The competitive wind power tariffs combined with a mature technology have led to continued high capacity additions in the wind power segment across the world. With 651 GW of cumulative wind capacity installed by the end of the year 2019 and rapid growth expected in the coming years, wind power is one of the mainstream clean energy sources. According to the Global Wind Energy Council (GWEC), 2019 alone witnessed 60 GW of new wind power installations worldwide, a 19 per cent growth over 2018. Of this, 54.2 GW of capacity was installed in the onshore wind segment and the remaining in the offshore space. The Asia-Pacific region contributed the largest share of 50.7 per cent to global wind power installations in 2019. It was followed by Europe with a 25.5 per cent share, North America with 16.1 per cent, Latin America with 6.1 per cent, and Africa and the Middle East with 1.6 per cent share each. The leading wind power markets, China, the US, the UK, India and Spain, contributed 70 per cent of the global installations in 2019.
While capacity additions have been impressive, these are not sufficient for meeting the clean energy ambitions. Effective operations and maintenance (O&M) of these wind projects is equally important. This is because wind turbines contain various machinery and equipment that are prone to failures, thus hampering the generation output from wind farms. According to research conducted by DNV GL, common gearbox failures include bearing, gear and lubricant failures, while common generator failures include stator, rotor and bearing failures. According to various studies, drivetrain components such as gearboxes and generators have a long downtime per failure. In general, high wind speeds, start-up, grid connection, emergency stops and shutdowns are the major causes of the deterioration of components. The downtime and deterioration of components impact the revenue of wind farm developers. To avoid these losses, developers spend a substantial amount on the O&M of the plant. According to Wood Mackenzie, global onshore wind O&M costs reached nearly $15 billion in 2019. Of this, $8.5 billion was spent on unplanned repairs and corrective maintenance caused by component failures.
O&M strategy and digitalisation
According to DNV GL, the use of a proactive maintenance strategy helps predict generator bearing failures well in advance and prevents a potential downtime of 500 hours and an estimated revenue loss of $28,000. With an enormous amount of potential revenue loss, it has become pertinent to have a robust O&M strategy to reduce such losses. To this end, condition-based monitoring of components is carried out to predict failures and identify abnormal behaviour. Many new monitoring systems and approaches are being developed. Currently, these approaches are broadly divided into diagnostics and prognostics. Diagnostics deal with the detection of anomalies, affected components and the extent of the fault. Prognostics deal with the estimation of time to failure, remaining useful life and prediction of future failures.
The supervisory control and data acquisition (SCADA) system is a common example of a diagnostic tool. These systems receive data on temperature, turbine components, speeds, etc. Advanced monitoring systems also share information on vibrations, acoustic emissions and particle measurements of drivetrain components. These systems cost $7,000-$9,000 per turbine, excluding the annual costs associated with maintenance, monitoring and software. This is usually quite expensive for a wind farm developer or O&M player. Therefore, basic SCADA systems are commonly being used by the industry.
Innovations in this space are continuously taking shape in the wind O&M market. The industry is working towards incorporating various technologies for monitoring wind farms. Going forward, the wind O&M industry will capitalise on the records of historical failure patterns and operations to arrive at quick and accurate predictions.
Wind O&M market size
According to the report, “Wind Turbine Operations and Maintenance Market – Global Market Size, Trends and Key Country Analysis to 2025”, published by GlobalData, over 400 GW of wind power capacity was added during 2006 and 2016, which significantly increased the opportunity for the wind O&M market. During this period, the global wind O&M market grew from $2.12 billion to $13.74 billion, at a compound annual growth rate (CAGR) of 20.6 per cent. It is expected to reach $27.4 billion by 2025, at a CAGR of 7.7 per cent. According to the report, the increasing age of wind turbines and failure of components such as blades and gearboxes will be the major reasons for the growth of the wind O&M market.
With a market size of $1.12 billion, the O&M of offshore wind plants accounted for about 8.2 per cent of the total wind O&M market in 2016. While the share of the offshore wind O&M market is less than the onshore wind O&M market, the O&M cost for the former is much higher due to higher logistics costs and a lack of skilled manpower. Although the setting up of onshore wind projects also faces logistics and manpower issues, the impact of these factors on the offshore segment is much higher.
It is estimated that the offshore wind O&M market will continue to grow, to reach $5.04 billion, having an 18.4 per cent share of the total wind power O&M market in 2025. In 2016, China was the largest wind O&M market in the world and accounted for 30 per cent of the total O&M market size. According to the report, it is expected that in 2025, China will continue to be in the top position; however, its market share will drop to 27.4 per cent. The US was the second largest wind O&M market, with a share of 14.6 per cent in 2016 and will continue to be in the second position in 2025. Germany, the largest European wind O&M market, accounted for 14.3 per cent of the O&M market in 2016 and is expected to have an 11.9 per cent share in 2025.
In the offshore wind O&M market, the UK, Germany, and China will be the largest contributors, with a market share of $1.46 billion, $0.86 billion and $0.69 billion respectively.
The Covid-19 pandemic has, no doubt, put pressure on the wind O&M industry. During the initial lockdown – in most countries and in India as well – O&M was disrupted due to the inability of technicians to do their jobs properly.
According to Ben Backwell, chief executive officer, GWEC, a positive development in the wind power sector across various countries across the globe is that wind farms are categorised under critical or essential services. The wind industries in different countries are also discussing with their respective governments to build standard guidelines to carry out O&M of wind projects. Therefore, the future outlook for the wind O&M market still remains positive despite the challenges posed by Covid-19. As technology has matured, the ability to efficiently access wind turbines remotely has also improved.
However, going forward, the wind O&M market will face challenges as many recent auctions have discovered ultra-low tariffs, which reduce margins for developers and O&M players. There is a risk that the quality of wind O&M will go down with the falling margins.
Despite this challenge, the wind O&M market will continue to grow with the expansion of the installed wind capacity. According to GWEC, the global wind industry is expected to grow at an annual rate of 4 per cent over the next five years. It expects over 355 GW of new capacity additions till 2024, leading to roughly 71 GW of installations each year. Europe, in particular, has very ambitious wind targets with huge capacity additions expected in the UK. The wind markets in Taiwan, Vietnam, Japan and Korea are also growing impressively.
Therefore, the scope for the wind O&M market is expected to grow in all geographies. Overall, the development of the wind O&M market should not be dependent only on capacity additions of wind plants and tariff competitiveness but also on innovations in digitalisation.
By Sarthak Takyar