Offshore Wind Farm O&M Costs, Performance and Best Practices

EURoPEan stUDy
oFFshoRE WinD FaRM oPERations & MaintEnanCE
BEnChMaRks, Costs anD BEst PRaCtiCEs FoR CURREnt anD FUtURE WinD FaRMs

» How well does the industry manage O&M today and at what cost?
» What changes in strategy, techniques and control will provide quick gains in O&M performance?
» What effects will changes in the industry, technology and service provision have upon O&M
requirements and costs?

Gain UniQUE insiGhts into:
» OPEX and life cycle costs for o≠shore wind farms
» Benchmarks for reliability, availability
» The best strategies and systems for cost effective operations
» Wind farm accessibility and transfer methods
» Technical and business impacts on future wind farm O&M performance

DVV MEDia GRoUP

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The T.A.Cook European Study "Offshore Wind Farm Operations & Maintenance"
is published in first edition in April 2011.

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Dr. Dirk Meissner, T.A.Cook (Author)

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Copyright 2010 T.A.Cook & Partner Consultants GmbH

Study exemplar of | T.A. Cook

Contents

CONTENTS .............................................................................................................. 3

1 MANAGEMENT SUMMARY ........................................................................... 6

2 ZUSAMMENFASSUNG (GERMAN SUMMARY) .......................................... 10

3 BACKGROUND AND OBJECTIVES ............................................................. 14

3.1 O BJECTIVES .............................................................................................. 14

3.2 I MPORTANCE AND ROLE OF O&M FOR OPERATORS , DEVELOPERS , FINANCIERS
AND INSURERS ...................................................................................................... 18

