Onshore wind capacity has grown hugely over the past decade. And that growth looks set to continue in the years to come—by some estimates global capacity could grow 48 percent by 2020 (to 690 GW), while “out-of-warranty capacity” could almost double (to 349 GW). And as the industry matures and regulatory incentives come to an end, it’s also becoming increasingly cost competitive when compared with other sources like gas turbines and coal.
But, as we explained in our recent onshore wind report, with maturity comes new challenges. Turbine fleets are on average more than 10 years old, leading to increased failure rates. Assets need to be repowered or retrofitted to extend their lifespans. Successful cost reductions to date have focused on development and installation (where costs are down by two-thirds since the 1980s) but the optimization potential in operations and maintenance (O&M) has been largely untapped. O&M currently accounts for about 20 percent of the levelized cost of electricity (LCOE) produced by onshore wind.
We spoke to representatives from some of the world’s largest onshore wind operators and investors to get their perspectives on this opportunity. Five core themes were evident.
First, operators underestimate O&M’s bottom-line potential. O&M can be used to support better forecasting, as well as increase revenues from grid services. One operator improved their energy forecasting through analytics and reduced unbalancing costs by 10 percent, for example. And by investing in their Renewables Control Centre and CORE system, ScottishPower Renewables (SPR) aggregates generation from multiple wind farms, allowing services (reactive power, frequency control, grid-tripping) from a number of wind farms to be combined and delivered cooperatively.
Second, all operators are to looking increase the share of predictive maintenance. Advanced analytics can be used to create predictive models for key components. Those models can then predict the expected time to failure (TTF), the probable cause, and remediation required. The models allow operators to make more cost-effective maintenance decisions to maximize production. Currently, most maintenance is still unplanned or planned, with less than 20 percent of maintenance activity being predictive.
Third, contracting and procurement is becoming increasingly important. After the typical warranty period ends, operators often negotiate an extension and continue with the full-service OEM turbine manufacturer. But they could be more proactive, whether by opening local markets to new providers, or by bundling/unbundling O&M activities. One UK operator saw nearly a 30 percent cost reduction by increasing local competition by bringing in O&M service providers from Germany and Spain into the UK, for example. And operators could unbundle activities like planning, inspection, Q/A, and the sourcing of components and spare parts, while bundling similar activities across different wind farms (even when the windfarms have different turbines).
Fourth, the spare parts supply chain could be significantly optimized. Spare parts have historically been outsourced to OEMs who don’t in fact manufacture most of those parts themselves. Operators can look to alternative sourcing options, especially as their turbines age and parts become a bigger share of maintenance costs. That might include salvaging late-life turbine parts from repowering, sourcing spares from other operators, or developing local supply chains. Operators should also examine their parts inventories, accounting for predicted TTF and the trade-off between availability and stocking costs.
Finally, workforce optimization remains a huge opportunity. The workforce is still the largest cost element in turbine maintenance. Tablets and mobile apps are now regularly used to allocate work, track engineers, grant remote access, provide detailed schematics, and offer remote expert advice. But there remains room for improvement in leveraging intelligence from the field to improve performance – recording learnings from daily work, benchmarking time, managing poor performance, improving collaboration, minimizing duplication, and reducing inefficient handovers.
These five themes can guide the transformation of an onshore wind operator’s O&M. But how are they being used in the industry today? What are the leading players doing to forge ahead? That’s something we’ll explore in a future blog post.