bills. 

Powerwall’s smart system can be tailored to your specific energy requirements. This battery can be charged from solar energy, ensuring that power is always available on demand. It essentially serves as a backup power source for nighttime or cloudy days.  

Following their initial release in 2015 in limited quantities, Tesla has continually expanded its energy lineup with larger-scale solutions.  

In 2025, Tesla’s lineup includes three Powerwall models: Powerwall 2, Powerwall+, and Powerwall 3. Each model offers 13.5 kWh of usable energy storage.  

In Australia, Powerwall+ and Powerwall 3 are designed for new solar and storage system installations, which involve integrating solar inverters for higher efficiency. At the same time, Powerwall 2 is often used for retrofitting existing solar systems. 

Now, they also offer different categories, such as the Powerpack, designed for commercial and industrial use, and the Megapack, engineered to support utility-scale grid operations, among others. 

How Does Powerwall Work? Find Out!

In general, the Tesla Powerwall is a rechargeable home battery system that stores energy for later use while providing essential security and financial benefits.  

It works seamlessly with solar panels or the electric grid to manage energy supply and demand in your home.   

It includes energy monitoring, metering, and smart controls, which the owner can customize and control via the Tesla app.  

The system then learns and adapts to your energy consumption slowly over time. It receives over-the-air updates to add new features and improve existing ones.  

How Does Powerwall Work

Here’s a step-by-step guide on how it works: 

Step 1:  Energy Collection 

  • With Solar Panels 

Your solar panels usually generate electricity during the day. From that, some of this energy powers your home, while the excess charges the Powerwall battery.

  • Without Solar 

If you don’t have solar panels, the Powerwall can charge using electricity from the grid when rates are low, for example, at night.

Step 2:  Energy Storage 

  • The Powerwall stores the unused electricity in its lithium-ion battery. 
  • This stored energy is saved for when you need it most, like during peak usage times, at night, or during a power outage.  

Step 3:  Energy Usage 

  • When solar production drops or the grid goes down, the Powerwall automatically kicks in, supplying your home with clean, stored renewable energy.

Step 4. Intelligent Management with the Tesla App 

  • The system learns your energy usage patterns and optimizes when to charge or discharge.
  • You can monitor and control everything through the Tesla app, giving you real-time insight into your energy use, storage levels, and solar generation.

The Australian Energy Rollercoaster: Why Batteries Are More Relevant Than Ever?

Undoubtedly, Tesla Powerwall 3 is one of the most exciting innovations to hit the market in recent years. Tesla’s next-gen home battery is designed to supercharge solar systems and dramatically reduce the reliance on the grid.  

For Australian homeowners, it’s a total game-changer, offering a smarter way to store solar energy and power homes more efficiently than ever before. 

Curious about the other benefits of the Tesla Powerwall 3? In the following part, we’ve rounded them all up for you: 

  • Powerwall Batteries Maximize Self-Consumption  

Using your own solar power, especially during the expensive evening peak, saves you significantly more than exporting it to the grid.  

The Powerwall stores your excess daytime solar to power your home at night with free, clean energy. 

  • Battery Storage Reduced Electricity Bills 

Adding a Powerwall battery to your solar panel can drastically reduce your reliance on grid electricity during peak hours, leading to substantial savings on your energy bills.  

Some reports suggest adding solar batteries has reduced electricity bills by over 70% in many Aussie homes in the past few years. 

  • Ensure Energy Independence & Security 

The Powerwall provides seamless backup power for essential appliances, ensuring your lights stay on, your fridge stays cold, and your devices stay charged during any unexpected blackouts. 

  • Smart Energy Management 

The Tesla app provides intuitive monitoring and control over your energy usage. You can track your solar generation, battery charge, and household consumption in real time. 

This allows you to optimize your energy habits and maximize savings. 

  • Virtual Power Plant (VPP) Participation 

Through VPP, you can earn money by letting your battery support the grid during high-demand hours.  

This will benefit your wallet and contribute to a more stable and renewable energy network for everyone. 

  • Environmental Impact 

Batteries can reduce your reliance on fossil fuel-generated electricity, significantly lower your carbon footprint, and contribute to a cleaner, more sustainable future for Australia. 

  • Increased Home Value and Building Aesthetics 

Homes with solar and battery systems are increasingly attractive to buyers. They often command a premium due to lower running costs and increased energy resilience.

Tesla Powerwall 2 vs Powerwall+ vs Powerwall 3: The Evolution of Home Energy

Tesla’s Powerwall series has become a symbol of energy independence. From the Powerwall 2 to the all-in-one Powerwall+, and now the game-changing Powerwall 3, Tesla continues to push the boundaries of home energy storage. 

Let’s break down what makes each Powerwall unique and why Powerwall 3 is the most powerful one yet. 