3.3 M ETHODOLOGY AND APPROACH ................................................................. 22

3.4 O FFSHORE WIND FARMS – AN OVERVIEW .................................................... 23

3.4.1 Existing offshore wind farms ................................................................ 23

3.4.2 Planned offshore wind farms ................................................................ 28

4 LIFE CYCLE COST OF OFFSHORE WIND POWER .................................. 33

4.1 C OST ELEMENTS ....................................................................................... 40

4.1.1 CAPEX for planning and installation .................................................... 40

4.1.2 Operations and Maintenance Cost ........................................................ 46

4.2 L IFETIME COST ......................................................................................... 57

4.3 A SSET RELIABILITY IMPACT ON OPEX ........................................................ 59

5 O&M IN EXISTING OFFSHORE WIND FARMS ......................................... 67

5.1 W IND FARM CERTIFICATION AND INSPECTION .............................................. 67

5.1.1 Drivers for certification and inspections ............................................... 67

5.1.2 Types of inspection ............................................................................... 70

5.2 O&M STRATEGIES .................................................................................... 76

5.2.1 Major elements of O&M strategies ....................................................... 76

3 | Contents



5.2.2 Impact of O&M strategies on wind farm design ..................................... 81

5.3.1 Reactive (corrective) maintenance ........................................................ 86

5.3.2 Scheduled preventive maintenance ........................................................ 89

5.3.3 Condition based maintenance ............................................................... 91

5.4 K EY P ERFORMANCE I NDICATORS FOR O&M ............................................... 96

5.4.1 KPIs for O&M work preparation and scheduling ................................... 97

5.4.2 KPIs for materials and procurement .................................................... 101

5.4.3 KPIs for the work order process .......................................................... 102

5.4.4 KPIs for financial performance ............................................................ 105

5.5 O FFSHORE O&M ORGANISATION ............................................................... 106

5.6 W IND FARM TRANSFER AND ACCESS STRATEGIES ........................................ 113

6 TRENDS, OPPORTUNITIES AND RISKS .................................................... 127

6.1 E VOLUTION IN ASSET DESIGN AND MANUFACTURING .................................. 128

6.2 T ECHNOLOGICAL EVOLUTION TO IMPROVE FAILURE PREDICTION ................. 133

6.2.1 Gearbox and Bearing .......................................................................... 134

6.2.2 Generators .......................................................................................... 136

6.2.3 Power Electronics and Electric Controls .............................................. 137

6.2.4 Rotors and blades ............................................................................... 138

6.2.5 System-Level Fault Detection and Response ......................................... 140

6.3 D EVELOPMENTS IN WIND FARM ACCESSIBILITY .......................................... 141

6.4 C HANGES IN THE O&M M ARKET ............................................................... 144

6.5 O&M B OTTLENECKS ................................................................................ 145

6.6 C ONCLUSIONS .......................................................................................... 147

7 APPENDICES ................................................................................................ 150

7.1 L IST OF FIGURES ...................................................................................... 150

4 | Contents



7.2 L IST OF TABLES ....................................................................................... 151

7.3 R EFERENCES ............................................................................................ 152

7.4 P LANNED OFFSHORE WIND FARMS ............................................................. 161

5 | Contents



1 Management Summary

The offshore wind industry is an industry in transition. The problems fac-
ing it are typical of all industries as they scale up rapidly; unforeseen
problems arise and are solved, forecasts prove not to equal real life and
competition to be the principal market players is intense. After twenty
years of offshore wind power, and ten of significant commercial growth in
the market, we are coming to a more mature phase in the industry where
the difficulties that have appeared need to be addressed in a coordinated
and collaborative manner by the participants in order to support further
growth.

As regards O&M, certainly, the status quo will not be commercially viable
for future wind farms:

 While onshore wind farms routinely report operational availability of
over 96%, offshore wind farms can report availability as low as 85%.
 While onshore wind farm O&M typically costs around 10-15% of reve-
nues, offshore the cost is more usually 20-25% of revenues.
 Reactive maintenance activities currently account for around 60% of all
trips to offshore wind farms.
 Operating and maintenance costs for today’s wind farms can be up to
three times more than originally projected, particularly in the case of
the multi-MW turbines.

On the other hand, with an O&M market worth a predicted €10 billion by
2030 there is a clear incentive to invest in measures to improve its effec-
tiveness.

The countries showing the strongest growth in offshore wind – the UK
and Germany – currently support the market through the use of agreed
energy prices or Renewable Obligations Certificates. However, the indus-
try needs not to be reliant upon such support as it is not sustainable in
the long term. Although CAPEX per MW will no doubt decline in time, the
need for sizeable initial investment in an industry such as this is inevita-
ble. Therefore the onus is upon operations to find ways to reduce costs or

6 | Management Summary



(preferably and) increase the wind farm’s productivity. For the foreseea-
ble future this is likely to remain the case as demand for scarce resources
keeps development and installation costs high.

As the industry has developed larger turbines and pushed into harsher
environmental conditions many wind farms have had a pioneering element
about them. As a result, unexpected stresses have led to significant fail-
ures in major components such as gearboxes, generators, and blades.
Components theoretically designed with 20-year life spans have failed
prematurely - in some cases in less than two years.

Not surprisingly extensive warranty periods, in which the turbines are ser-
viced by OEM technicians, are essential buffers against the effects of such
problems and will continue to be so as wind turbines evolve further.

Currently, roughly 79 percent of operational turbines are still under war-
ranty. For the 21 percent of operators on the other side of the comfort
zone, a cost efficient operations and maintenance (O&M) strategy is the
deciding factor between commercial success and failure.

At present, however, O&M strategies are relatively unsophisticated com-
pared to other industries. For example, predictive maintenance is relative-
ly rare for a number of reasons:

First, as most wind farms are relatively young there is a lack of available
data about component lifetimes and failure modes with which to assess
component lifetimes in practice. This is exacerbated by OEMs’ requests for
confidentiality which severely limit the data sharing between offshore
wind farm owners. In several cases, although the owner has access to
much operational data while the turbine is under warranty in many cases
the owner’s operational team does not have the time or manpower re-
sources to make the best use of it. In a few cases the owner does not
even possess detailed operational data about their wind farm.

Second, the dynamic loads placed upon the wind turbine’s systems in-
crease the difficulty of making useful predictions considerably. As we will
see later, this is being addressed today but there is still work to be done
here before the problem is eliminated.

Third, limited access to the wind farms themselves means that sometimes
even where a potential fault is known about the operator cannot make a




preemptive repair and must either accept a failure or shut down the tur-
bine before it fails and accept greater revenue losses as a result.

The cost of failures offshore is considerable. Where the cost to replace a
gearbox bearing costing €1,200 may be in the order of €17,000 offshore –
taking into account component replacement, vessel hire and operational
losses – the cost of it failing catastrophically can quickly add up to around
€200,000 owing to the need to replace the gearbox, hire a crane vessel,
suffer greater operational losses etc 1.

