Global growth

In 2016, global wind power capacity reached 491GW, with an addition of 52GW in that year. More than 400GW of wind capacity was added during 2006–16, which drastically increased opportunity for the operations and maintenance (O&M) market in the forecast period. The global wind O&M market grew from $2.12 billion in 2006 to $13.74 billion in 2016, at a compound annual growth rate (CAGR) of 20.6%. The market is expected to reach $27.4 billion by 2025, at a CAGR of 7.7% during the forecast period. The increasing age of wind turbines and the failure of components such as blades and gearboxes are the major reasons for the increasing wind turbine O&M market.

The market’s growth is currently restrained by a lack of skilled labour and the cost of logistics. However, there is an increase in companies providing specialised wind turbine O&M services, which in turn is reducing the cost of these services.

Offshore power

Offshore wind accounted for about 8.2% of the total wind O&M market in 2016, with a market size of $1.12 billion. Offshore wind attracts higher O&M costs in comparison with onshore wind. Higher turbine maintenance, high logistics costs and a lack of skilled labour make offshore wind services more challenging than the onshore equivalent. Although onshore wind also faces logistics and labour issues, the impact of these factors on the offshore segment is higher. It is estimated that the offshore O&M market will continue to grow to reach $5.04 billion, equating to an 18.4% share of the total wind power O&M market in 2025. The UK, Germany, and China will be the largest contributors to this market, with contributions of $1.46 billion, $0.86 billion and $0.69 billion, respectively.

Predictive maintenance

Predictive maintenance processes have become common practice in wind O&M in the recent past. The processes help service providers plan orders for parts, and schedule work and refurbishment activities based on condition assessment. It also reduces technical crew visits as minor repair issues are tackled remotely. The process includes predictive models for visual inspection, confirmation of damage, developing an action plan and assessing how long bearings can operate. In a fleet of wind turbines, predictive models work in conjunction with condition monitoring systems (CMS) to give the longest lead time for identifying faults.

Growth of China

China is the largest wind O&M market in the world and accounted for 30% of the total market size in 2016. It is expected that China will remain in first position with a share of 27.4% by 2025. The US is the second-largest wind O&M market in the world with a share of 14.6% in 2016, and is also expected to continue in second place in 2025. Germany, the largest European market, accounted for 14.3% of the O&M market share in 2016 and is expected to hold a 11.9% share in 2025.

Chinese and US-based wind companies are expected to take advantage of the next wave of consolidation activity in the industry. Low to moderate growth of wind power in major markets such as the US and Germany, due to economic problems, will lead to weakening demand and a cautious approach from financial institutions. This situation will increase the intensity of competition, leading to a reduction in profit margins. Price pressures and reducing margins in a maturing market will then lead to consolidation in the wind industry. Turbine manufacturers will look to mergers and acquisitions as an option to consolidate their position in the market, and developers and owners will put wind projects up for sale under the prevailing tight credit scenario, in order to offset credit and interest rate risks.

In China, the Ministry of Industry and Information Technology (MIIT) developed the Wind Power Equipment Manufacturing Industry Access Standards in March 2011, to finetune the country’s domestic wind manufacturing capabilities. Under the policy, turbine manufacturers will need to produce wind turbines of at least 2.5MW, and should have a manufacturing capability of at least 1GW to be able to bid for domestic contracts. Manufacturers who produce these turbines will receive preferential treatment such as raising money from the stock market, simpler requirements for bank loans and tax breaks.

The guidelines from MIIT have led to the start of a new wave of consolidation among smaller companies, as only around 12% of the 80 Chinese manufacturers operating in the segment can meet the criteria. This is expected to affect smaller manufacturers, which will be acquired by large companies.

Large installations

The key trend in the global market is the development of large-scale wind farms. Any wind power installation needs significant initial investment. Producers will choose to develop large plants because they generate a huge output and attract a large amount of premium. As cash inflows generated from largescale projects will be high, payback will also be high. This means faster payback on initial investment and high returns once the payback is completed. Thus, the development of large-scale wind projects is profitable to the owner and is increasingly sought after. With offshore wind gaining momentum, large-scale wind projects will continue to increase during the forecast period.

Gains in momentum

The offshore wind market is expected to gain momentum during the forecast period. Offshore wind power installations accounted for 1.9% of the global windpower market in 2012, growing to 2.9% in 2016. It is increasingly explored across the world for its high yield due to stronger and more consistent winds, and has the scope to construct massive GW-scale projects. The UK, Germany, China, Denmark, and the Netherlands are the major offshore wind-power markets, with a number of projects currently under way. With an increasing number of countries exploiting offshore wind, it is expected that the share of offshore in the global wind-power market will reach 7.7% by 2025.