Tesla Powerwall 2: The Energy Game-Changer

Launched in 2016, the Powerwall 2 was a massive leap in energy storage for homeowners.  

It is ideal for those with existing solar systems or those seeking basic backup and energy optimization. 

Key Highlights: 

  • 13.5 kWh usable capacity, which is sufficient to power an average home overnight.
  • 5 kW continuous power output. 
  • Backup power during outages.
  • Sleek wall-mounted design.
  • App-controlled smart energy management. 

Powerwall+: Energy Storage Meets Solar Intelligence

The Powerwall+ is built on the foundation of Powerwall 2 and adds a major upgrade: an integrated solar inverter. 

Why It’s Smarter: 

  • Same 13.5 kWh battery capacity.
  • Higher peak power output (up to 7.6 kW) 
  • Integrated solar inverter with 4 MPPTs (Maximum Power Point Trackers)
  • Optimized for real-time solar generation and storage.

Powerwall 3

Powerwall 3: The Energy Upgrade Your Home’s Been Waiting For

Announced in late 2023 and rolling out through 2024, Powerwall 3 is Tesla’s most powerful home battery yet. It’s designed to meet modern energy needs, including higher loads, faster charging, and seamless integration with large-scale solar systems. 

What’s New: 

  • 11.5 kW of continuous power, which is more than double Powerwall 2 
  • Still offers 13.5 kWh capacity.
  • Integrated solar inverter with expanded capabilities
  • Designed for quicker installation and lower labor cost
  • Ideal for large homes, EV charging, or heavy appliance use 

So, with all these incredible upgrades, making it smarter, more efficient, and future-ready, don’t you think Tesla Powerwall is worth it?  

What else could you ask for? We’re pretty sure this is the battery your home’s been waiting for! 

The Actual Cost of a Tesla Powerwall: Is it Worth It?

Let’s not sugarcoat it, a Tesla Powerwall is a significant investment. As of mid-2025, the Powerwall 3 unit itself costs approximately AUD 11,900, with the essential Backup Gateway 2 adding $1,700. This brings the total hardware cost to approximately $13,600 AUD. 

Installation costs can range from $1,000 to $ 2,500 or more, depending on your location, system complexity, and the installer.  

This puts the total installed cost of a single Powerwall 3 in the ballpark of $14,600 to $16,000 AUD. 

While this might seem steep, it’s crucial to factor in the various incentives and potential savings.

The Australian Government’s Rebates and Incentives in 2025

Good news for Australian homeowners! 2025 is a sweet spot for solar battery rebates, with a significant federal program coming into play: 

  • Federal Cheaper Home Batteries Program (Starts July 1, 2025) 

The Australian Government has announced an upfront discount of approximately 30% on the cost of installing eligible small-scale battery systems (between 5 kWh and 50 kWh).  

For a 13.5 kWh Tesla Powerwall 3, this could translate to a rebate of around $4,725. The discount is based on usable capacity and will gradually decrease until 2030, making 2025 the optimal time to jump in.  

The discount is applied upfront by accredited installers, making it easy for consumers. 

  • State-Based Incentives 

While the NSW Peak Demand Reduction Scheme (PDRS) battery rebate ends on June 30, 2025, it will be replaced by an expanded Virtual Power Plants (VPP) incentive from July 1, 2025, offering a single upfront payment of up to $1,500.  

Other states like Victoria (interest-free battery loan up to $8,800), ACT ($15,000 interest-free loan), and Western Australia (up to $7,500 rebate and loans) continue to offer their own incentives.  

Altogether, these rebates dramatically lower battery costs, often by 30–50%, making the Powerwall 3 far more accessible.  

Top 5 Tesla Powerwall Alternatives Available in Australia

The Australian battery storage market is vibrant and competitive. While Tesla is a dominant player, several other reputable brands also offer excellent alternatives. 

Looking for something beyond Tesla Powerwall?  

Here we’ve listed some of the best battery brands in Australia in 2025: 

  1. LG Energy Solution RESU: Known for their reliability and various capacity options. 
  2. BYD Battery-Box: A popular choice for its modularity and competitive pricing. 
  3. Sungrow: Offers a range of battery solutions, often paired with their inverters. 
  4. Enphase Encharge: A good option for microinverter-based solar systems, offering modularity and resilience. 
  5. Alpha ESS: Alpha ESS battery provides integrated solar and battery solutions. 

Parting Thoughts

Tesla’s Powerwall ecosystem offers energy resilience, grid independence, and smart control. With the release of Powerwall 3, Tesla is responding to the growing demand for higher capacity, smarter tech, and easier installs. 

In Australia, the home battery market is gaining traction, with data showing that the majority of homeowners are opting for the Tesla Powerwall.  

