Wind operators focus on data, depots in spare parts control grab
Data analytics, economies of scale and supply chain buyouts are helping operators reduce spare parts risks deemed crucial to wind farm performance, a new report shows.
As market competition pinches wind power margins, spare parts strategies are playing an increasingly important role in plant efficiency.
Wind operations and maintenance (O&M) costs vary but might typically represent around 20% of the levelized cost of energy (LCOE) of a plant. Spare parts costs can represent up to half of O&M costs and operators view spare parts procurement capability as a crucial factor when selecting their service provider, according to a recent survey by New Energy Update.
Growing digitalization, economies of scale and supply chain consolidation in the wind industry are creating new opportunities to optimize spare parts strategies, according to New Energy Update's recently-published 2018 Onshore Wind Operations and Maintenance report.
Operators are seeking greater control over spare parts procurement and the pooling of spare parts between operators is a growing trend, the report said.
Pooling between operators optimizes storage costs and downtimes, especially for more expensive components, it said.
"The larger the pool size, the lower the cost for each participant and the lower the shortage risk," the report said.
The wind O&M market is expected to grow dramatically in the coming years and industry relationships are evolving.
U.S. wind farm owners are expected to spend over $40 billion on O&M over the next 10 years and original equipment manufacturer’s (OEMs) such as Suzlon, Siemens Gamesa, MHI and Vestas are increasingly moving into the third-party servicing market, IHS said in a recent report.
OEMs expect an increasing share of onshore wind revenue to come from O&M services in the next five years, New Energy Update’s survey showed. OEMs and ISPs are investing heavily in infrastructure and digital technology and innovative spare parts strategies to capture market share, respondents said.
Key investment areas for wind OEMs
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Source: New Energy Update Wind O&M Survey (March 2018).
Facing increasing cost pressure, operators are switching from time-based availability strategies to performance-based strategies. Many large operators—most notably in the U.S.-- are choosing to bring O&M activities in-house.
As a result, established wind operators are increasing their control of major and minor spare parts and investigating local supply alternatives for certain parts, the 2018 Onshore Wind O&M report said.
"Because of operators` more direct access to information and their increasing stock management experience, they are better equipped to predict breakdowns and know when they should order a specific part," it said.
By pooling spare parts components between a number of suppliers, operators can reduce the variability of demand for spares, the report noted.
As the chart below shows, increasing the numbers of turbines dramatically reduces spares required per unit.
Pooling effect for a typical gearbox
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Source: Lemaire, J. (2017).
Growing fleet sizes can provide additional spare parts savings. Large wind farm operators can buy in bulk and distribute spares to different wind farms from central depots.
"The trend is one of rather than replacing a gearbox at a time we are seeing replacement of multiple gearboxes to cut crane costs over a large number of machines," the report said.
OEMs are also seeking increased control over supply chains, to capture more revenues from spare parts sales.
For example, OEMs are continuing to buy out component suppliers, part of a wider consolidation of the supply chain in response to margin pressures.
Recent examples include GE’s acquisition of LM Wind Power, a rotor blade supplier, and Nordex' acquisition of SSP Technology, a rotor blade mould supplier.
Data analytics will have a greater influence over spare parts strategies going forward.
In the U.S., machine-learning developer Uptake Wind plans to integrate inventory functionality to its data analytics platform this year to optimize spare parts strategies. Since 2016, Uptake has been working with U.S. operator MidAmerican to deploy data analytics across some 4.3 GW of wind capacity. Uptake also recently signed an agreement with Pattern Energy to install its technology at the 200 MW Logan's Gap Wind facility in Texas.
Spare parts availability rates of over 90% may be possible by applying learnings in analytics and automation to the wind sector, Tushar Narsana, Managing Director, Supply Chain BPS at Accenture, told the Wind Operations Dallas 2018 conference in April.
A spare parts optimization project implemented for a major airline supplier increased spares availability rates to over 90%, a level which should be attainable by the wind sector, Narsana said.
Spare parts strategies require detailed supplier collaboration to ensure different suppliers are sharing the same desired outcome, Narsana noted.
Operators should drive for improved visibility of the spare parts journey across the supply network, he said.
Predictive modelling can then be used to understand lead times and provide operations teams with longer notification periods, Narsana said.
"Instead of getting a notification the night before, can you start predicting four, six, eight weeks in advance, so that you have a lot more time to react," he said.
New Energy Update