Onshore wind O&M costs dropping, Bloomberg shows

» By | Published 06 Nov 2012

A recent announcement by Bloomberg New Energy Finance (BNEF) that says the costs of onshore wind farm operations and maintenance (O&M) continue to fall rapidly is further proof that the electricity-generating technology is both affordable and dependable.

The wind energy sector is making significant improvements not just in the capital cost and performance of its turbines, but also in the ongoing cost of operating and maintaining them once installed, the BNEF announcement said, adding the average operations and maintenance costs since 2008 saw a cumulative decrease of 38%, or just over 11% per year.  Operation and maintenance costs are only a small part of the overall costs in particular for onshore wind energy.

“Wind power has done much to improve its competitiveness against gas-fired and coal-fired generation in recent years, via lower-cost, more technically advanced turbines, and more sophisticated siting and management of wind farms,” Michael Liebreich, chief executive of Bloomberg New Energy Finance, said in a press release.

“This new O&M Price Index shows that servicing wind farms at the operating stage is also becoming much more cost-efficient,” he added in the 1 November press release.

The announcement said the average price for full-service O&M offerings for onshore wind farms (including scheduled and unscheduled maintenance works and component replacement) fell to €19,200 per MW annually in 2012, from €30,900 per MW in 2008.

For the first issue of its O&M Price Index, which will be updated twice a year, BNEF analysed confidential contract data from 38 major developers and service providers. The data covered 104 confidential and undisclosed O&M contracts, totalling 5.3GW of contracted capacity, in more than 24 markets. In all cases the service providers are the turbine manufacturers, with a main focus in Europe and the Americas.

Noting that the operational performance and efficiency of wind assets has become increasingly important for wind project owners and investors, BNEF said better planning of O&M works and more efficient spare-part management can reduce unplanned downtime while improving output and generators’ margins.

BNEF added that O&M services have become an increasingly important revenue stream for manufacturers as the installed base of turbines has grown, and particularly during the industry’s current slowdown.

“The decline in O&M prices was driven by increased competition, as turbine manufacturers vie for service contracts, as well as by improved service performance of the underlying turbines,” BNEF added.

The analysis found that average contract duration has risen from 4.5 years in 2008 to 6.9 years in 2012, as manufacturers attempt to lock in longer-term agreements.

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