So, whether you’re going solar for the first time or upgrading your energy system, the Powerwall lineup has top-notch options tailored for your home. 

By the end of 2021, battery installations had increased by 400%, and the majority chose the Tesla Powerwall. With our affordable solar packages, you can make your dream of owning a Tesla Powerwall a reality.   

Still unsure?  

Contact a certified installer, such as Cyanergy, to explore your options tailored to your home, location, and future needs. Get a free quote today and learn more about the Tesla Powerwall battery price, rebate availability, and installation details.

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IWTG Consulting Addresses Turbine Failures

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Weather Guard Lightning Tech

IWTG Consulting Addresses Turbine Failures

Jon Zalar, founder of IWTG Consulting, discusses the challenges of wind turbine maintenance, emphasizing the rise in turbine failures and the importance of root cause analysis (RCA). Proactive maintenance, proper documentation, and expert consultation will help to mitigate issues and ensure turbine efficiency.

Sign up now for Uptime Tech News, our weekly email update on all things wind technology. This episode is sponsored by Weather Guard Lightning Tech. Learn more about Weather Guard’s StrikeTape Wind Turbine LPS retrofit. Follow the show on FacebookYouTubeTwitterLinkedin and visit Weather Guard on the web. And subscribe to Rosemary Barnes’ YouTube channel here. Have a question we can answer on the show? Email us!

Welcome to Uptime Spotlight, shining light on Wind. Energy’s brightest innovators. This is the Progress Powering tomorrow.

Allen Hall 2025: Jon, welcome to the program.

Jonathan Zalar: Thanks for having me,

Allen Hall 2025: Jon. Let’s start with the reality facing wind farmer operators today. What’s the core problem when it comes to turbine failures?

Jonathan Zalar: There’s been a larger number than they probably experienced like five years ago. I think, um, you know, the volume of turbines out there and some of the bigger issues that, you know, people are seeing in the last two to three years has made owning a wind farm a little more challenging than before.

Um, you know, between blade issues, bolted joint issues, shoes, and. Overall, like o operations, right? It’s been tougher to keep these turbines up and running, you know, manpower’s an issue, getting people out there to go fix stuff. It’s, [00:01:00] it’s been tough for a lot of people I’ve talked to.

Joel Saxum: Do you think this is a, a partial result of like, um, okay, so what we’re, you know, on the podcast in the last few years, we’ve always been talking about, oh, there’s all kinds of models coming out and there’s this, this manufacturer can put out this many different variations and all these things, and now.

Now we’re getting to the age where that family, that group of turbines that, I guess it’s kind, I’m looking at it like a class, right? That class of, that, those years of turbines are now getting to the stage where they’re out of warranty and they’re coming into, some people are taking, you know, ISPs taking, um, maintenance of them or an owner operator taking maintenance over from the OEM.

And all of a sudden now there’s these issues popping up and different things that we’re, we’re kind of in this. Um, like a swamp of problems with a lot of different models. So, uh, yeah, like you said, we’ve we’re, we talked a little bit off air here about RCAs and how to fix things and looking at serial defects and stuff, but it’s just like, it seems like every other week [00:02:00] someone calls Alan Ryan’s like, Hey, have you heard about this thing with this model?

And it’s like, man,

Jonathan Zalar: another one. I think it’s a combination of two things. One. Like I talked about the last time we had podcasts, there was a, you know, a pretty big push to increase rotor size, come out with new models for, for every, for all the os, right? They’re competing against each other. Coming out with a new model every 18 months.

And you can ask Phil, but I believe mostly the OEMs are sold out. If you go back five, six years, where. A huge expansion in the amount of wind turbines that have been placed. Right. So I think you combine those cheap factors and now, yeah, the owners have a lot on their plate, a lot more than they’re

Allen Hall 2025: probably used to.

And my question all is this, the complexity of the turbines. So every new model that comes out, what I’m seeing is more instrumentation, more sensors, more stuff, more variability, even in where the components originate from.

Jonathan Zalar: Right? Yeah. [00:03:00] I mean, to increase, to be able to meet that increased demand the OEMs had to get, you know, a lot of different suppliers for bearings for, you know, maybe two or three different places to make blades, right?

Um, and you’re right about the complexity, right? So like these rowers are getting bigger. They were trying to keep as many components the same. So you need better sensing, better controls to, you know, keep those loads where they work.

Allen Hall 2025: And a lot of times, uh, when operators have problems, they don’t actually realize.

What to do or realize that maybe there’s a serial defect and how to address it and how to suss that out. Now the, the big question is, is like what’s at stake if the operators don’t implement some sort of proper root cause analysis? Uh, what does that sort of downward spiral look like? Because we have seen operators that do that, that, that don’t try to identify key issues with their turbines.

