MAKE Consulting's Global Wind Turbine O&M 2014 report analyzes this developing sector and expects 10% growth, on average, per year, over the next six years. While traditional markets in Europe and their large installed bases constitute the lion's share of demand, the rapidly growing installed base in Asia Pacific is expected to provide significant opportunities over the next decade. For the Americas, MAKE values the services market to reach $3.8 billion in 2020.
While the sector's growth is promising, revenues and profit opportunities vary significantly based on a company's ability to differentiate itself in scheduled maintenance, remote monitoring, minor correctives, technical support, spares and distribution, major correctives and component upgrades. Front-end elements, such as scheduled maintenance services, are generally the least profitable, while major correctives and component upgrades have traditionally been the highest-profit opportunities in the market and are expected to offer a revenue potential of $5 billion by 2020.
Planned maintenance practices have evolved and new providers have emerged globally. Many large-asset owners have decided to perform planned maintenance in-house through the cultivation of an internal services division or through acquisition of independent service providers (ISPs). Self-performing asset owners are a growing population and are able to utilize a cost and experience advantage to put significant pressure on full-service ISPs and turbine original equipment manufacturers (OEMs).
Turbine OEMs globally have taken notice of O&M market opportunities and are aggressively pursuing service agreements post-warranty. OEMs are marketing their intrinsic competitive advantages, including advanced knowledge of the turbine, proprietary upgrades and access to spare-part supply, as key selling points to adopt OEM aftermarket service.
ISPs present an attractive alternative to the turbine manufacturer for aftermarket service. ISP business models run a full spectrum, from planned service to project-based maintenance, presenting many opportunities to asset owners seeking flexible, cost-effective and reliable service.
Many niche opportunities exist for O&M market participants, which are currently underserved in key markets. As broader industry consolidation looms, there is potential for a growing fleet of so-called ‘orphan’ turbines – when the OEM is no longer supporting the turbine platform – which represents a niche opportunity for willing ISPs able to specialize in these turbine technologies.
Author's note: Dan Shreve is partner at Boston-based MAKE Consulting. He can be reached at (978) 448-3186 or firstname.lastname@example.org.