A huge effort is under way to make the next generation of offshore wind farms more profitable than those that have gone before. And with the potential for 40 GW of wind turbines to be deployed off Europe's shores alone in the next 10 years, a great deal of attention is being directed at the design and installation of new wind farms.
But the new generations of offshore wind turbines will also need to operate more reliably than their older onshore counterparts to maximise the energy generation opportunities, as well as reduce maintenance costs. A recent study published by T.A. Cook reveals some significant insights and opportunities.
In the long term it makes sense for there to be a focus on the wind turbine - and wind farm - design, in order to improve reliability. But this misses a critical issue: what does the industry need to do to improve existing wind farms, or those under construction? And is changing a turbine design the only improvement that can work in practice?
Operations and maintenance (O&M) is the elephant in the room for the offshore wind industry. But at a major event - such as EWEA 2011 - only one session of 39 looked at this crucial topic; and this focused on the design of turbines, and how that could impact on maintenance.
But what about operational strategies to improve maintenance activity? Sharing experiences of what works and what doesn't in practice? No discussion at all, seemingly.
In part, this is because data is hard to come by. In its publication The Economics of Wind Energy, the European Wind Energy Association (EWEA) admits that its own calculations of the O&M costs for offshore wind farms are “subject to considerable uncertainty”.
So what is the scale of the problem with operational expenditure at the moment and what underlies it? And will it be enough to simply redesign the wind turbines?
Issues that affect costs
While the Operating Expenditure (OPEX) for onshore wind energy stands at around €12 per MWh of energy generated, at sea it is around €15 to €18 per MWh. In itself this does not appear to be a critical difference. However, onshore a wind turbine is typically expected to operate at full production capacity for around 2,500 hours per year, while at sea 4,000 full load hours is a more typical figure. So in a hypothetical situation where a turbine onshore generates 100 MWh at a cost of €1200, the same turbine offshore would cost €2400 to €2880 to run and generate 160 MWh.
Put another way, it would cost twice as much without generating double the income; given that the cost to install the wind farm in the first place is several multiples of that for an onshore installation - costs which all need to be recouped before the project becomes profitable. Therefore it is no surprise that the operating cost has a crucial impact on payback times.
Today, most offshore wind farms are accessed by boat, with maintenance engineers stepping off the boat onto a landing point or ladder. This is only safe to do in relatively calm weather. Figures from existing offshore wind farms show a very mixed range of accessibility, varying quite significantly from year to year at the same site. However, today's wind farms can be inaccessible for 30% to 50% of the year. Anecdotal evidence from wind farm operators suggests that occasionally a wind turbine can be stopped for anything up to a month, because a half-hour repair cannot be safely carried out.
A further issue comes with the increasing size of offshore wind turbines. These are appealing to wind farm owners, as the same amount of energy can be generated from fewer turbines, lowering build and installation costs. However, the ability to avert or respond to failures becomes that much more pressing.
In a 120 MW wind farm composed of 2 MW wind turbines (such as the Prinses Amalia wind farm), a situation where a single turbine is irreparable for a month would cut the overall farm's energy production (and revenue) by 1.7% for the month. If the same farm was composed of 5 MW wind turbines, a similar failure would cut production by 4.2%.
As a result of factors such as these, existing offshore wind farms' annual OPEX ranges between 2% and 4.5% of Capital Expenditure (CAPEX). At these levels, over a 20-year period the OPEX can add up to almost as much as the initial investment.
With the 300 MW Thanet wind farm costing an estimated £900 million to build, no wonder that wind farm operators are aiming towards the lower OPEX total – or less, if possible.