I

Jonathan Zalar: mean, at the end of the day, it costs money, right? So if the quicker you figure out an [00:04:00] issue and if it’s a solution for an issue, the quicker you’re gonna solve that problem for your site or your fleet. Um. Also like making sure you’re communicating with the OEM about your failures so that they can add them to their RCA if they’re working on one, for example.

The more data they have, it’s gonna help them come up with a more effective solution.

Joel Saxum: I think you’re, you’ve gotta, how to put this? You have to have a specific engineering mindset. So of course we’re dealing with engineers all day long. We’re all engineers. We enjoy the engineering mindset. So it’s easy for us to quantify ROI and value add from an RCA, right?

So, hey, we’re gonna bring in an expert, or we’re gonna bring in a consultant, or whether it’s a, you know, a big one, A DNV, a UL type, or it’s a Jon Zalar, it’s gonna cost us a little bit of money, right? It’s gonna cost us. 5, 10, 20, 30 grand, what, whatever that is. But to us, that ROI is easy to quantify, oh, we had [00:05:00] this issue on this turbine.

We’re gonna spend 20 grand figuring out why, what, how, and how we fix it in the future. Well now we can avoid that blade failure. Next time we can avoid, you know, a de deductible on an insurance case, $250,000. So boom, we, if we save one of those, we paid for the whole RCA. It’s easy for us to do that in that engineering mindset, but to get, sometimes to get.

You know, an asset manager who may not have that engineering mindset, they’re just looking at, um, dollars and cents. They’re like, yeah, do we wanna spend this money? And, and I, I think that that’s a, uh, uh, a mindset, a, an action, an operation that, you know, us as evangelists for engineering in the industry need to help because we can help it in a large scale, right?

Like if we, if we solve these problems through RCAs. Then we can avoid ’em in the future and it’s better LCOE for the entire fleet. That’s the goal,

Jonathan Zalar: right? Like even if you identify an issue and you have the ability to figure out how many [00:06:00] turbines are affected and like we use a Blade Blade issue, right? If you only catch the CAT five, that’s a much more expensive repair than a cat two or three.

So if you work with somebody to identify, hey, this lat or you know, this list of turbines have a better chance of having this problem, let’s inspect it a little more, for example. Or let’s proactively add some strength in one area that we know we’re seeing issues that could save a lot of money in the long run.

’cause blade repairs are expensive. They take time, weather out. It just adds up.

Allen Hall 2025: And what I see when Joel and I have been around a lot of, uh, wind turbines in the Midwest, is that the asset managers. Get a lot of complaints from the neighbors and the landowners. So if they have a blade break or they have some sort of bearing that’s going bad, that’s making a lot of noise.

It’s a constant set of phone calls from the surrounding landowners about this problem. So even in the simple things. That can be [00:07:00] fixed, turn into big problems because of all the associated people that are around it. I mean, Joel, you’ve, you’ve seen some of these cases where, like a bearing’s squeaking, okay.

And the neighbor complains, or a blade breaks and the, and the owner calls up and say, Hey, why is this blade in my front yard? Which has happened? And those are real life situations that, that. You know, re requires somebody with knowledge to catch them before they turn into that neighborhood problem. Yeah.

That’s

Joel Saxum: the intrinsic side of, of the return on investment, right? Like, you can’t measure that, but it’s valuable. And, and I, and we get, this concept comes up a lot to us because we’ve been doing a lot of work in Australia lately, and Australia has a different approach to their neighbors and how they work within things.

And it’s very, very, very hands-on. Where in the states sometimes you see like, oh, well, they’re a non-participating landowner, so we just kinda, you know, move on. And then you see the Facebook posts that are like, these turbines take a thousand gallons of [00:08:00] oil a year and they never run. You know? And if we can, as an industry, if we can avoid those things by getting on top of stuff with RCA, we can, we can get ahead of the game, right?

We can change the perception of, of renewables as we move forward. Um, which is, I mean, it’s a difficult battle, but that’s, as engineers, we can, we can help that fight. So I think that this is an important thing. That’s why we’re talking to you, Joe.

Jonathan Zalar: Yeah, I agree. I mean the, the video of the guy who was asking why it wasn’t turning, ’cause there was no wind.

I’ll never forget that one.

Allen Hall 2025: So how do we break this cycle of reactive maintenance and repeated failures? What should we be doing?

Jonathan Zalar: Continuing that relationship with the OEM, making sure you’re having those monthly quarterly calls, sharing information back to them and making sure that you’re getting the updated information from them.

Because, you know, all the major OEMs have like information letters they provide when there’s an a known issue and they give recommendations of what to do to fix it. And just making sure that you’re plugged in, especially the smaller owners that you’re plugged into the oem, just make sure you get that [00:09:00] information.

