The Bloomberg New Energy Finance news, information, and analysis services (the "Services") are owned and distributed locally by Bloomberg Finance L.P. ("BFLP") and its subsidiaries in all jurisdictions other than Argentina, Bermuda, China, India, Japan and Korea (the "BLP Countries"). BFLP is a wholly-owned subsidiary of Bloomberg L.P. ("BLP"). BLP provides BFLP with all global marketing and operational support and service for the Services and distributes the Services either directly or through a non-BFLP subsidiary in the BLP Countries.
Wind farm operation and maintenance costs plummet
Average prices for operation and maintenance contracts in the wind sector have dropped 38% in the last four years, boosting the sector’s competitiveness significantly
London and New York, 1 November 2012 – The wind energy sector is making significant improvements not just in the capital cost and performance of its turbines, but also in the ongoing cost of operating and maintaining them once installed. This is the message from the inaugural issue of the Bloomberg New Energy Finance Wind Operations and Maintenance Price Index, just published.
The index, based on contractual data submitted on a confidential basis by leading players in the wind energy sector worldwide, shows that the average price for full-service O&M offerings for onshore wind farms (including scheduled and unscheduled maintenance works and component replacement) fell to EUR 19,200 per MW annually in 2012, from EUR 30,900 per MW in 2008 – a cumulative decrease of 38%, or just over 11% per year.
Michael Liebreich, chief executive of Bloomberg New Energy Finance, commented: “Wind power has done much to improve its competitiveness against gas-fired and coal-fired generation in recent years, via lower-cost, more technically advanced turbines, and more sophisticated siting and management of wind farms. This new O&M Price Index shows that servicing wind farms at the operating stage is also becoming much more cost-efficient.”
The operational performance and efficiency of wind assets has become increasingly important for wind project owners and investors. Better planning of O&M works, more efficient spare-part management can reduce unplanned downtime, and hence improve output and generators’ margins.
O&M services have become an increasingly important revenue stream for manufacturers as the installed base of turbines has grown, and particularly during the industry’s current slowdown. Turbine manufacturers have been competing hard for service contracts, resulting in keener pricing. Typical O&M agreements considered in the report include scheduled and unscheduled maintenance works, as well as replacement costs for major components (such as blades, gearboxes and generators), and provide availability guarantees to the wind farm owner.
Bloomberg New Energy Finance has analysed confidential contract data from 38 major developers and service providers for the first issue of its O&M Price Index. The data have covered 104 confidential and undisclosed O&M contracts, totalling 5.3GW of contracted capacity, in more than 24 markets. In all cases the service providers are the turbine manufacturers, with a main focus in Europe and the Americas.
The main conclusions of the analysis are:
• Average prices for full-service O&M contracts fell to EUR 19,200 per MW per year in 2012 – a 38% decrease since 2008. The decline in O&M prices was driven by increased competition, as turbine manufacturers vie for service contracts, as well as by improved service performance of the underlying turbines.
• Average contract duration has risen from 4.5 years in 2008 to 6.9 years in 2012, as manufacturers attempt to lock in longer-term agreements.
• Average availability guarantees in the contract sample reached 96.9%, with any upside beyond that generally shared between the developer and service provider. Guarantees on actual energy production are also becoming more commonplace.
• Markets in Eastern Europe and the UK had the highest pricing for full-service offerings. This may be due to higher labour costs and/or a limited local supply chain. The US displayed the most competitive pricing of all markets.
• Pricing between manufacturers has been fairly similar in 2008-12, with the exception of one manufacturer, German company Enercon. Its prices for full-service contracts were nearly 20% lower than the market average throughout the whole period.
• Index participants expect O&M pricing be fairly stable at least until 2015. They regard Enercon, Siemens and Vestas as the best service providers in the industry in terms of promptness and quality of service for scheduled and unscheduled works.
The O&M Index will be updated twice a year, and Bloomberg New Energy Finance is in discussion with additional companies planning to participate. If your company has bought or sold O&M service agreements in 2008-12, and you would like to participate in the survey please email Eduardo Tabbush (firstname.lastname@example.org).
Bloomberg New Energy Finance is the world’s leading independent provider of news, data, research and analysis to decision makers in renewable energy, energy smart technologies, carbon markets, carbon capture and storage, and nuclear power. Bloomberg New Energy Finance has a staff of 200, based in London, Washington D.C., New York, Tokyo, Beijing, New Delhi, Singapore, Hong Kong, Sydney, Cape Town, São Paulo and Zurich.
Bloomberg New Energy Finance serves leading investors, corporates and governments around the world. Its Insight Services provide deep market analysis on wind, solar, bioenergy, geothermal, carbon capture and storage, smart grid, energy efficiency, and nuclear power. The group also offers Insight Services for each of the major emerging carbon markets: European, Global Kyoto, Australia, and the U.S., where it covers the planned regional markets as well as potential federal initiatives and the voluntary carbon market. Bloomberg New Energy Finance’s Industry Intelligence Service provides access to the world’s most reliable and comprehensive database of investors and investments in clean energy and carbon. The News and Briefing Service is the leading global news service focusing on clean energy investment. The group also undertakes applied research on behalf of clients and runs senior level networking events.
New Energy Finance Limited was acquired by Bloomberg L.P. in December 2009, and its services and products are now owned and distributed by Bloomberg Finance L.P., except that Bloomberg L.P. and its subsidiaries distribute these products in Argentina, Bermuda, China, India, Japan, and Korea. For more information on Bloomberg New Energy Finance: http://www.bnef.com.
Bloomberg is the world’s most trusted source of information for businesses and professionals. Bloomberg combines innovative technology with unmatched analytic, data, news, display and distribution capabilities, to deliver critical information via the BLOOMBERG PROFESSIONAL® service and Multimedia platforms. Bloomberg's media services cover the world with more than 2,300 news and Multimedia professionals at 146 bureaus in 72 countries. The BLOOMBERG TELEVISION® 24-hour network reaches more than 240 million homes. BLOOMBERG RADIO® services broadcast via Sirius XM Radio and 1worldspace™ satellite radio globally and on WBBR 1130AM in New York. BLOOMBERG MARKETS® magazine, Bloomberg Businessweek magazine and the BLOOMBERG.COM® Web site provide news and insight to business leaders and financial professionals. For more information, please visit http://www.bloomberg.com .
The BLOOMBERG PROFESSIONAL service and data products are owned and distributed by Bloomberg Finance L.P. (BFLP) except that Bloomberg L.P. and its subsidiaries (BLP) distribute these products in Argentina, Bermuda, China, India, Japan and Korea. BLOOMBERG, BLOOMBERG NEWS, BLOOMBERG TELEVISION, BLOOMBERG RADIO, BLOOMBERG MARKETS AND BLOOMBERG.COM are trademarks and service marks of Bloomberg Finance L.P., a Delaware limited partnership, or its subsidiaries. All rights reserved.