Executive Summary: 

• Climate change is projected to significantly alter global wind patterns 

• Equitix partnered with Sust Global to analyze climate impacts to their portfolio

• Sust Global’s geospatial AI approach enabled climate-informed investing insights

Climate change impacts on the wind industry

Climate change is poised to transform global weather systems and disrupt industries around the world. Though public attention has primarily focused on catastrophic weather events and rising sea levels, a more subtle yet highly consequential climate shift is beginning to occur: changes in wind speeds. 

Climate models project that wind resources will deviate by more than 30% from their historical patterns, and these changes aren’t expected to be uniform across geographies, with some regions expected to see significant wind increases while others are expected to see wind resource decreases.¹ 

The predicted changes in wind patterns present a challenge to the wind energy generation industry, which currently predicts asset performance and makes investment, construction, and operating decisions based on the assumption that wind speeds will maintain consistent patterns over long periods of time. 

This assumption has largely held over the ~40 year history of the wind industry enabling historical observations to be an effective and sufficient dataset for predicting future asset performance. However, significant wind pattern changes could disrupt standard industry practices by decreasing the accuracy of energy generation projections that are based on historical data. 

Using climate models in wind investing

Equitix – a leading global infrastructure investor, developer and fund manager – identified the potential risks and opportunities that changing wind patterns could present and sought to assess potential impacts to their wind asset portfolio. 

Equitix believes that utilizing forward-looking climate models is conducive to long-term competitiveness as a responsible investor. Therefore, Equitix partnered with Sust Global, a geospatial AI company, to further understand how changing wind speeds could impact its wind energy generation portfolio and to develop tools that support the integration of future wind speed projections into decision making. 

Building high-resolution wind speed models

Producing forward-looking wind speed models to inform wind investment decisions required substantial innovation by Sust Global. While forward-looking wind speed projections had been previously developed, these produced outputs with low resolution and low accuracy resulting in limited utility for investment industry use cases. 

To overcome this, Sust Global applied its geospatial AI capabilities to build high-resolution and high-performance wind speed projections that could power asset-level analysis. 

Sust Global leveraged Denoising Diffusion Probabilistic Models – a generative artificial intelligence approach that learns to reconstruct high-resolution images by estimating and removing noise through a controlled diffusion process – to integrate disparate geospatial datasets such as climate simulations, satellite observations, terrain attributes, on-site historical performance, and more. 

This approach yielded wind speed projections that significantly outperformed other climate models. A graphic comparing Sust Global’s and an alternative model’s resolutions can be observed below in Figure 1. 

Figure 1: Previous state-of-the-art forward-looking wind speed model resolution (left) compared to Sust Global’s forward-looking wind speed model resolution (right).

Integrating climate data into financial workflows

While Sust Global’s climate modeling breakthrough was significant, further steps were required to initiate climate change-informed decision making across Equitix teams. Sust Global collaborated with Equitix’s asset management team to understand individual asset operating contexts, such as wind turbine engineering specifications, to develop power generation projections from the initial wind speed models. The complete workflow to produce high-resolution power generation projections from disparate geospatial datasets can be seen below in Figure 2.

Figure 2: Sust Global’s geospatial AI workflow to project wind asset power generation 

The construction of power generation projections, a wind industry-native dataset, enabled climate change impacts on wind speeds to be analyzed across Equitix’s investment, asset management, and sustainability teams. 

Sust Global and Equitix then collaborated to design processes which bring climate-informed decision making into the investment and asset life cycle. 

Data in action: A closer look at an Equitix wind site

With Sust Global’s data now available to offer insight into future asset performance, Equitix conducted a deep dive analysis of one of its operating wind assets to assess potential emerging risks and opportunities driven by changing wind patterns.

Sust Global’s data provided forward-looking projections of daily wind speed until 2050 enabling both long-term energy yield and asset performance volatility, a measure of how much asset yields are expected to vary year to year, to be analyzed. 

At the site, no statistically significant change in either energy yield or performance volatility is expected, enabling Equitix to continue operating the asset with confidence. 

Figure 3: Climate change analysis of future asset energy yield and yield volatility at an anonymous Equitix wind site. Energy yield refers to the total amount of electricity generated by an asset, while yield volatility refers to variability in energy generation over time due to wind speed fluctuations. Assets with high yield and low volatility are preferred due to predictable high output. The asset analyzed shows low risk of reduced energy generation or increased variability in performance. 

Impact on Equitix

Equitix integrates the recommendations of the Task Force on Climate-related Financial Disclosure (TCFD) as part of its approach to responsible investment in order to identify and mitigate risks, whilst also maximising the opportunities associated with the need for sustainable infrastructure. 

To develop its TCFD strategy further, Equitix has sought ways to quantify the impact of climate change on investment performance across the portfolio. While climate risk data alone can help identify portfolio-wide hotspots in climate risk exposure, qualitative climate findings often fall short in providing actionable insights for asset management and investment teams.

Quantifiable data—such as impacts on revenue, operational costs, asset lifetimes, and insurance costs—are therefore essential for making informed investment and asset management decisions.

The three primary value-add levers enabled by incorporating forward-looking climate data were:

1. Investment strategy: Identifying potential target investment regions based on predicted future wind patterns.

2. Acquisition due diligence: Including a climate review step in project acquisition to mitigate climate-related risks and capture opportunities.

3. Asset management: Updating asset performance guidance and asset management processes to optimize operating decisions.

By leveraging the learnings from this project, Equitix hopes to apply this approach to sectors beyond wind generation, continuing to further strengthen its portfolio-wide climate strategy.

Joe Robinson, Director of ESG & Sustainability at Equitix says,

‘’Our commitment to researching the quantification of climate impacts on renewable generation assets underscores our strategy to ensure sustainability risks and opportunities are considered in investment and asset management decisions. By leveraging climate data, we can continue to develop comprehensive tools which enhance our ability to identify, monitor and mitigate climate-related risks whilst optimising opportunities.’

Looking forward: Geospatial insights for a resilient wind sector

Wind energy will continue to grow in strategic importance as global economies accelerate their net zero ambitions. To ensure energy security amidst the climate change-driven wind pattern alterations, it’s vital for wind industry participants to make decisions optimized based on future performance rather than historical observations. 

Advances in artificial intelligence will enhance the wind energy sector’s ability to understand future wind conditions and take actions that mitigate risks and maximize emerging opportunities. 

Equitix and Sust Global will continue their partnership, leveraging Sust Global’s expertise in developing further innovations in geospatial intelligence and Equitix’s deep industry experience to apply these insights to sustainable infrastructure investment. 

Bibliography:

1. D. Carvalho et. al, Wind energy resource over Europe under CMIP6 future climate projections: What changes from CMIP5 to CMIP6, Renewable and Sustainable Energy Reviews, Volume 151, 2021