The sobering challenge of how to keep America's growing number of massive wind power stations running profitably for years to come is exercising the minds of both owners and operations and maintenance experts. Long term costs are a relative unknown and in a market where the industry cannot acquire components to meet demand for new turbines, supply of the same components to replace worn out or broken parts in old turbines is just as constrained. Original equipment manufacturers (OEMs) of turbines may be part of the solution or part of the problem, said experts speaking at the American wind industry's annual conference in Houston last month.
"What really makes it tough for the wind business is that the bulk of the asset goes in up front, taking away the uncertainty of the repair cost," said Uwe Roeper from Ortech Consulting Inc. Most projects being deployed today are not fully accounting for repair costs and are assuming a fixed amount over the lifecycle that may be lower than in practice, especially if supply of parts is constrained and delays in shipments are longer than expected.
Overall operation and maintenance (O&M) costs are generally very small compared to the capital costs that are financed up front, but get them wrong and it can be a disaster. "It's a problem because it carries on for the life of the project and it's slowly going to erode the economics of the project," said Roeper.
Warranties supplied by OEMs are typically short in duration, commonly two years, leaving all the risk on the owner/operators. "I won't risk myself with a number...but half of the installed base that is going to be there at the end of 2008 is already halfway out of warranty," said Philippe Kavafyan, Services Product Line Leader, GE Energy. "These are assets that need to run 20 years for investment to be successful."
A critical part of keeping the assets running is in bringing up to speed more skilled O&M workers to service the machines. But this has been a challenge for the wind industry in America and beyond. "It's difficult to imagine a training program for an army of technicians -- literally thousands of them. We are not going to be able to train a full level of skills for everyone," said Kavafyan.
One inherent hurdle is that the ideal O&M technician would have the broad skill set and knowledge base to climb up and throughout a turbine and shift seamlessly between simple mechanical tasks to more complicated power electronics or troubleshooting that often require years of experience and specialised training. "We're not going to have PhDs climbing towers. Maybe they would, but maybe that would take too long," joked Kavafyan.
GE's solution, he says, is the implementation of regional service centres that tie the local, responsive skills of O&M workers -- either staff from the project owner/operator or a third party -- to the more specialised expertise of staff from an OEM that is likely to have deeper knowledge and trouble-shooting expertise. The imagined centres would rely on the OEM's established supply chain to ensure availability of replacement parts.
An interesting idea, said Roeper, but it might not result in lower costs. "At the moment, you have major turbine manufacturers vertically integrating and buying up everybody below in the supply chain. Because at the moment there is a lot of money to be made from those subs and controlling the parts supply," said Roeper. He added that some OEMs use contracts with their sub-component suppliers that restrict them from making parts for anyone else other than the captive manufacturer. "There are parts manufacturers that would love to sell you parts but can't because of these contracts," he said.
What is not being said so publicly is that these strategies are designed partly to prevent a competitive third party parts supply market from emerging in the wind power industry, according to Roeper. Not only would that industry have to design spare parts that are high quality and fit machines in the field, but it would also have to avoid infringing any patents from the OEM and its dedicated parts suppliers.
Third party suppliers
Roeper said the North American automotive industry went through a similar phase when many decades ago it owned all the parts supply companies. Then a third-party market emerged and began to produce parts that were just as good -- and often better -- than those provided by OEMs. The automotive industry since then spun off all its subcomponent suppliers while the wind power industry has done exactly the reverse. "At the moment, you're lucky to get parts for the machine you bought, never mind from a third party parts market. That is certainly coming, but it will take some time," said Roeper.