To reduce the number, cost and extent of failures a variety of strategies
are available to the operator:

 Improve preventive and predictive maintenance to reduce failure rates.
 Change the turbines themselves to reduce the maintenance demands at
the wind farm.
 Improve access to the wind farm for better maintenance response.
 Automate responses to faults and failures to minimise the impact of
inaccessibility.
 Reduce the commercial impact of failures through warranties, insur-
ance and compensatory clauses in maintenance contracts.

As will be seen, all five strategies are being pursued, each with their own
strengths and weaknesses. We will see developments on all these fronts
in the next few years although ultimately the balance of strategies em-
ployed at any given wind farm will be determined by the individual climat-
ic, financial and operating conditions of the wind farm.

This study acts as an indispensable reference guide for O&M service pro-
viders, wind farm operators, energy utility companies, investors, re-
searchers, engineers, distributors and many more, who participate in the
offshore wind energy industry.

We present a comprehensive analysis of current European offshore wind
power O&M costs, strategies, challenges and opportunities. In addition we

1
See Hyers et al 2006 for details.




offer forecasts and recommendations to help readers meet the challenges
and opportunities of the market as it evolves.

Key features of the study include:

 Forecasts of installed offshore wind energy generation capacity and
related O&M expenditure over the next 20 years
 Developments in the market structure for O&M services
 O&M market size estimates 2011-2015 and forecasts to 2030
 Future technical, logistical and industry trends affecting O&M strategies
and costs
 Projections of O&M cost evolution over the lifetime of a wind farm
 Market outlook and insights that will help develop competitive business
strategies
 Challenges and opportunities for OEMs, service providers and in-
house services
 Future needs of the O&M industry




2 Zusammenfassung (German Summary)

Die Offshore-Windindustrie befindet sich im Umbruch. Dabei steht sie vor
Problemen, die typisch sind für alle schnell wachsenden Branchen. Es ent-
stehen unvorhergesehene Probleme, unkonventionelle kurzfristige Lösun-
gen werden gefunden, Prognosen erfüllen sich in der Regel nicht und der
Wettbewerb der Marktteilnehmer nimmt beständig zu. Nach nunmehr
zwanzig Jahren der Offshore-Windkraft und zehn bedeutenden Jahren
kommerziellen Wachstums reift die Industrie zunehmend. Das lässt die
Notwendigkeit erkennen, die auftretenden Herausforderungen auf eine
koordinierte und kooperative Art und Weise von den Teilnehmern anzuge-
hen und weiteres Wachstum zu unterstützen.

Betrieb und Instandhaltung (im folgenden O&M) spielen dabei eine we-
sentliche Rolle. Der Status Quo der O&M-Ansätze wird sich künftig als
nicht dauerhaft wirtschaftlich tragfähig erweisen:

 Während Onshore-Windfarmen eine technische Verfügbarkeit von
mehr als 96%, erlangen, erreichen Offshore-Windfarmen meist höchs-
tens 85%.

 Die O&M-Kosten von Onshore-Windfarmen belaufen sich auf 10 - 15%
der Erträge, Offshore-Windfarmen müssen 20 - 25% der Erträge auf-
wenden.

 Reaktive Instandhaltung (Fehlerbehebung) ist momentan für 60% aller
Instandhaltungsmaßnahmen on-site verantwortlich.

 Die realen O&M-Kosten der Offshore-Windfarmen betragen oftmals bis
zum Dreifachen der geplanten Kosten.

Die Ausgaben für O&M werden bis 2030 die Grenze von 10 Mrd. EURO
durchbrechen. Diese Größenordnung ist ein klarer Anreiz, in die Erhöhung
der Effektivität und Effizienz der O&M-Konzepte zu investieren.

Gegenwärtig verzeichnen Großbritannien und Deutschland die höchsten
Wachstumsraten bei Offshore-Windfarmen, welche die Industrie mit mas-
siven Anreizen unterstützten - entweder durch langfristig garantierte Ab-

10 | Zusammenfassung (German Summary)


nahmepreise oder durch Renewable Obligation Certificates (Erneuerbare-
Energie-Zertifikate). Gleichwohl ist es wichtig für die Industrie, trotz die-
ser Anreize kontinuierlich in die Verbesserung des Status Quo zu investie-
ren. Auch wenn die investiven Ausgaben (CAPEX per MW) mit Sicherheit
weiter sinken werden, so handelt es sich bei der Größe der Windfarmen
immer um substantielle Investitionen. Um diese wirtschaftlich zu rechtfer-
tigen, sind Wege zur Kostensenkung und zur Erhöhung der Produktivität
klare Prioritäten auf der Agenda der Windfarmbetreiber. Kurzfristig wird
es zu Engpässen aufgrund knapper zur Verfügung stehender Ressourcen
für die Windfarmbetreiber kommen. Diese werden die Preise für Anlagen
und Dienstleistungen weiterhin auf hohem Niveau halten.

