Wind Industry Growing Pains
Wind turbine technology has become a fully commercial venture, but the recent rapid growth of the wind industry has strained its supply chain to meet demand in a timely manner. Furthermore, unexpected component failures, especially electronic controls, gearboxes, generators, and rotor blades, have driven up Operations & Maintenance (O&M) costs.
During the course of the research for a new report just published by Wind Energy Update it ultimately became clear that reliable and verifiable data on wind industry O&M cost trends is quite rare. In fact, there are no current widely available data sets illustrating these wind industry O&M costs. Proprietary research, reviews of scarce secondary sources and anecdotal evidence obtained through confidential interviews with wind industry owner/operators and component suppliers suggest that O&M expenses are double or even triple what was originally projected, particularly with the latest class of multi-megawatt machines now permeating the global wind market.
Of course, nearly all machine and electrical components have a certain chance of failure within their design lifetime, and wind turbines are no different. Savvy operators can make problematic turbines look better through innovative in the field O&M strategies, and vice versa. Nonetheless, the wind industry’s promises of delivering cost effective clean renewable energy to combat global climate change is being compromised by higher than expected component failure rates. Gearboxes allegedly designed for a 20-year life are breaking down prematurely across most major manufacturing brands, are failing after only 6 to 8 years of operation.
The key, therefore, to long-term profitability is for the wind industry is reducing O&M risk, whether through superior designs, higher quality manufacturing, smarter component transportation techniques, and more strategic installation and field operations (or most likely, all the above. ) “Just a one percent improvement in O&M makes a huge difference on the bottom line,” said one 30-year veteran of the wind industry. He added, “Improved performance is not free, but you’re still not paying for fuel. O&M is a much better use of capital.”
This same source made the following startling admission: “Engineers are still scratching their heads when it comes to gearboxes. Even though gearboxes are certified to operate for 20 years, none of them on today’s market last more than 8 years. It turns out that designing wind turbines is tougher than rocket science since the humongous stresses on gearboxes goes all the way down to the microscopic level.”
Given the scope of today’s O&M challenges, owner/operators, component suppliers and manufacturers have no incentive to reveal component failure data because the problems are so widespread. Revealing this data will dampen enthusiasm for wind power, which now has widespread public and policy support. Why would anyone want to harm their potential bottom lines? As one large wind turbine fleet manager bluntly stated: “We have the data on O&M costs, but we don’t even share it with the manufacturers. I’ve seen their data, and it is all wrong. The problems are way, way worse than they realize. If you keep a turbine long enough, it will fail.”
The “true costs” of wind industry O&M are also clouded by the fact that the majority of current wind capacity is just now coming out of warranty, so most owner/operators do not have access to data about their own wind projects! On top of that, O&M costs are impacted by specific turbines designs, the nature of site specific wind resources, siting criteria, terrain and existing support infrastructure.
The majority of those interviewed said larger project O&M costs range from 1 to 2.5 cents/kWh, compared to an early estimate by the largest US manufacturer of just .5 cents/kWh. At 2 cents/kWh, O&M costs are roughly equal to the federal production tax credit (PTC) offered in the US as a subsidy to make wind cost-competitive.
A long-term veteran of the wind industry now stationed in Europe, but who was involved with first generation turbines in California in the early ‘80s, made this poignant observation: “O&M at .5 cents/kWh? All of the current figures I’ve seen for O&M don’t reflect long-term reality. Interestingly enough, even at these high O&M cost levels, wind projects can still pencil out, especially in Europe.”
A warning: generalizations and averages are helpful, but O&M challenges are often quite site and project specific, with major differences evident between the U.S. and European markets (as well as Asia and the rest of the world). A turbine may perform adequately in a typical terrestrial regime with a capacity factor of less than 20 percent in a moderate wind regime in Germany, but exhibit extreme fatigue in a hostile cold marine or scalding hot desert environments and operating at a 35 percent capacity. Terrain and wind regimes play a big role in long-term performance, as do siting protocols, availability of adequately trained labour force, and the quality of component manufacturing.
The current economic recession is a much needed pause, allowing the entire wind industry – including its increasingly large and diverse supply chain – to make a mid-course correction and prepare for the next boom in deployments lying just around the corner. The industry can no longer afford uneven component quality, long lead times for component replacements, and the high costs attached to catastrophic wind turbine failures.
The current recession is allowing manufacturers, owners and operators and the supply chain to re-evaluate performance. Now is the time to plan for ways to boost returns on investments by planning ahead and more accurately forecasting O&M costs – and then respond with corresponding strategies, including a greater reliance upon both condition and performance monitoring systems which can alert operators to potential problems ahead of time. The key to reducing O&M liabilities is preventative maintenance substituting for unscheduled maintenance. Here is a list of the primary findings derived from a Wind Energy Update survey conducted for this report:
- The percentage of wind turbines still under warranty during the time of Wind Energy Update survey was 79 percent. Due to this fact, most owner/operators don’t even know what their exact O&M costs are. Due to the unexpected high failure rates of major components with the most recent class of multi-MW turbines, OEM’s have no motive to share their failure rate data with owner/operators, let alone researchers trying to publicize these facts.
- O&M costs for wind power are far higher than originally projected, particularly in the U.S., now the world’s largest wind power market.
- Europe’s emphasis on preventative rather than reactive maintenance results in overall lower O&M costs than the U.S.: a 2 to 5 percent advantage if resource factors are accounted for.
- According to this Wind Energy Update survey, the percent change in wind farm return on investment was -21 percent with a standard deviation of 13 percent. This underperformance of wind assets is most likely attributed to both differences in power production and O&M costs over original estimates.
- The same surveys showed that the percentage of total wind initial project costs invested in O&M was 3 percent with a standard deviation of 3 percent. Many project owner/operators had originally estimated O&M at 1 percent of initial project costs.
- Finally, the average values of O&M costs obtained from surveys were $0.027/kWh. This compares to early estimates by one of the world’s dominant turbine suppliers of $.005/kWh.
The report also chronicles O&M success stories by General Electric, NextEraEnergy, Suzlon, Clipper Wind, Enercon and Nordic Windpower.