Wind Energy Update Report V4 PDF

Wind Operations and
Maintenance in 2014:
Navigating New Challenges and
Sharing Operational Experience
FC Business Intelligence
Written by: Ben Schiller
Compiled by: Wind Energy Update
Contributions from:
Hans Owens, Vice President, Operations,
Catherine Helleux, Vice President, Energy
Structured Finance Unit,
John Coultate, Head of R&D and
Consultancy Department,
David Clark, Condition Monitoring Expert,
Wind Energy Operations
& Maintenance Usa
Industry Leaders Thoughts
In Association with
The 6th Wind O&M Summit
(15-16, Dallas) for complete
event details visit the website:

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operations-maintenance-usa/
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WEUREPORT when you register
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At the time of writing mid-January 2014 the US Congress is yet to
renew the Production Tax Credit, a key incentive for the wind industry.
With the deadline looming in late-2013, wind developers rushed to get
projects underway in order to take advantage of the subsidy, which
is worth $23 per megawatt hour, or a total of $2 billion a year. But, as
2014 got underway, many observers were expecting a slowdown to
start. Wind is suddenly not the investment it was, though a host of state
incentives remain and utilities are likely to still fund projects from their
own balance sheets. The watchword in the industry was uncertainty
as in too much of it.
Should the pace of new projects slacken, that is likely to put more
pressure on the industry to maximize what it has. That is, the emphasis
will move from putting in new towers to maintaining existing eets.
And, in fact, the unreliability of the PTC isnt the only reason for
that. Many wind-farms are aging in any case, naturally raising the
importance of O&M. Theres a general sense that maintenance costs
are too high, because of a lack of proactive maintenance programs.
And, many sites that emerged in the late 2000s are now coming out
of warranty, placing the onus on operators to pay more attention to
performance, rather than relying on manufacturers to x problems. If
the industry is going to continue to compete with natural gas (which
remains plentiful), nuclear and coal, O&M may be the thing that makes
the diference. It could certainly be the thing that sorts out the best
operators from those that havent noticed the shifting currents.
Greater emphasis on O&M should be good news for service providers,
those companies ofering condition-monitoring, retrots and data
analysis. IHS Emerging Energy Research sees the service market
doubling in size by 2025, from $3 billion now, to $6 billion. IHS EER
expects that, despite declines in unit-level costs, overall annual spend
on O&M will increase at a 5.5% compound annual growth rate (CAGR)
as installed onshore wind capacity in the US grows from 47,078 MW at
year-end 2011 to 127,510 MW by year-end 2025, it has said.
Exactly what the future holds is hard to fathom, however. And probably
it will mean diferent things to diferent people. Theres a lot of variety
in the age of turbines in the US, from a raft of 1980s-era towers in
California, to the massive new elds in states like Texas and Kansas.
Each company has to make decisions based on its own circumstances,
while understanding the broad trends.
This years Wind Energy Operations & Maintenance Summit will take
place in Dallas in April, and will bring together all sides of the wind
community to discuss a variety of pressing issues. Ahead of the event,
we asked four speakers to give their views on O&M topics. Were
grateful for their participation.
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The speakers are 4 Key Industry Thought Leaders from Across the
O&M Industry::
Hans Owens, is vice president of operations at Ingen,
a leading operator with equity stakes in 18 US wind
farms. Owens has more than 30 years experience in the
energy industry across wind, thermal and solar power
generation. He previously held management roles
at BP Alternative Energy, Calpine, Shell and Enron, and has a BS in
mechanical engineering from Mississippi State University.
Catherine Helleux is vice president of Socit
Gnrales Energy Structured Finance unit, in
New York. She joined the banks Project Finance
Group in 2004, and has nanced dozens of projects in infrastructure,
conventional power and renewables in both Latin America and North
America.
John Coultate, based in the United Kingdom,is
leader of Romax Technologys R&D and
consultancy department. Romax is a drivetrain
specialist, with 350 clients around the world, including many in the
wind energy industry.
David Clark, a condition monitoring expert with
Bachmann Electronics, which supplies controllers
for roughly half the worlds turbines. Hes been
involved with condition monitoring for wind since 1999, and has
participated in several large recent projects in the US. He is also
condition monitoring editor for Windpower Engineering magazine.
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Catherine Helleux: Historically, Congress has renewed PTCs as they
expired or were about to expire. Usually, these renewals were under
the same conditions, or with slight changes to rules on eligibility.