Jüngste Erfahrungen zeigen, dass die O&M-Kosten im schlimmsten Fall
das Dreifache des ursprünglich geplanten Budgets erfordern. Dieses Phä-
nomen wurde insbesondere im Fall der Multi-MW-Klasse von Turbinen be-
richtet. Die höheren als erwarteten Kosten resultieren aus mehreren Fak-
toren: Ein wesentliches Kriterium ist, dass der jüngste Offshore-
Windenergie-Boom die Kapazität der bestehenden Supply Chain über-
steigt. In der Folge sind häufig Qualitätsmängel zu beobachten. In den
neuen Multi-MW-Maschinen treten in den ersten Betriebsjahren über-
durchschnittlich viele Fehler in Getrieben, Generatoren und Rotorblättern
auf. Diese auf 20 Jahre Lebensdauer ausgelegten Komponenten haben
meist eine deutlich verkürzte Lebensdauer von vier bis sechs Jahren. In
jüngster Zeit zeichnete sich eine leichte Besserung des Zustandes ab, seit
die Hersteller wieder Komponenten eigenentwickeln und Inhouse-
Komponenten anstelle von "Off-the-shelf"-Komponenten eingesetzt wer-
den. Gleichwohl ist Bauteilversagen nur die halbe Wahrheit. Die tatsächli-
chen Kosten entstehen, sobald die Betreiber die defekten Teile ersetzen
müssen. Beispielsweise können beim Austausch eines Getriebes die Kos-
ten für das Ersatzteil, das Mieten eines Transportschiffes und die eigentli-
che Installation 500.000 Euro pro Turbine betragen.

Wenig überraschend bieten die Anlagenhersteller vermehrt verlängerte
Garantiezeiten an, während die Windfarmen von den O&M-Experten der
Anlagenhersteller gewartet werden. Es ist zu erwarten, dass dieses Modell
auch künftig weiterhin ausgebaut wird. Gegenwärtig sind noch ca. 79 Pro-
zent der Windfarmen in der Herstellergarantiezeit. Für die anderen Wind-
farmen zeigt sich bereits, dass das richtige O&M-Konzept der entschei-



dende Faktor für den wirtschaftlichen Erfolg einer Windfarm ist. Im Ver-
gleich zu anderen Industrien sind diese Konzepte aber noch auf einem
Anfangsniveau.

Eine vorausschauende Instandhaltung ist aus verschiedenen Gründen bis-
her noch nicht weit verbreitet:

Erstens legen die Anlagenhersteller die für das Verständnis der Kompo-
nentenversagen benötigten Daten nur ungern offen, um sowohl das Risiko
von Rechtsstreitigkeiten einzudämmen als auch potenzielle Wettbewerber
vom Markt fern zu halten. Es zeigt sich, dass die Betreiber von Windparks,
die noch unter Garantie sind, vielfach keinen Zugang und keine Kenntnis
der O&M-Daten haben. Ebenso sind wenig öffentlich zugängliche Daten
bekannt. Sofern solche Daten existieren, sind sie in der Vergleichbarkeit
und ihrer Aussagekraft häufig limitiert, da sich die Standortfaktoren von
Offshore Windfarmen meist sehr voneinander unterscheiden.

Zweitens sind die Windturbinen und deren Komponenten gegenwärtig nur
wenig oder teilweise standardisiert. Diese fehlende Standardisierung der
Windturbinen und -komponenten bedeutet, dass neuen Komponenten-
Lieferanten, häufig mit Misstrauen begegnet wird, während sie versuchen
im Markt Fuß zu fassen. Sofern nicht Standards, Prozesse und Verfahren
etabliert werden, ist es unwahrscheinlich, dass dieses Problem gelöst und
der Anbieterkreis verbreitert wird.