You know, some could be a parameter setting or a increase inspection or, or a safety concern as well. Just keeping that relationship I think is important.

Joel Saxum: So, Jon, so continue on that, that thread at what, at what point does. Because not everybody is able to keep that relationship really good. And sometimes OEMs don’t wanna share a little bit, at what point does an operator say, I’m taking on an RCA myself.

I’m going to get a consultant in here. Or we’re gonna take it on in our internal team. what, how do you make that call?

Jonathan Zalar: It’s looking at their relationship and if it’s not there, and that does happen. There’s breakups in the industry, if you will, and. You see three or four of the same failures at a, 50 wind turbine park.

it should be a little bit of a yellow flag. I wouldn’t say red yet, but one turbine fell over. That’s a red flag, and that’s when if you’re not getting what you need and you don’t know what to do about it, that’s when you call somebody else out because. [00:10:00] The next one’s gonna be just as expensive, and there could have been a way to make it either cheaper or not happen.

Allen Hall 2025: let’s, get down to specifics now, because I think a lot of problems in the United States are related to bolts at the minute, and I, this may be a worldwide problem, that there seems to be blade bolts and pitch bearing bolts that are. Have cracked or are failing in some unique ways. And I’ve seen more recently where operators are just replacing them.

Like they, they don’t think about it in a larger context of maybe there’s a problem here. Maybe I need to be flagging these things. And they don’t bring in an expert like you, Jon, to come in and do an RCA To suss this out, you want, can you give us just a little bit of background on what’s happening on the, blade bolt and pitch bearing bolt problem?

Jonathan Zalar: It is multiple OEMs are having. I think three or four different failure modes that I’ve heard so far between root inserts, just the bullet joint itself, and then potentially just some initial torquing issues. Um, I know from my experience there have [00:11:00] been update updates to the bold, the bolt torque.

Specifications. And back to my comment about the relationships, like if you’re not getting that information, then you might not know. You should have went back and retort all these bolts and now you have a couple fail. Fail. Right? And then also what you do about it, when you have one that comes out, do you replace just the one or do you replace four to the left and four to the right?

So d different solutions I have seen from different OEMs about what to do when you do have one particular bolt fail. Um, you know, there’s definitely some potential supplier concerns. ’cause like I said, there’s been so many turbines with so many bolts, like you’re gonna have some manufacturing issues. You can’t get over that With the volume of bolts that are out there.

Joel Saxum: Do you think the technology innovations in bolting and tensioning tools right now are gonna help or hinder. Bolting problem.

Jonathan Zalar: I think they’re gonna help. Um, you know, [00:12:00]torquing, big bolts have been a problem in multiple industries. Even when I worked in locomotives, you know, getting high torque to come out with the right size tool to be able to get in there, to go, to go put the locomotive back on the frame.

Right. It is a very hard job. And you had mean you looking at 92 bolts on one axis, then you got tower bolts. I mean, it’s a very, very boring job, I’m assuming for the people that have to do that. All the time and having tools that make it easier, have a, have a less chance of not hitting that torque value, setting something wrong, not putting the tool in properly at an angle, for example.

I, I think the more, at least what I’ve been seeing recently, the more money and effort people are putting into, like making bolted joints. Is gonna be worth it.

Joel Saxum: Well, and I think this is why, like this is the importance of an RCA, right? Because at that level of, say, new construction or repowers, people are just pointing fingers like, oh, the technicians did this wrong, or whatever, blah, blah, blah, blah.

Or you get an RCA specialist to come in and can do, you know, the [00:13:00]eight eight DRCA or if they throw an RCA and figure this thing out properly and be able to point to, well, actually there’s a. A metallurgical defect in these bolts and you know, it’s a supplier issue or, or maybe it does the RC may point, Hey, these guys were at the bar the night before they torked this one or something.

You

Jonathan Zalar: know? Or, or could be like crew a just happens to not pay attention or, or had or had the wrong information. They had the old bolted joint, this tribal knowledge.

Joel Saxum: Exactly. And speaking about the problem there, like if we’re down the line, say now out of warranty, and we’re looking at a bolted connection issue.

It may point to once you’ve stretched those bolts a certain amount, if you’re re torquing or changing torque specs or something along the way that’s done, like that’s cash, like that doesn’t, it doesn’t work like that called yield.

Jonathan Zalar: Yes.

Allen Hall 2025: Well, especially composites though, when you start talking about these bushings that are in the blades.

You pull them, they’re, they don’t recover. They just get damaged. It’s not like some metal and it can stretch. You don’t really stretch [00:14:00] composites. You break composites.

Jonathan Zalar: Right. Once it loose is once it’s loose, it is adherence, it’s done right. You have to go do something, get it back. And I know there’s some technologies out there trying to fix some of these inserts, but yeah, like once you do that damage.

