GE introduces production-based O&M agreement for wind energy

GE (NYSE: GE) introduced a new concept in operations and maintenance (O&M) agreements called "Production-Based O&M."

Generally, wind O&M contracts have provided an availability guarantee measured from time-based availability of wind turbines. In 2011, GE moved from time-based availability to a production-based availability guarantee structure with the goal of maximizing production for customers.

Production-based O&M agreements incorporate both a fixed and variable fee. The variable portion is based directly on wind farm production relative to a megawatt-hour target agreed upon by GE and the customer. The total cost of the O&M agreement, not just the availability bonus, is now based on production. The agreement is made to reduce upfront costs to customers, balance the risk between owner and service provider, promote a “run it like we own it” approach towards service, and tie into GE’s annual energy productions enhancement initiatives.

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