Drittens ist der Zugang zu den Windfarmen aufgrund von Wetterbedin-
gungen und Engpässen in der Transportlogistik nicht immer gewährleistet.
So geschieht es häufig, dass die Windfarmbetreiber über potenzielle Feh-
ler in den Anlagen zwar informiert sind, jedoch keine rechtzeitigen Ge-
genmaßnahmen ergreifen können und die Anlage konsequenterweise aus
Sicherheitsgründen abschalten. Dabei sind die durch Anlagenfehler verur-
sachten Kosten erheblich.

Um die Anzahl, die Kosten und die potenziellen Folgeschäden zu reduzie-
ren, können die Anlagenbetreiber verschiedene Strategien verfolgen:

 Verbessserung der vorausschauenden Instandhaltung;
 Verbesserung des Turbinendesigns zur Reduzierung der Instandhal-
tungsnotwendigkeit;
 Verbesserung der Zugangsmöglichkeiten zu den Windfarmen;



 Automatisierung der Fehlermeldung und –behebung zur Reduzierung
der Wirkung der Nichtzugänglichkeit
 Reduzierung der wirtschaftlichen Auswirkungen von Fehlern durch er-
weiterte Garantien, Versicherungen und entsprechende vertragliche
Vereinbarungen mit O&M-Dienstleistern.

Die Studie zeigt auf, dass alle Strategien in der einen oder anderen Form
bereits eingesetzt werden. Es wird sich zukünftig zeigen, wie der Balance-
akt zwischen den Strategien am besten ausgestaltet und gehalten werden
kann.

Die Studie ist eine unabkömmliche Referenz für O&M-Dienstleister, Wind-
farmbetreiber, Energieunternehmen, Investoren, Versicherer und Finan-
zierer und viele andere, die in der Offshore-Windenergieindustrie tätig
sind. Es wird eine umfassende Analyse des europäischen Offshore-
Windenergie O&M-Marktes präsentiert. Ebenfalls werden die wichtigsten
Entwicklungen der wesentlichen Komponenten - Getriebe, Generatoren,
elektrische Geräte und Steuerungen, die nahezu 90% aller O&M-Kosten
verursachen, vorgestellt. Im Mittelpunkt stehen dabei:

 Entwicklung der installierten Offshore-Windenergie-Kapazität und
damit verbundene Ausgaben sowie die O&M-Entwicklung von Inves-
titions-und Betriebskosten über die nächsten 20 Jahre;
 zukünftige Entwicklungstendenzen von O&M-Modellen;
 typische O&M-Aktivitäten für Getriebe, Generatoren, Leistungselekt-
ronik und elektrische Steuerungen sowie die durchschnittlichen jähr-
lichen Kosten und Lebensdauer von Windparks und O&M;
 O&M Marktgröße - Schätzungen und Prognosen des Marktes bis
2030;
 Typische Kosten für Technik und Einnahmen für den O&M-
Dienstleistungsmarkt;
 Marktausblick und Einsichten, die bei der Entwicklung wettbewerbs-
fähiger Geschäfts-Strategien erforderlich sind;
 Chancen und Herausforderungen für OEMs, Dienstleister und In-
house-Services und künftiger Bedarf der O&M-Industrie.



3 Background and objectives

3.1 Objectives

It is widely agreed that the offshore wind industry can contribute to Eu-
rope’s transition to a green economy. Offshore wind generation can create
innovative solutions, and innovation is a way out of a recession because it
drives economic growth. It is believed that the emerging offshore wind
industry has the potential to generate a substantial number of new jobs
with existing but also emerging new firms. The array of jobs created will
be considerable; with offshore wind farm operators, with equipment sup-
pliers, facilities providers, logistics and also, in the longer term, with op-
erations and maintenance service providers. While production, installation
and connection of offshore wind farms are a one-off effect, operations
and maintenance (O&M) will have an ongoing economic impact. At the
same time O&M poses new challenges for wind farm owners, operators 2,
equipment suppliers and financial service providers.