Unfortunately, the renewal often comes in a last minute manner,
resulting in a slow-down of activity at the manufacturer and developers
levels, with lay-ofs and dwindling backlogs as a result.
By the time of the conference, in April, we hope the legislation has
been renewed, and that the market starts picking up again.
Because of the ve percent rule, projects had to start construction
before the end of last year, to qualify for PTCs, and we have been seeing
a rush before the December 31, 2013 deadline. For each deal we closed
in 2013, we paid attention to whether each would qualify for the PTC,
under the 5% start of construction constraint and the continuity test.
So again, until the PTCs are renewed, we expect a slowdown in new
development and new constructions. But not necessarily a slow-down
in nancing activities. Because banks are still organising nancing for
projects that already qualied, there are still wind farms that are eligible
for PTCs and that will seek nancing in 2014.
PTCs are key nancial drivers for wind projects. Tax equity (TE)
investors are now going to exit the market, at least momentarily. The TE
market is structurally up and down anyway, as one needs tax inventive
on one side and tax capacity on the other. So, if Congress were not
to renew, then there would be a real slowdown once all the wind
farms that have already qualied have been nanced. Without PTCs,
independent developers and utilities would need to focus on projects
that are economically attractive on a stand-alone basis.
The way we integrate the O&M risk and exposure in project nancing is
to assess such exposure when we model the cash ows for repayment
of our loan. We look at the expected O&M xed and variable fee, the
guaranteed performance level in the O&M agreement, and the penalties
and bonus in relation to the guaranty. We also look at the O&M reserve
and typically we want a six month reserve for this just in case.
Sometimes, we also require setting aside another reserve for major
overhauls, typically occurring every ve years the major maintenance
reserve. Its integrated into the nancing, so the operator and developer
are prepared if theres a sudden increase in O&M expenses.
Of course, we also look at the quality of the operator as well. The
number of megawatts they have under maintenance in their portfolio
is a good criterion for quality. And, we would look at the history,
FUNDING
How has the uncertainty
with the renewal of the
Production Tax Credit
afected the funding
environment for wind?
& Maintenance Usa
certication, eet performance, and site suitability of the specic
turbine and transformers they are using.
Hans Owens: PTC uncertainty has historically afected the funding
environment for wind. We have seen dramatic expansion of wind
capacity in years when the PTC is available to developers. If the
government delays extending the PTC, as happened at the end of 2013,
companies delay development activities and shut down production of
turbines or other manufacturing that supports the broader domestic
wind industry. Most of the current development activity is related to the
PTC that recently expired and without an extension, we expect wind
installations to decline sharply in the coming years. But our company is
slightly insulated because were not currently building wind farms.
John Coultate: We ofer solutions for monitoring and for managing
problems. For example, weve worked with lots of companies that have
had main-bearing problems on their turbines. Failures do happen. The
question is you manage that failure. Depending on how you do it, you
can save a lot of money.
We estimate that a third of the cost of the energy generated at a site is
operational expenditure. Out of that, three-quarters of that is the O&M.
Its a huge part of the cost. Companies will typically have a lot of budget
set aside. But they wont always have money for failures that happen.
REDUCING DOWNTIME
What are the best ways to
optimize production and
reduce downtime?
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One thing they can do is to plan maintenance better. Its not just about
taking an of-the-shelf monitoring system and plugging it in and
seeing a big return on investment. You also need to plan maintenance
intelligently based on what the system tells you.
Wind turbines have one or two main-bearings, typically. They support
the weight of the rotor loads. If the main-bearing fails, often you
have to remove the whole turbine. That means ordering a crane at a
signicant cost. Its not just the downtime. For a typical US onshore
2MW turbine, the cost of a crane could be as much as $150,000,
including mobilisation and de-mobilisation fees.
Then, you have the cost of the replacement parts, the engineering
labour, and shipping, which could double the overall cost again. Plus,
you have the downtime. In the worst case, you could lose 90 days for a
failure, once youve waited for the crane and spare parts. The total cost
of one machine failure could be $325,000. Then, imagine if an operator
has a eet of 200 turbines. If they are just reacting to each failure, the
cost could be huge.
But, if you are planning maintenance more intelligently, you can save a
good deal. That means having a monitoring system, so you have lead-
time before a failure happens. Ideally, you want to extend the life of the
equipment during peak periods, then schedule downtime during the
slower season. Then you want to do maintenance on multiple turbines
at the same time.
