A report from IHS Emerging Energy Research (IHS EER, NYSE: IHS) says yearly expenditures for operations and maintenance (O&M) services in the U.S. wind industry are expected to double from just under $3 billion in 2012 to nearly $6 billion in 2025.
The report, "U.S. Wind O&M Strategies: 2012-2025", also says O&M’s share of annual U.S. wind is expected to increase from 12 percent to 29 percent between 2012 and 2025.
“Despite declines in unit-level costs due to anticipated efficiencies, operations and maintenance spending is only set to increase as the U.S. wind fleet grows and ages,” said Matt Kaplan, associate director of IHS EER’s North American Wind Energy Advisory program. “O&M strategies are increasingly vital to improving the operational performance and bottom line of a wind owner’s collective investment.”
The report predicts overall annual spend on O&M to increase at a 5.5 percent compound annual growth rate as U.S. installed wind capacity grows from 47 GW at year-end 2011 to more than 127 GW by year-end 2025. The growth of spending is expected to make the market for those services more competitive.
Larger wind owners are planning to bring more aspects of O&M in-house to leverage economies of scale, while original equipment manufacturers (OEMs) are expanding the O&M side of their businesses due to expectations that the pace of new turbine orders will decline.
Production-based availability contracts—which tie O&M compensation to project output—are becoming more prevalent and are anticipated to begin replacing traditional uptime availability guarantees. OEMs and some independent service providers (ISPs) are also developing new tools to enhance the production of previously installed turbines as a means of differentiating their offering.
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