The offshore wind energy industry is set to make an important contribu-
tion to Europe’s energy production over the coming decades; from just
over 1GW of installed capacity today, the industry is forecast to have
40GW capacity by 2020 and 150GW by 2030, when it will produce around
13% to 17% of Europe’s total energy.3 To meet these expectations de-
mands a great leap forward in many respects, such as in installation
methods, costs and speeds as well as supplying the vastly increased de-
mand for materials and skills. One of the key challenges lies in operations
and maintenance (O&M), which also needs a great leap forward in order
to have profitable wind farms developed at the rate Europe needs. In-

2
Wind farm operators and owners are not always identical. In some cases wind farm operators are legal
entities established by a consortium of different partners mainly from utilities industry. Such entities
in many cases contract operational responsibilities to third parties, typically an OEM or one of the
partners.
3
EWEA publication ‘Pure Power’, Dec 2009

14 | Background and objectives


deed, estimates of O&M costs per MWh currently place offshore wind at 5
to 10 times that of onshore. 4

Even before the wind farms are built, O&M is of great significance. In the
past O&M was often not considered very extensively in the design phase
or during negotiations with financiers and insurers. Based on the evidence
of early offshore wind farms it was believed that the cost of maintaining
them would be very little relative to the cost of building, as with many
onshore wind farms. However, more recent commercial scale farms, fea-
turing larger turbines in stronger winds, have shown that offshore tur-
bines to date tend to perform less reliably than onshore and a number of
costly unanticipated problems have arisen at most, if not all, wind farms.5
These have reduced the power generated, lowering revenues and increas-
ing costs to the point where project profitability comes into doubt. Conse-
quently, investors in offshore wind today demand robust strategies, fore-
casts and cost projections for operating and maintaining wind farms when
determining whether to invest and upon what terms.

Meanwhile, wind farm developers are planning to develop wind farms fur-
ther and further offshore, increasing transportation times and costs for
any site visits and reducing the available working window. Developers
need to see significant improvements in the reliability of the wind farms
being put in place, as well as to establish strategies that will provide the
optimum power generation at optimum cost. For example, although the
theoretical ideal would be to have wind turbines running at their maxi-
mum load, in fact loads between 70 and 80 per cent of technical maxi-
mum load appear to be preferable. This is because the wear on, and need
to replace, such components increases with the loading and beyond a cer-
tain point energy gains are more than offset by the increased incidence,
and cost, of failures.

When the first offshore wind farms began operation earlier this century
hopes were high that experiences from onshore wind farm O&M could be

4
Onshore O&M costs of €1.2 to 1.5 per MWh (EWEA Economics of Wind Energy March 2009) versus €8-
12 per MWh offshore in the period 2009 to 2012 (New Energy Finance presentation, Nov 2009)
5
See reference material on BERR, DECC and Egmond aan Zee



applied to offshore wind farms. This has been true to some extent for the
first offshore wind farms, which were relatively close to shore.

However, most current and future wind farms are being installed at signif-
icant distances, and travel times, from shore. Such wind farms are now
planned or being installed up to, and in some cases more than, 50 km
away from shore where wind speeds are more constant and greater than
near-shore, and where wave heights tend to be greater as a consequence.
This blocks access to the turbine on a more regular basis and renders
even minor faults which, on land, would be fixed quickly and simply, much
more significant. This places increased demands for reliability upon com-
ponents and requires, for a cost-optimal approach, less reactivity to fail-
ures and a greater ability to forecast, and thereby prevent, them.

Offshore wind O&M Maintenance tends to fall into three categories:

 First line maintenance including local and remote response as well as
scheduled inspections and maintenance;
 Second line maintenance which requires medium size component re-
placement of moderate complexity; and
 Third line maintenance, which includes major maintenance activity,
requiring heavy equipment such as jack-ups or cable laying vessels.

An O&M strategy should involve scenarios addressing different mainte-
nance categories. A scenario technique allows the wind farm operator to
compare options, for example including turbine design modifications, ac-
cess design modifications or different scheduling options. These options
can be fed into both CAPEX and O&M models to identify their overall im-
pact on asset lifetime costs. In addition it is possible to review the effect
of different options on HSE and identify the right balance between cost
and safety risk in operations.

However, in practice the data available to build objective O&M bench-
marks is hard to access, causing practical problems for wind farm devel-



opers, operators, regulators and investors.6 For example, without a robust
cost forecasting tool for new wind farms it becomes very difficult to iden-
tify the optimum efficient level of incentives to encourage wind farm de-
velopers. It also makes allocating research resources in the most effective
way impossible, or at least unverifiable. For developers, lack of bench-
marks makes operational forecasts more uncertain, leading to increased
risks – and higher insurance – for the wind farm.