For example, you could try and do all main-bearing changes for a year
or two within one period. That means youre scheduling one crane,
youre minimizing downtime during high periods, and youre extending
life as much as you can. We estimate these strategies could reduce
costs related to main-bearing changes by 40 percent.
A lot of operators arent very good at predicting costs. A lot of companies
are in re-ghting mode. Theyre not managing these problems
proactively and their downtime costs are high. What we do is move to a
managed service for monitoring, extending the life of the bearing, and
conducting failure investigations so we know whats happening.
David Clark: Theres been a shift recently. Before it was lets plant
more wind turbines in the ground and lets not worry about the ones
that we have. All of a sudden, with the threat of the PTC going away,
theres been a switch to how do we maintain what we already have.
The rst major installation of wind turbines in the US was in Northern
California, not far where I am now. Back in the late-80s, the tax credit
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was for every wind turbine you installed. They didnt even have to be
functioning. So, a lot of machines went in without any planning at all.
Thats why they put the P in Production Tax Credit. Lawmakers said
well, we need to make sure these things are running.
But, even then, everything was under warranty, and there wasnt a lot
of failures. Now, three, four, ve years down the road, the majority of
towers are coming out of that. And theres been a shift to maintenance.
Thats where condition monitoring comes into play.
You would be hard-pressed to nd an industry in North America, be it
steel mills or mining, that doesnt use condition monitoring. Most of
have been doing it for 40 years. With wind, however, there are still so
many people getting it wrong. Manufacturers arent really motivated to
give clients better information, and Ive seen a range responses from
the operators. Some have decided to sell their towers, others are trying
to ne-tune to get more out of them. And then Ive seen others, where
the operational costs are just so ridiculously high, that they really dont
know what to do.
There are about 14 owners in the United States that own 95 percent of
the wind turbines. They all have a very varied approach to maintenance.
But none of them is really doing best practice. There are very few
companies doing condition monitoring for their entire eet.
There are three ways to run these assets. One is to wait until something
breaks, which is the most expensive way. The second is to replace
things every few years, whether they need replacing or not. The third
way is to predict maintenance, and thats what condition monitoring
does. You have sensors on the drivetrain that tell you when it is going
to fail.
The ideal time to change a gearbox is out of windy season, and then
to do other gearboxes on site that are also failing. When you do that,
it afects several parts of the organisation. It impacts your purchasing.
Youre not making last minute buys and trying to expedite parts. You
know exactly what you need to keep in stock, and what you need
to order. It impacts maintenance and labour costs, because youre
not paying for overtime on a Friday to have a crew of guys on-site. It
impacts due diligence when youre selling a site, and impacts the ability
of someone to nance that site. They can know the viability of the
turbines.
We monitor 2,100 turbines from 24 manufacturers right now. Theyre
various vintages, various sizes. Half the failures are in the gearboxes,
half are in the generators. If you catch a high-speed gearbox early
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enough, its an up-tower repair. If its not caught, its a crane call-
out, which costs about $300,000, once you include downtime and
mobilisation in most of the United States. If you see a problem ve to
seven months in advance, by contrast, crews can go up the tower and
its only $12,000.
Hans Owens: Our number one priority is safety. After that, we need to
make sure we have enough parts and qualied people to maintain the
plant. As the equipment ages, you go through cycles of maintenance.
Maintenance is not the same every year. There is always a question of
how many people you need so we are constantly reviewing stafng. Ten
turbines per technician is a benchmark for us, but this is dependent on
the technology and the size of the wind farm.
Data is a critical aspect of our business. We collect SCADA information
from ve diferent turbine technologies and perform a variety of
analytics using a data historian. We do have an engineering group that
analyzes data from our SCADA systems. This group uses the data to
evaluate production curves, wind resource and fault data that increase
production and identies risks that can lead to equipment failures and
downtime.
A key part of our strategy is to keep up with the planned maintenance
and identify corrections we can make while we are up in the turbine.
Integrity management of the turbines and BOP is key. We want to
assure all systems are in good working order at all times and that all
safety systems are working. We also want to respect the way systems
are designed and not change the design in the eld without approval
from a competent person.
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John Coultate: The design life of a turbine is typically 20 years. Towards
the end of life, you need to be doing very detailed analysis to understand
the condition of the machine. Weve done work to re-rate turbines. If
you want to extend the life, there is scope to de-rate. But then you need
to understand the nancial trade-of from damaging the machine versus
the revenue you get from the machine, versus the cost of maintenance.
We havent done that for turbines beyond 20 years. But we have done
that for machines within the 20 years that have had problems.