Cost reduction measures in O&M
So what can be done to reduce the cost of maintenance? There are a number of different approaches being developed in parallel, in order to reduce the number, cost or extent of failures:
- Improving preventive and predictive maintenance to reduce failure rates. At present the majority of maintenance on a wind farm is conducted as a reaction to a failure. But given a better understanding of the state of the turbine - and forewarning of failures - the operator would be able to judge what the most cost-effective response would be; either to nip the problem in the bud with preventive maintenance, or have spares on hand for when the failure occurred;
- Changing the turbines themselves to reduce the maintenance demands at the wind farm. This is a much-discussed option where a significant amount of R&D is taking place, not least because builders of more reliable wind turbines will have a competitive advantage in a burgeoning market;
- Improving access to the wind farm for better maintenance response. Work is being done to develop new forms of transportation and methods to transfer engineers to the wind turbines, but as yet nothing compelling has reached the market;
- Enabling automatic, on-turbine responses to failures to minimise the need for travel. This is very much in its early stages as a concept, but at its most basic level there are useful opportunities that can be realised here;
- Reducing the commercial impact of failures through warranties, insurance and compensatory clauses in maintenance contracts. Not surprisingly, this is very popular as a method to transfer business risks. Turbine vendors have typically offered a warranty period, in which the vendor also maintains the wind farm to a given level of performance, or else is penalised;
- Increasing the capabilities and responsiveness of the maintenance organisation.
This last alternative has not received a great deal of debate to date, for a variety of reasons. Firstly, in some cases the wind farm operator does not control the maintenance organisation – the wind farms are under warranty and rely upon the turbine vendor to conduct most or all of the maintenance and its management.
Second, there are frequently questions relating to the data ownership and sensitivity of information on O&M. And while wind farm operators may view sharing certain information as a benefit to the industry, turbine vendors view operating data on their turbines as a competitive issue.
Wind farms operate under a wide variety of contracts, in some of which the data provided to the owner is relatively small in comparison to what the vendor receives, while in others the vendor retains a strong influence on how that data is used.
As a result, what seems like a simple option for making improvements – experience sharing – becomes a complex negotiation. This means in practice it is largely bypassed in favour of making improvements to technology, which do not need to rely directly on specific operational data.
But the impact of learning effects in practice can be significant. In the case of the Middelgrunden offshore wind farm, for example, many of the turbine's transformers have had to be replaced. The first transformer replacement took two weeks, but towards the end of the series the time taken was reduced to three days – just 21% of the initial time taken - drastically reducing the transport and manpower costs involved, and making the repair possible in much smaller weather windows.
By pooling the techniques learnt from such experiences the industry has the opportunity to make significant savings, and apply them to current as well as future offshore wind farms.
While the industry must respect the right of turbine vendors to maintain their competitive differentiation, there is certainly scope for a greater pooling of experience directly between wind farm owners. The telecommunications industry offers a number of models that work well, where a balance is struck between collaboration and competition.
Industry bodies will involve equipment vendors and telecoms operators to develop best practices, operating standards and standard interfaces.
While this requires a certain degree of openness to establish, vendors then have a framework in which to develop their own intellectual property and improvements to standard procedures, secure in the knowledge that their product will interoperate with any telecoms provider's equipment. This effectively opens up the entire market to the vendor while giving the telecoms providers a chance to select their choice of vendor, based on considerations of price and performance.
In the case of the offshore wind industry, an equivalent setup could see turbine vendors competing on reliability, cost and failure prediction, while openly collaborating to improve the techniques involved in operating the wind farm day-to-day. This would help reduce the cost of operations in the short term, enabling wind farms to be more profitable and become a better investment opportunity.
It would also reduce the costs for the turbine vendor during the warranty period, allowing them to charge less for this service and generate more profit. Essentially, by controlling a smaller portion of the industry they would enable it to grow faster and stronger – to their advantage.
KPMG's report Offshore wind in Europe 2010 underlined the financial bottlenecks facing the offshore wind industry at present. While there is a strong push towards offshore wind from Governments around Europe, investors face considerable concerns when supporting such ventures. Part of this is the question of liquidity of assets at present, but the other part of the equation is their low appetite for risk. Given the massive up-front costs of wind farm projects and the uncertain OPEX, the offshore wind industry needs to be seen to be mitigating risk and maximising returns wherever possible.
Today, while there are many projects under way to improve technologies or material solutions, they tend to be fairly disparate and uncoordinated.
An industry O&M organisation led by wind farm owners, developers and turbine manufacturers could act as a central focus to coordinate these activities, share appropriate information, and demonstrate to financial markets that investment is a less risky option than it first appears.
Alex Lawrence is a Research Analyst with TA Cook Research & Studies, specialists in maintenance and asset management research. He conducted research for the “Offshore Wind Farm O&M: Costs, Benchmarks & Best Practices” study throughout 2010.
Renewable Energy Focus, Volume 12, Issue 2, March-April 2011, Pages 32, 34-35