It doesn’t heal itself.

Allen Hall 2025: Right. And I think there’s a lot of misunderstanding about that right now in the field because it, they’re not talking to engineers. They feel like, well, we’ll just cinch it back up and it’ll be okay. No, that joint is done. It’s done. You need to have somebody come in and look at it and give you some really good advice.

Joel Saxum: So to get to that level, Jon, you need to go through an investigation process. Can you give us some of the like, tips and tricks for the investigation process that like, that you know of, that you, that have helped you in the past? Data quality is very important,

Jonathan Zalar: like making sure, you know, like what turbine, which bolts, how many bolts, when did it happen, when were they last touched?

Like documentation is not always the best in the field. There’s a lot of handwritten stuff I [00:15:00] know that, you know. Companies are getting much better with electronic documentation, but that didn’t always exist in the beginning, like four or five years ago, surprisingly. Um, and then also like having the expectations where an RCA doesn’t take a month.

If someone, if someone calls you up and says, I need an RCA in a month, they don’t want RCA, that’s it. They’re not that fast. You really need to look at what’s going on, collect the data, put a hypothesis together, and. Validate or invalidate it and repeat if needed. And then you have corrective action. And that takes time.

That takes a commitment from the customer as well as you know, whoever they’re working with.

Allen Hall 2025: And that corrective action is the real key. But it’s hard to get to the corrective action if you don’t know what the root cause is. I see a lot of corrective actioning happening out in the field. Like they assume they know what’s happened, but not the details.

And you’re right, Jon, it’s gonna take more than a couple of days. To suss this out because there’s too [00:16:00] many variables and there’s not a lot of information, particularly when you show up on site. A lot of operators haven’t kept the real detailed records that you would need to be able to point it in in an afternoon.

Like, yes, this is it. Right?

Jonathan Zalar: Unless it’s a known issue that you’re not aware of and somebody else tells you, oh, yeah. G has his tail go do this, whatever this is. Right.

Allen Hall 2025: And how does that play out between the different OEMs at the minute? Are they basically providing the same level of information about, uh, known problems?

I have very little experience with like, um, I don’t know. Intercon for example, I haven’t seen a lot of Intercon service bulletins. I’ve seen Seaga Mesas and GEs Iveta. They’re pretty on top of it, but there’s other turbines that are out there, Solan. Well, how does that work?

Jonathan Zalar: That’s a very good question.

’cause I’m not seeing very many from Intercon or Solan either. And I believe they have some bigger companies that are responsible for them now. Um, [00:17:00] it’d be interesting to see. What kind of level that a turbine, that old without, you know, their OEM’s gone. Right. Someone else bought ’em out at some point.

Allen Hall 2025: Well, it’s like the Mitsubishi 1000 A’s, which is a really good example because a lot of the Mitsubishi 1000 A’s, and there are a number of them still in the states are, are being repowered at the minute.

So they’re gonna have another 20 years of lifetime. But I, you know, Mitsubishi probably doesn’t really provide a lot of service on those. What do you do? If you have an issue on a Mitsubishi or an old Suland machine or even an old GAA machine, where are you going to get help? I

Jonathan Zalar: mean, you, you really need to go to like an independent engineer that has that kind of experience, you know, hopefully with that particular turbine model.

But if not, you know, people who do follow known RCA processes, we will be able to like work through issues like that.

Allen Hall 2025: Is there a network of RCA people in the industry? I know you. Because you’re the [00:18:00] best. So, I mean, I’m talking to you all the time, Jon. I’ve seen this problem of the turbine tell me what’s going on.

But is there a, a general network of people that are just out there focused on solving these problems?

Jonathan Zalar: I don’t think the market’s huge in that right now. I mean, yes, there’s some independent people like myself, and then you have your DNB Leidos, those type of companies that that will do RCAs. But I don’t think they have dedicated RCA teams.

I think. The OEMs are the ones with the dedicated OEMs and then a handful of people like me.

Allen Hall 2025: So let’s, let’s walk through that for a minute, because one of the questions that pops up when someone’s trying to solve a problem is like, why not bring in a big organization like the one you just mentioned to, to do the RCA?

Like we, we, we’ve hired, uh, the three letter acronym to come in and do the RCR, the two letter acronym to come in and do the RCA. There’s a downside to that. I think I, I’m not always sure that the, the competency is there based [00:19:00] upon the, just what I see for the level of person that’s been assigned to that.

When they have so many RCAs and requests coming into the door, can they. Manage it at a level that you as the customer would be happy with.

Jonathan Zalar: I don’t deal with it too much, but you’re right, it, it will depend on the person you get Right. When you’re using one of the bigger one. Right. And you know, I’m sure some customers have the opposite, like, oh, I got the best guide or girl I could get for this.