With a few exceptions, most wind farm developers and operators today
are increasingly willing to share information, in principle; however, there
are a number of factors mitigating against openness in the industry.
There are some fears still about sharing information in case it gives away
a competitive edge 7, though increasingly there is a perception that poten-
tial benefits outweigh the risks.

More significantly, the amount of information developers have access to
themselves varies considerably, particularly in cases where the wind farm
is under warranty or contract by the OEM. In some cases these companies
have been criticised for their lack of data sharing, although in more recent
wind farms – particularly larger wind farms – this is starting to change as
the developer is both in a stronger bargaining position and will have more
resources available to make use of the data that is provided.

The final major hurdle to data gathering is the contract between wind
farm operator and OEM, which tends to limit what information the opera-
tor can share. Each contract tends to be negotiated separately, so there
are different nuances in each case, but broadly the effect is to either give
the OEM a veto on potential data sharing or else to collect all mainte-
nance data under an umbrella of confidentiality.

As discussed above, there are reasons for optimism looking toward a
more open future; however, OEMs still require some persuasion.

6
Even the EWEA struggles to gain information on O&M costs; in ‘Economics of Wind Energy’ 2009, p67,
O&M costs for all offshore wind farms (save Middelgrunden) are assumed to be consistently €16/MWh
– but are ‘subject to considerable uncertainty’.
7
Exceptions to this rule tend to have been built with a clear purpose of sharing information; for example,
the Egmond Aan Zee offshore wind farm, Netherlands, or Alpha Ventus, Germany. However it needs
to be taken into consideration that such data tend to be for scientific and pure basic research purposes
only. Commercially sensitive data are still hard to access at these sites.



3.2 Importance and role of O&M for operators, de-
velopers, financiers and insurers

In the absence of many years of commercial experience, the offshore
wind industry is faced with significant levels of uncertainty when it comes
to operational expectations and maintenance predictions. This is empha-
sised by the fact that many wind farms to date have some element of in-
novation to them; either by pushing into deeper water or harsher cli-
mates, or else by using new turbine models. Despite pre-production test-
ing, the fact remains that the new wind farms are to some extent an ex-
periment.

It is generally expected today that the cost of O&M in offshore projects
will be higher than for equivalent onshore wind farms. However the ex-
tent of this increase still remains unclear. As discussed above, the EWEA
uses €16 per MWh as a rule of thumb in its publication ‘Economics of
Wind Energy’ 2009, compared to onshore costs of €5-6 per KWh.

O&M costs make a substantial contribution wind farm economics and thus
it is important to include them even in an ’order of magnitude’ calculation.
Although O&M costs are very difficult to predict, and the relevant quanti-
ties closely interlinked it can be concluded that the major factors affecting
O&M costs are:

 The distance of the wind farm from shore (or ports),
 Climatic conditions at the site,
 The size of the wind farm,
 The reliability of the turbines,
 The maintenance strategy under which they are operated and
 The availability that is required.

For a long time one of the most important risks associated with the de-
velopment of onshore wind farms has been that related to the predicted
long-term wind resource and energy production. Today these "wind risks"
can be reliably quantified if high quality onsite measurements are con-
ducted and a suitable source of long-term reference data is available. Re-



cent validation studies of predictions show that estimates can be quanti-
fied accurately, if rigorous methodologies are applied. Consequently cur-
rent discussions of O&M cost forecasting are centred upon risks concern-
ing turbine and generator reliabilities and wind farm accessibility.

O&M predictions are of a very uncertain nature. Problems with accessibil-
ity can prevent a two-hour repair being effected for anything up to sever-
al weeks.

O&M cost item EURO/kW/year EURO/kWh (approx.)

Service contract* 4-8 0.15-0.6

Administration Cost basis varies 0.1-0.3

Insurance 4-7 0.15-0.5

Land rent** 2-4 0.08-0.4

Local taxes*** 3-5 0.1-0.2

TOTAL 13 to 24 0.58 to 2.0

* Service contracts refer to O&M contracted to third parties
** Land rent refers to renting office and storage facilities for wind farm operator

*** Local taxes vary considerably with the location of the wind farm

Table 1 | O&M Cost Elements

Scheduled maintenance or servicing is implemented by the crews within a
specified service interval, where possible. However, repair work tends to
take precedence over scheduled maintenance, especially if the turbine to
be repaired is inoperable. At this point crewing resources become signifi-
cant; discussion with OEMs and operators suggests that a two-layer staff-
ing strategy, involving separate crews for regular maintenance and ex-
traordinary repairs, may become one leading solution.