Hans Owens: We are not at that point right now. The typical age
of our portfolio is seven years. We regularly evaluate proposals to
increase the output of our turbines. This includes software upgrades,
blade enhancements or maintenance activities. Blade maintenance
and modication to the airfoils have shown promise in increasing the
life and production capability of our existing turbines. We did look at
re-powering for one project with older technology. The challenge is
mainly related to a lack of of-take markets that would justify upgrading
the technology.
David Clark: A condition monitoring system soon pays for itself. You
catch one gearbox on a site of 50 towers, and that pays for condition
monitoring for the whole site. In other industries, its seen as a no-
brainer.
One reason its not on more towers is that manufacturers want to get
through the warranty as quickly possible. They dont want to have
to deal with warranty claims, and, in some cases, they dont want
people to know the equipment isnt good. There was one notorious
case where 100 turbines were installed, and conditioning monitoring
revealed that 16 of those were faulty. You can see why a manufacturer
wouldnt want that information to get out.
The other reason we havent seen more condition monitoring is that
its difcult to come up with money after-the-fact. Youve funded the
site, youre installing the towers, and now you have to come up with
additional capital. That can be difcult.
John Coultate: Most manufacturers provide a three or ve year
warranty. During that period, the operator doesnt have to do very
much. Or, at least, the risk of failure isnt very high. After the warranty
period ends, the operator has all the risk. Towards the end of the
period, they need to understand the condition of the machine exactly.
Its a bit like if you were buying a second-hand car. You want to know
that the car is okay, because youre suddenly taking on all the risk of
POST WARRANTY
An estimated 73 percent of
wind plants will come out of
their warranty period in the
next three years. How does
that afect relationships
between manufacturers,
service providers and
operators?
ASSET EXTENSION
What are the most cost-
efective ways to maximize
energy output for a project
nearing end of life?
& Maintenance Usa
that vehicle blowing up. It makes sense sometimes to pay a mechanic
to come out and look at the car before you buy it, because you want to
make its going to run as it should.
The operator will go through a whole process to manage that hand-
over when the warranty ends. We get involved in several ways, in
particular with inspections of drivetrains. We might tell operators to get
the manufacturer involved before they hand it over. That in itself can be
hugely valuable.
These days, operators have a lot more awareness of what they need to
do during the end-of-warranty period. Now, they make sure they have
more data from the site. More operators understand the history of their
sites and theyre better armed when they sit down with manufacturers
at the end of the warranty.
We now monitor over 2GW of assets globally, and an increasing amount
of those are for turbines that are still under warranty. In the past, we
might have gotten involved later in the turbines life. Now, we get
involved earlier, so operators can build up their knowledge. That makes
the end-of-warranty process easier to handle. They understand the risks
and work out what needs to be done before the warranty ends.
Hans Owens: The relationship is not afected at all if warranty
agreements are extended. But if not, you still need to have a good
relationship with your equipment manufacturer. Both parties need to
make sure this happens. Its in both parties best interest. The evaluation
of not extending warranty agreements should start two to three years
ahead in order to be prepared. Training, parts and infrastructure are key.
David Clark: The rst emerging technology that comes to mind is
blade condition monitoring. So far, nobody has come up with a system
that addresses all the failures you might have, from lightning strikes to
icing. There are no commercial systems right now that address all these
issues. The best Ive seen is from Bajou Engineering, from Southern
California. Its now in the process of selling its patent, and I think that
will be the next phase.
The other thing I see coming along is the integration of condition
monitoring along with SCADA data. Its not SCADA data mining or
condition monitoring, its more like performance monitoring. Its
ne-tuning the tower to optimise operation. With some controllers,
you cant manipulate certain operational parameters. That brings
additional load to the drivetrain and a loss of efciency and reliability.
For example, if the wind is coming from two oclock and your turbine
TECHNOLOGY
What technologies are
you using right now for
operations & maintenance?
What are the best on the
market?
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is at seven oclock, youre losing efciency. If you could manipulate the
turbine, that would produce additional generation. Its like having your
car tires straight or out of line with the road.
The third thing is controller retrots. Weve got tens of thousands of
controllers in North America, and some of them have issues that are
hard to x. Ive talked to some owners who say it could make sense to
completely replace the controller, and I think well begin to see that in
the next ve years.