Right.

Allen Hall 2025: Have you seen the varying in quality there, Joel? Like if you just call out the big name and pick up the phone and call the name. You don’t always know what you’re getting

Joel Saxum: there. We know, we know some really good people in the industry that has specific problems, but the trouble is, is scaling engineering expertise is tough.

Right. So like if you have a, you have a Jon Zalar on the phone, you get an awesome engineer that knows how to do RCAs, but you only get Jon Zalar, right? You, you, you can’t expand that. A million things like Jon Zalar can’t take out 58 RCAs this week because he’s Jon Zalar. Whereas, whereas I think that some of the [00:20:00] bigger houses, you get the strength of having a, uh, the larger team behind some of them where they can kind of spread some work out.

Or you may have an expert in fracture mechanics that he can look at this and somewhat so you have that with the larger teams, which I think is an advantage and you get some varying opinions in the room and you can really sort down to certain things. But at the end of the day it, it, it’s exactly that.

It’s an engineering expertise shortage

Jonathan Zalar: off. You know, it’s also nice when they have a good network. Of people that they’ve worked with in the past to bounce ideas off of. Because like if you’re the only one doing RCA all on your own, you’re gonna second guess yourself a lot. But like having somebody who does have.

A lot of contacts and colleagues in the industry. I think that’s very helpful.

Allen Hall 2025: Well, a new avenue for root cause analysis is looking at the service providers. I’ve noticed that, uh, you know, it’s one thing if a product comes to an OEM, you, you kind of know what you’re dealing with there. But when a company’s out there, uh, independent service provider or maybe some out there on a contract is [00:21:00] doing work on your turbine.

Now RCAs are looking into those service providers. Jon, are you involved with some of those discussions?

Jonathan Zalar: It’s, you know, not just the service provider, it’s even like who’s doing the work. Are they actually doing what they say they’re doing? Um, are they following the OEMs maintenance schedule correctly? Um, you know, especially some of the owners that farm out the whole operations to somebody else.

Double checking their work, I think is important just to make sure, I mean, you, even if you have total control and people, but just having a second set of eyes doing some quality checks. I, I, I don’t think that enough of that’s being done in the industry at this point. I think there’s opportunity to get

Joel Saxum: better.

The bird dog concept, right? The bird like oil and gas is bird dogs everywhere in the onshore, offshore. Anything you do, they gotta, they got a client rep who is rolling around making [00:22:00] sure things are done right. And I think we need that in wind too. And it’s not any different if you look at the same thing.

Remote operations people are like, oh, wind farms are all over the place. Like, have you looked at any other In industry, it’s the same thing.

Jonathan Zalar: It it, it’s harder. There’s more of them and they don’t move, like, you know, like a locomotive or automobile, right. Where they come to the shop and you can overlook, see what somebody did.

But yeah, like spending that money and effort on. Quality, I think could go a long way. And one of the ways would be the bird dog method that you suggested.

Allen Hall 2025: Yeah, I do think some of the issues we’re seeing in the field are related to particular groups that have touched the turbines, and maybe they just don’t have the latest and greatest information from the OE em, or maybe they’re just winging it, but either case, uh, the sampling there needs to happen and it really gets down to knowing what’s happening with your turbine.

And then when it doesn’t seem right. Getting an expert on site to take a look and make sure that your turbine is operating like you think it should and [00:23:00]it should be producing like it should, because if anything, we know right now production is key. We need those turbines up and running. Jon, you know, a lot of people call us and ask us, how do I get ahold of Za LR?

Do you have an email for Jon? How do people get ahold of you? I send ’em to your website, i wtg consulting.com. But they, you know, they want your mobile number, which I try to avoid giving them, but how do they, how do they reach you?

Jonathan Zalar: Um, the website, it’s got a form there. Um, they can also email me at Jay zr@iwtgconsulting.com.

Allen Hall 2025: Well, you can see Jon on LinkedIn. It has a lot of good posts on LinkedIn and you’ll see him. Around the country and the world at different symposiums and discussions about wind turbine operations. Uh, and you can always feel free to talk to Jon Jon’s easy to talk to. So Jon, so thank you so much for being on the podcast.

We love having you. Thanks for having me, guys. I appreciate it. It was [00:24:00] fun.

https://weatherguardwind.com/iwtg-consulting-failures/

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The Lightning Diverter Problem with GE Vernova Blades

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Weather Guard Lightning Tech

The Lightning Diverter Problem with GE Vernova Blades

A design that causes massive problems

As wind turbine operators continue to expand their fleets worldwide with larger turbines, bigger generators, and longer blades, the risk of significant lightning damage continues to plague the industry. Lightning is now the leading cause of unplanned turbine downtime for many operators. In years past, OEM warranties or insurance would cover the costs of repairs and business interruption. Those days are gone. OEMs have eliminated lightning damage from warranties and insurance companies are dramatically raising rates, or eliminating coverage, for lightning damage. That leaves operators exposed to millions in repair bills every year.

