O&M costs typically account for 20–25% of the total generation costs currently for both onshore and offshore wind. In comparison, they come in at about 15% for coal, 10% for gas and 5% for nuclear. Getting this cost factor down for wind power is the biggest driving force for the O&M industry. In this report, we look at how the industry is doing that, the economic impact, what the main challenges are, and who the main players in the industry are.
Published: June, 2016
Pages: 126 | Tables: 4 | Figures: 29
The global wind power market is continuing to grow at a rapid pace. With close to 60GW installed to take cumulative capacity worldwide to 430GW, 2015 was another record year for the sector. All but 12GW of that 430MW is onshore.
This ongoing growth, the fact that more and more older turbines are coming out of warranty (particularly in North America and Europe), plus the industry’s continued drive to lower the overall cost of wind power, means operations and maintenance (O&M) is big business. We estimate the global onshore wind O&M market will be worth more than €16 billion this year, rising to just under €19.5 billion in 2018.
The fundamental pillars to any O&M plan – operations, preventative maintenance, unscheduled maintenance, logistics and service structures – are examined fully. Moreover, as well as looking at the industry on a global scale, this report assesses O&M at a regional level, providing three-year O&M market forecasts for Asia-Pacific, the Americas, Europe, Africa and the Middle East (EMEA), and for the key countries within each region.
It may come as no surprise that Asia-Pacific has overtaken EMEA to have the largest share of the O&M market since we produced the last version of this report, back in 2014. Based on our current cost estimates and industry forecasts of future capacity, we expect Asia-Pacific’s onshore wind O&M market to be worth just over €6 billion in 2016 rising to more than €7.5 billion by 2018, while in EMEA the market’s value will rise from €5.6 billion this year to €6.5 billion. In the Americas, the market will be worth €5.4 billion in 2018, up from €4.57 billion in 2016.
In order to estimate the O&M market for onshore wind, we engaged our experts in assessing the relative weighting of operations costs – including rent and rates, insurance, electricity and administration, among others – against maintenance costs. The latter were also divided into scheduled and unscheduled maintenance and itemised according to the individual component or group of components the costs relate to. Overall, under the categorisation we applied, operations accounted for about 45% and maintenance for 55% of total O&M costs.
Regional variations were accounted for to some extent. For example, rent/rates were nearly twice as much in Europe as in the Americas or Asia-Pacific in percentage terms. When estimating costs for macro-regions, consideration was given to the relative amount of installed and pipeline capacity, which means, for example, that percentage costs for Europe, Middle East and Africa were largely dictated by our estimate of the same costs for Europe.
The overall cost of O&M in 2015 was estimated to be €16/MWh in Europe and €15/MWh in North America and Asia-Pacific. Figures for installed capacity up to 2015 are based on Windpower Monthly’s proprietary Windicator index. The 2016–18 projections are based on data contained in WPI’s Global Forecast report.