Growing pains: wind power global market overview

The operation and maintenance (O&M) of a wind farm is essential as it contributes to value creation, increases turbine availability (lowering downtime) and raises returns. Regular O&M reduces the downtime of a turbine and optimises electricity generation, which results in an increase in revenue. In optimal conditions, O&M guarantees a useful life of 20 years for the wind farm, and can further extend this lifespan through improvements and adaptations during later years. O&M will help the plant to comply with any changes in existing technical standards or regulations.

Global trends

Global wind power capacity increased by 44GW to 363.9GW last year. Offshore wind power capacity also rose by 1.8GW. Between 2006 and 2014, the global wind O&M market expanded at a compound annual growth rate (CAGR) of 18.9%, from $2.32 billion to $9.25 billion.

The main drivers of this increase were aging wind turbines and increasing turbine installations owing to financial incentives, capital subsidies and tax rebates, and failure of components such as blades and gearboxes. On the other hand, growth was restrained by logistical costs and lack of a skilled workforce. Against this backdrop, the global wind O&M market is estimated to reach $17 billion in 2020, registering a CAGR of 10.7%.

China is currently the largest O&M market, at an estimated size of $2.18 billion (26%) in 2014, followed by the US and Germany. It is expected to maintain this position and increase its market share to 34% by 2020. The US is the second-largest, with a share of 16%, and is expected to retain this status up to 2020. Germany, the largest European wind O&M market, accounted for 13% and is expected to retain that share up to 2020.

Onshore vs offshore

The global onshore wind O&M market grew from an estimated $2.21 billion in 2006 to $8.34 billion in 2014. Although there will be a drop in this share, it is forecast to rise to $13.43 billion by 2020 at a CAGR of 9.2%.

Although onshore wind also faces logistical and workforce issues, the impact of these factors on the offshore segment is greater. It is estimated that the offshore wind O&M market, which accounted for about 10% of the total wind O&M market in 2014, will by 2020 grow from an estimated $0.91 billion to $3.57 billion, or 21% of the total wind power O&M market, at a CAGR of 26%.

The UK, Germany and China will be the largest contributors to this increase in the offshore O&M market, putting in $1.1 billion, $0.6 billion and $0.5 billion, respectively.

O&M costs

O&M costs account for 10-15% of the total cost of power generation in an onshore wind farm and 25% in an offshore wind farm. These are recurrent and necessary for the running of a wind project over its life cycle. Some of the major operational costs of a wind farm are:

• insurance
• electricity
• land rent
• spare parts
• permits
• overheads.

Maintenance costs are directly associated with wind turbines and rise continually as a turbine ages. These costs are divided into three categories:

• unscheduled maintenance costs or corrective maintenance costs to repair turbine malfunctions (when a component fails)
• scheduled preventive maintenance
• scheduled major overhauls and component replacements.

These types of maintenance work require spare parts, crew and a crane - or, in the case of offshore wind, a vessel.

One of the key parameters on which the O&M costs vary is the age of the turbine. O&M costs amount to 10% of the annual cost of generation for newer turbines and as much as 35% for older ones. Offshore wind maintenance is more expensive as it requires specialists to lift and install components. This can be particularly challenging in difficult weather conditions, which can hamper accessibility.

Technological improvements and innovations will continue to reduce wind O&M costs. Direct drive and tension-control measurement technology for turbine bolts are among the innovations that considerably lower these costs. The former eliminates the gearbox, which is one of the major areas of failure in a turbine. Nuts and bolts are simple devices, but failures can be costly. It is suggested that more than 90% of bolted joint failures occur because of insufficient bolt tension, and this can be minimised using tension-control measurement.

Predictive maintenance processes have become common practice in wind O&M in the recent past. It uses condition assessment to help O&M service providers to schedule work and refurbishment activities, and to order parts in advance. It also reduces the need for technical crew to visit plants, as minor repair issues are tackled remotely.