The SafeReceptor ILPS System

The basic lightning protection systems for LM Wind Power blades has been two small, coin-sized receptors placed on either side of the blade tip. Designated as the SafeReceptor ILPS, the receptors are connected to an insulated metal cable that runs through the center of the blade which connects to the hub, nacelle, tower and eventually earth. Certified to IEC61400-24, the SafeReceptor ILPS has been used on most onshore LM Wind Power blades since 2011.

LM Wind Power would, occasionally, place a special, additional lightning protection feature onto their blades. Patented in 2005, this lightning add-on contained a line of stainless steel cross-shaped buttons in a soft, gray-colored sealant which formed a segmented lightning diverter. As lightning approached a blade, the LM segmented lightning diverter helped guide the lightning to the receptor, lowering the chance of lightning damage to the blade.

LM Wind Power, and eventually TPI Composites, used the LM Wind Power segmented lightning diverter. Most installations of the LM segmented lightning diverter placed the device behind the receptor – using the receptor to block rain and airflow impact. The reason? If the LM Wind Power diverter was directly exposed to the wind and rain it would eventually degrade.

Remarkably, the LM diverter strip was used sparingly, or not at all, on the LM/TPI 56.9m and 62.2m blades. As it turns out, the 56.9m / 62.2m are unusually vulnerable to lightning damage. In a WGLT study of over 900 GE Vernova onshore turbines in Texas and Oklahoma with blades exceeding 50m, the rate of lightning damage was approximately 1 in 5 strikes. The industry standard for lightning damage is roughly 1 in 50 strikes per the IEC standard. That results highlight a gigantic risk for wind turbine operators.

Presumably in response to these high damage rates, GE Vernova has introduced LPS “improvements” to the 56.9m and 62.2m blades. Two additional receptors have been added to the blade approximately 3m from the blade tip. Also, LM Wind Power diverter strips have been added to every receptor; with short pieces behind the tip receptors plus long pieces behind and in front of the two receptors down the blade.

The Lightning Diverter Problem with GE Vernova Blades
Latest GE Vernova 62.2m Blade Design

This is a risky decision by the blade designers at GE Vernova. Most lightning strikes occur when blades are pointed upwards towards the sky – and segmented lightning diverters provide maximum protection when they are also pointed towards the sky. GE Vernova placed the LM Wind Power diverters parallel with the airflow over the blade – perpendicular to the sky – which dramatically lowers their lightning protection ability.

The Lightning Diverter Problem with GE Vernova Blades
LM Wind Power Lightning Diverter Installation

Why are the LM Wind Power diverters not oriented upwards towards the storm clouds? Our research indicates that exposing the broad side of the diverter to rain erosion causes the part to fail.

Several years ago, Weather Guard Lightning Tech developed an accelerated rain erosion test rig to mimic rain erosion that appears on aircraft nose radomes and wind turbine blade tips. This test sprays water droplets onto test samples at 135 m/s (300 mph) and has yielded accurate predictions for lifetimes. WGLT examined the durability of the LM Wind Power diverters in our accelerated rain erosion test rig. The results were astonishing. The LM Wind Power diverter failed in under 1 minute for every orientation.

The Lightning Diverter Problem with GE Vernova Blades

And here are the images of the test articles after rain erosion testing.

The Lightning Diverter Problem with GE Vernova Blades

Sample 2 Post-Test 90 Degrees to Face of Diverter

The Lightning Diverter Problem with GE Vernova Blades

Sample 5 Post-Test 0 Degrees to Side

The Lightning Diverter Problem with GE Vernova Blades

Sample 6 Post-Test 0 Degrees to Leading Edge

Now, what does this mean for the lightning protection for your GE Vernova wind turbine blades with LM Wind Power diverters? You need to monitor the diverters for damage and peeling off the blade. Missing metal segments from a diverter or sections of diverter that have separated from the blade need to repaired or replaced.

The Lightning Diverter Problem with GE Vernova Blades

What’s the risk? Your blades are susceptible to significant lightning damage which could cost you $$$.

For more information about StrikeTape lightning protection technology and installation services, contact Weather Guard Wind at 1.413.217.1139 or info@wglightning.com.

About Weather Guard Wind: Weather Guard Wind specializes in advanced lightning protection solutions for wind energy applications, with installations protecting turbines worldwide in the most challenging lightning environments.

https://weatherguardwind.com/the-lightning-diverter-problem-with-ge-vernova-blades/

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