Global turbine O&M spend to hit $17bn by 2020

FCBI (LONDON) Experts call for new RCM technology and lessons learned in Europe at 7th Annual Wind O&M Summit as O&M spend hits record high.

Dan Shreve, a Partner at US renewable energy consultancy, MAKE Consulting, says of the upcoming 7th Annual Wind Energy Update O&M Summit, “I would like to discuss how asset owner buying behavior evolves as new technology and market consolidation...

By Katherine Steiner-Dicks

Global expenditure for wind turbine operations and maintenance will rise from US$ 9.25bn in 2014 to an estimated US$ 17bn by 2020, according to research and consulting firm GlobalData.

The rise of global expenditure for wind turbine operations and maintenance (O&M) is being driven by increasing numbers of installations and aging turbines. These market drivers call for more sophisticated power performance and Reliability Centred Maintenance software and hardware in 2015 as turbine owners look for new ways to generate increased cash flow.

Peter Wells, CEO at UpWind Solutions, an ISP based in California, says he is keen to learn the “potential for delivering Reliability Centered Maintenance and the role of technology, such as hardware and software; including big data required to deliver it” at the 7th Annual Wind O&M Summit USA which is taking place in Texas between April 13 – 15.

Questions Wells would like to hear answered include:

• Who is really practicing RCM in the wind industry?

• How much more can be done?

• What knowledge can be transferred from other industries?


Wells and many others attending the event are interested to learn which direction turbine owners will go when choosing their next O&M contract.

“In general terms, this comes down to preferred O&M Strategy by the Owner/Operator. Do they go OEM, ISP, Self-Perform and some form of hybrid approach? Do they go long term, 5 years plus, or go less than 5 years to stay current with O&M approaches, scope and price?” he ponders.

“There’s a lot to think through and every owner has to deal with different dynamics,” says Wells.

However, he says that owners and operators must evaluate and understand fully their risk profile and what they are paying for risk transfer to the OEM.

“We have developed models and offerings that deal with every approach, so any new 'trends' are less of an ‘impact’ and more of a ‘direction’ for us,” says Wells.

2020: Preparing for an ageing fleet

By 2020, MAKE Consulting estimates that 30% of US wind turbines will be a decade old. In that same year, MAKE also expects that there will be 40GW of off-warranty GE turbines across the Americas, and more than 20GW of off-warranty Vestas and Siemens machines.

Many turbine owners have financial asset models set at 20 to 25 years, but new upgrade analysis is proving that turbines can churn out power closer to 30 to 35 years.

In 2015 and 2016 wind farm operators, such as E.On in the US are likely to choose immediate upgrade revenue benefits, extracted from turbine performance software, over any perceived shortened turbine life expectancy due to increased power output.

Dan Shreve, a Partner at US renewable energy consultancy, MAKE Consulting, is, like Wells, interested in gaining a clearer picture on how new technology will impact the O&M segment.

“I would like to discuss how asset owner buying behavior evolves as new technology and market consolidation continues,” says Shreve.

“The impact of yieldco engagement in the global wind energy market and their desire to minimize operational risks on their pro-forms,” is one off the most pressing issues for the wind industry this year, he adds.

While Shawn Lamb, CEO – US Operations at the Danish Wind Power Academy Americas, says that he is excited to see the latest trends in O&M practices employed by the US industry, he is also hoping that more people this year share their “lessons-learned” from Europe.

Lamb believes the single most pressing issue or wind market dynamic that could impact the industry in 2015 is the move by owners and operators to self-perform their maintenance.

The Big Opportunity

According to Harshavardhan Reddy Nagatham, a power analyst at GlobalData, a wind farm’s O&M costs account for 10% to 15 % of the total cost of power generation in an onshore wind farm and 25 % in an offshore wind farm.

The global onshore wind O&M market is forecast to grow in value from US$8.34bn in 2014 to US$13.43bn by 2020, at a Compound Annual Growth Rate (CAGR) of 9.2 %.

The offshore wind O&M market value will increase at a rapid CAGR of 26 %, from an estimated US$ 0.91bn in 2014 to US$ 3.57bn by 2020, boosting its share from 9.8 % to 21 %.

On average, offshore O&M is two to four times more expensive than onshore O&M. Offshore wind power accounted for about 2.4 % of the world’s cumulative wind power capacity in 2014, but accounts for approximately 10% of the global wind O&M market.

The analyst adds that while the onshore wind O&M market was valued at over nine times that of its offshore equivalent in 2014, the offshore arena is set to expand at a much faster rate over the forecast period due to experienced gained in onshore projects and ambitious renewable energy policies in Europe.