By Vince Granquist
The winds of change have been blowing at Consulting Engineers Group (CEG) for the past five years. And ironically, these winds have brought…wind.
CEG is a wholly owned subsidiary of Dakota Electric Association that provides high-quality, high-tech transmission and distribution engineering to the utility market. CEG has turned its attention to the burgeoning wind power market in the past five years–more particularly, design and build work for wind farms.
“It is far and away our biggest area of growth,” says Vince Granquist, a vice president and senior project engineer with the Farmington, Minnesota-based firm. “At this point, it is probably over 75 percent of the company’s focus.”
But why wind farms?
“I happened to see that a wind turbine was planned for Carleton College, a private, liberal arts college in Northfield, Minnesota,” Granquist goes on. “I live in Northfield and know all these people. Once we got interested in that project, it kind of snowballed as we talked to other people building other small wind-related projects in Southwestern Minnesota.”
Once CEG began its journey down the wind farm road, it gained valuable expertise that could only be acquired through firsthand experience. A key find of CEG engineers is that designing and installing collection systems, including the 35kV cable portion, and the substations and transmission line work that accompanies it, is one of the most critical aspects of a wind farm project. To support this function, CEG purchases hundreds of thousands of feet of 35kV TRXLP, underground cable. Although the cable is a critical component of the system, it is a standard utility product that is used to connect the turbines, both to each other and back to the substation.
Given that this cable is viewed as a commodity, there are numerous reputable suppliers capable of providing a reliable product; regardless of whether the end product is a cutting-edge wind farm or a traditional electric facility, the standard utility cable will do the trick. But how does a company determine which supplier is best? One thing that Granquist knows for certain: while pricing is important, it is by no means a “make-or-break” purchasing parameter.
“Certainly, you’re always looking for the best price possible to lower total project cost,” he says. “For a typical 100-megawatt wind-farm, you can be talking about a million dollars worth of underground cable, so the pricing difference between two suppliers can be noticeable.”
“On the other hand, for a 100-megawatt wind farm, there’s going to be about eight million dollars in total electrical work, so the decision is not entirely price-sensitive. The level of service matters much more than another tenth of a cent reduction in product price.”
Back in 2005, a time in which CEG was relatively satisfied with its cable supplier, Granquist became familiar with Hendrix Wire & Cable based in Milford, NH. Hendrix’s local representative, Chuck Healy of ElectroTech Inc., a Minneapolis-based firm, began talking with CEG, asking that they listen to what Hendrix had to offer. Feeling that Hendrix might be a good fit with CEG, Granquist agreed; after all, Hendrix had offered competitive pricing for CEG’s wind farm applications, as well as management for all the delivery and scheduling issues.
Discussions with Hendrix left CEG pleased with the quality and pricing of Hendrix’s 35kV cable. What’s more, Hendrix was excited about the prospect of bringing on another wind-farm customer. The first purchase order from CEG came in June 2006.
While the relationship between the two companies moved forward smoothly, Granquist soon learned what truly separated a good vendor from a great vendor in this industry. The difference lies in the value-added services offered by the vendor to back up the product, as well as the unique delivery requirements of the wind farm industry.
To that end, Hendrix introduced two additional services to CEG during the second year of the relationship that truly sealed Hendrix’s status as a valued CEG partner: “Bill and Hold” and “Capacity Planning.”
Bill and Hold, quite simply, is a means of adjusting for the uncertainty in project lead times versus cable lead times. “Hendrix builds the cable based on the scheduling needs of a given project. Then the company holds the cable on site, free-of-charge for an agreed upon time frame. This program has provided CEG the certainty of cable availability combined with the flexibility to react to unplanned events,” says Granquist.
This option gives CEG the ability to work within its clients’ production schedules, which are often erratic at best, by providing what is essentially “just in time” delivery of the cable to the jobsite when the time is right—not just in terms of actual installation but ensuring that someone is at the site to take delivery.
“Cable manufacturing will consume a fixed amount of plant production time from when you issue a purchase order,” Granquist explained. “You usually issue a purchase order with a notice to proceed contract, but without necessarily having everything nailed down as to when work will begin at the site. It becomes necessary to get the cable on order with the distinct possibility that even though the cable is ready, the site won’t actually be available until the following month. In some cases, the delay may be as much as two months.”
The typical process would call for the vendor to manufacture the cable and deliver it to the jobsite, despite the fact that the site might be unprepared and be nothing but a cornfield. This would require companies like CEG to make alternative storage arrangements. Further, it means locating someone with equipment capable of unloading and moving thousands of pounds of cable. In this case, the cable could sit for a month or more at the jobsite, with no one to watch over it, exposing it to damage or theft.
“Delivering the cable directly to CEG in Farmington would be a possibility, but it would have to be moved a second time to the job site. Few people want to pick up and handle cable twice, incurring further cost,” adds Granquist.
Capacity Planning is another service that provides CEG a greater measure of control over the sometimes uncontrollable scheduling of wind farm projects. This option provides CEG with access to the Hendrix production schedule on a regular basis, allowing CEG to modify items and quantities to respond to multiple wind projects in development.
“If I suspect that a few projects are likely to be released over the course of the summer and fall, I can work out what I think might be the basic cable order, even if the projects aren’t definite,” says Granquist. “I can say to Hendrix, ‘From a capacity planning point of view, plan on taking up a couple of slots in late July to deliver cable to me in early August, and I will confirm it on June 1.’ That way, Hendrix can have an idea of what CEG needs for possible production. In the event that one of those slots doesn’t work out, we have at least established a ‘fish-or-cut-bait’ date so that it doesn’t become an economic problem for Hendrix.”
“Essentially, we needed a procedure to address the fact that we know we’re going to do something but frankly, until people stop moving turbines and tell us to go ahead, we don’t know exactly what. So, a vendor with flexibility in terms of how we fit things through their system and get it out the other side is extremely useful.”
These two programs, along with the consistent quality of the cable and the ability to produce specific lengths (with virtually no overage costs) have helped Hendrix and CEG forge a mutually beneficial partnership. Hendrix’s knowledge of the wind farm market and the challenges faced on the jobsite is an advantage that cannot be overstated.
“Most of the firms that supplied primary cable to the electric utilities now supply it to the wind farm industry as well,” states Granquist. “But it helps that Hendrix has been doing it long enough that we can have shorter, more productive conversations. We no longer have to work through the same issues over and over again. They know how the wind-power industry works in terms of the cable requirements that are unique to an industry whose projects are out in the middle of nowhere and released on a variable schedule. That’s pretty handy to have.”
In the end, CEG and Hendrix have both gained insight into each other’s world. CEG has learned about cable manufacturing and Hendrix has become more knowledgeable about wind power project management. Through this close-knit relationship, both companies have crafted a unique approach to serving the wind power market.
And that’s not just blowing hot air.
About the Author:
Vince Granquist is a Licensed Professional Engineer in Minnesota and Nebraska. He has been with CEG since 2001 and has been working on wind farms since 2004.