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The average price for operations and maintenance (O&M) contracts in the wind energy sector has dropped 38% over the last four years, according to the latest price index released by Bloomberg New Energy Finance (BNEF).

BNEF says the price drops were due to a number of factors, including improvements to both the capital cost and performance of wind turbines, as well as to the ongoing costs of operating and maintaining them once they are installed. The decline in O&M prices was also driven by increased competition as turbine manufacturers vie for service contracts.

"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," explains BNEF CEO Michael Liebreich. "This new O&M price index shows that servicing wind farms at the operating stage is also becoming much more cost-efficient."

In addition, the report found that the 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 the service provider. Guarantees on actual energy production are also becoming more commonplace, BNEF says.

The U.S. displayed the most competitive pricing of all markets. Markets in eastern Europe and the U.K. had the highest pricing for full-service offerings, which BNEF says may be due to higher labor costs and/or a limited local supply chain.

Pricing among manufacturers has been fairly similar during the 2008-2012 period, with the exception of one manufacturer: German company Enercon, whose prices for full-service contracts were nearly 20% lower than the market average throughout the whole period.

Index participants expect O&M pricing to be fairly stable at least until 2015. They name 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.

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.



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