John Coultate: Wind farms produce a lot of information. The
problem is, it tends to exist in diferent silos. So, youve got condition-
monitoring data, data from the high-level control (SCADA) system,
inspection data and maintenance data. All these things exist on
separate systems, and the complexity grows when operators have
diferent wind-farms and diferent types of turbine. Its difcult to put
them all together and come to a judgement about the condition of the
turbines and then to decide what to do. A hot topic at the moment is
how to bring all this information together and analyse it. Its only by
doing that that you can begin to plan maintenance intelligently and
begin to see cost savings.
The thing on the horizon is that wind operators are beginning to learn
from other industries. Aerospace companies plan maintenance based
on models, such usage models or remaining-useful-life models. They
will plan inspections based, say, so many ight hours, or so many take-
ofs and landings. Were now seeing more of that in the wind industry.
For example, were now working with E.ON on that.
Hans Owens: We do not have third-party condition monitoring
installed on all our turbines.
The core to managing technology is our engineering department,
which we started three years ago. They evaluate production data,
produce monthly reports on the health of the eet and identify issues.
Were learning that the components are not always lasting as long as
they should. So, instead of buying the cheapest components, we are
trying to nd components that will last longer. We conduct a net-
present-value analysis to make the right decision. This is one of our
processes. We place emphasis on being a process-driven company.
& Maintenance Usa
The last few years has seen tremendous growth in the USs onshore
wind capacity. There are now about 60,000 MW installed across the
country. However, the potential end to the PTC could derail that
growth, ending the ability of the industry to undercut generation prices
achieved by nuclear, natural gas and coal. At the same time, the aging
of the installed base is likely to lead to a natural drop in performance,
and more work for operators looking to maintain hoped-for levels.
All which is likely to place greater onus on operations & maintenance,
including new sensors and data collection capacity that allows for
earlier and more informed decision-making. The two service provider
representatives interviewed here, David Clark, of Bachmann, and John
Coultate, of Romax, make a persuasive case for new systems-thinking,
even if the initial investments seem steep. Meanwhile, Hans Owenss
comments show the importance of building in-house engineering
capacity as well.
O&M may not be the sexy side of wind generation. But it will be
where the money is; in the future, the onus will be on maintaining
and maximising the existing eet, rather than simply nancing and
commissioning new plants. The best-run companies will dene
themselves by their O&M expertise and foresight. The less good
companies will be O&M laggards, caught in a diferent era of the wind
industrys development.
This paper was written in Association with the 6th Annual Wind
O&M Summit that will take place in Dallas on 15th-16th April 2013:
Enhance Performance, Extend Asset Lifetime
and Minimize your Risk on O&M Expenditure
This high level summit is purpose built to bring together Operators,
Developers, OEMs, ISPs, Service Providers and Industry Specialists
to get a handle on the latest developments in O&M. With all the
contributors here conrmed to attend, plus 350 decision makers from
across the industry, this is set to be the number one O&M meeting for
business and networking in 2014.
END NOTE
Save $100 with this paper, just quote WEUREPORT when you
register on the website at
www.windenergyupdate.com/operations-maintenance-usa/
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WHAT IS NEW FOR THE 2014 O&M SUMMIT?
New Perspectives: Financial Wall Street Panel, Insurance Insight, International Panel Session, Policy
Panel and Post PTC Guidance
8 out of the 10 top operators: meet and learn from the industrys leading stakeholders including; EDF,
E.ON, NextEra, Iberdrola, EDP Renewables, Duke Energy, Ingen, First Wind and AES
Complete technical day with 3 workshops: Blade maintenance (preventative work and implementing
standards from the onset), Gearbox maintenance (how operations can prevent gearbox failures, up-
tower preventative repairs and decision making process) Live Training Demo Session (electrical safety
and training for transformers)
Life extension and cost reduction case studies: Learn how to implement new technologies and latest
R&D studies for maximum asset efciency
KEY TOPICS TO BE DISCUSSED AT THE O&M SUMMIT 2014:
Reducing Cost of Operational Maintenance: Smart O+M expenditure to efectively manage your supply
chain and increase your ROI
Optimizing Production: Technologies and software to enhance operations and meet industry energy
projections
Main Component Strategy: Discover strategies and new technologies to reduce failures on blades,
generators and gearboxes
Retrotting and Asset Life Extension: Performance enhancing retrots and cost efective measures to
ensure asset lifetime is extended
Data Gathering and Analysis: Explore how CMS and SCADA Data can be used to optimize operations
Strategic Solutions for Post Warranty Management: Understand the best approach to O+M for your wind
farm
Check out some of the top companies that have attended previously and will be back again in 2014:

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