Renewable Energy and Related Services: Recent Developments

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Renewable Energy and Related Services: Recent Developments ( renewable-energy-and-related-services-recent-developments )

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accordingly.57 Additionally, the longer duration of service contracts provided by the OEM is an increasingly frequent condition of financing by lenders.58 As a result, O&M services account for a significant share of some OEM’s overall business; for instance, O&M reportedly accounts for 15 to 20 percent of global business for Vestas.59 On the demand side, the primary factor influencing the U.S. O&M market has been the growing focus among leading project owners and operators on maintaining existing assets,60 rather than developing new projects.61 Demand for O&M services is largely dependent on the age of equipment, and there is a growing need for services as many turbines come off warranty and are up for new service agreements.62 Likely due to the aging of wind assets, a growing trend in O&M services has been a shift away from corrective and scheduled maintenance toward predictive and preventive maintenance, as owners and operators seek to avoid costly turbine failures and minimize time offline.63 As a result, a growing number of O&M service providers offer remote monitoring services. U.S. Industry Trends Wind energy services are typically provided by either OEMs or ISPs. Although OEMs have traditionally focused on O&M services, a growing number have expanded their service offerings to also include full development and installation.64 These expanded services offer a potentially strong revenue stream to supplement equipment sales as OEMs face an increasingly competitive equipment market.65 ISPs, on the other hand, focus solely on the provision of services. They vary widely, ranging from small firms that specialize in a particular service, such as wind resource assessment, to large organizations that offer a full array of development, installation, and maintenance services. Unlike OEMs, ISPs also frequently own and operate wind farms, either by developing and constructing a project themselves or by purchasing a turnkey project from a project 57 Longer contracts allow the provider better knowledge of the machine and the project, so they can better optimize performance. Industry representative, telephone interview by USITC staff, January 18, 2013; industry representative, telephone interview by USITC staff, January 22, 2013; Wind Power Monthly, “Balancing Act for Hard Pressed Supply Chain,” August 25, 2011. 58 Broehl, “Operations & Maintenance—Industry Prepares,” April 1, 2010. 59 Industry representative, telephone interview by USITC staff, December 12, 2012. 60 Industry representative, interview by USITC staff, Washington, DC, January 23, 2013. 61 Wiser and Bolinger, 2011 Wind Technologies Market Report, August 2012, 3; industry representative, interview by USITC staff, Washington, DC, January 23, 2013; industry representative, telephone interview by USITC staff, December 12, 2012. 62 Industry representative, interview by USITC staff, Washington, DC, January 23, 2013. 63 Wind Power Monthly, “Operations and Maintenance,” September 1, 2009. 64 OEMs traditionally focused on warranty and maintenance services because these add value to turbine sales as well as provide manufacturers with valuable knowledge from the opportunity to monitor their turbines in the field over time. Industry representative, interview by USITC staff, October 24, 2012; industry representative, interview by USITC staff, October 23, 2012; industry representative, interview by USITC staff, Santiago, Chile, May 12, 2013. 65 Competitiveness in the wind energy equipment market has increased due to declining turbine prices, overcapacity, and uncertainty regarding government incentives and other favorable policies. Wiser and Bolinger, 2011 Wind Technologies Market Report, August 2012, 33; Boyland, “Gone with the Wind,” 20; industry representative, interview by USITC staff, October 24, 2012; industry representative, telephone interview by USITC staff, January 22, 2013. 4-12

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