Scheduled maintenance operations are also subject to weather delays in
the same manner as those associated with repair work.



There are a number of major legal and administrative cost components,
which are illustrated inTable 1.8 As can be seen in the range of the total,
these costs can vary dramatically between offshore wind farms. Note,
these costs do not include direct maintenance-related costs such as
transportation or components.

The composition of O&M cost changes considerably according to the age
of the wind farm. While direct O&M costs (which include material &
transport costs, human resources and vessel hire) make up almost three
quarters of total O&M costs after 2 years of operation their share de-
creases to two thirds after 10 years of operation. Some of this discrepan-
cy reflects the fact that, on average, older wind farms tend to be closer to
shore and offer lower obstacles to access; however, it also reflects an
increasing familiarity with the individual wind farm and developing more
efficient ways to work, or simply becoming more practiced at dealing with
characteristic faults. In contrast insurance becomes increasingly expensive
with aging equipment (Figure 7).

While for many wind farms in operation warranties play a role, they are a
mechanism for transferring responsibility and risk from owners and lend-
ers to contractors. Currently many offshore wind farms are still under
warranty and face the challenge of deciding and negotiating new O&M
contracts at the expiry of the warranty period. At this point O&M costs
and strategies will become far more of a significant concern both for the
operator and for industrial insurers.

Warranties vary among wind farms; however, by and large the warranty
will ensure a minimum performance for wind farm operations, covering
component replacement and often involving some reimbursement of lost
revenues. Under these circumstances insurance companies do not have to
carry much risk. At the expiry of the warranty O&M strategies become
more central to insurance risk (and thus premium) assessment and calcu-
lation. Insurers are increasingly requesting wind farm operators to devel-
op and present sustainable O&M strategies as part of the basis of negotia-
tions. Such strategies usually include fundamental considerations such as

8
Note: figures displayed in the table are average figures regardless of wind farm distance to shore, type of
wind turbine, wind farm size and age .



the ratio of reactive and preventive maintenance, turbine loading, stores
and spares strategies, access methodologies, third party contracts and
more.

Thus a clearer perspective on O&M issues associated with offshore wind
projects will allow improved distribution of operational risk between own-
ers, lenders and contractors.



3.3 Methodology and approach

This study was conducted between November 2009 and April 2010. Within
this timeframe, we collected and collated the data required for the analy-
sis using the following research methods:

 Desk Research
 Expert Interviews (face to face and telephone)
 Open Interviews
 Standardized questionnaire

Desk Research and Questionnaire

Extensive desk research was carried out over three months to collect fac-
tual background data for the study. The sources used include specialist
and trade articles, the press, conference papers, company documents, the
internet and specialist databases. The results of the desk research were
used in the following work processes:

 Identifying target groups (wind farm operators, service companies,
equipment manufacturers)
 Identifying framework conditions
 Working out hypotheses and trends

The collected data provided the basis for a comprehensive overview of the
offshore wind power industry, which was used to calculate key figures for
this industry.

Desk research was supplemented by a standardized questionnaire which
was distributed to offshore wind farm operators. Data gathered through
the questionnaire has been treated as confidential and, in many cases,
gathering or usage was limited by the authorisation of the OEM or other
parties. Consequently, while this has been used to validate and supple-
ment other data, for the present study little questionnaire-based data can
be presented by itself.



Expert Interviews

Explorative expert interviews were carried out to support the analysis and
evaluation of market conditions. Applying this methodology makes it pos-
sible to gain insights into the market and identify trends. The interviews
used a semi-structured interview guideline, giving interviewers the oppor-
tunity to supplement or revise questions to gain further estimates and
background information. This combination of methods enables responses
to be interpreted more accurately, leading to much more reliable results.

Further open interviews were carried out with experts to compare and
evaluate the working hypotheses of this study. Interviews were not tied to
a structured questionnaire and were conducted by telephone or face-to-
face. The main objective of such interviews was to monitor key topics
throughout the discussion and to explore them further using funnel tech-
niques.

The target population of 32 wind farms in operation (April 2010) resulted
in a total of 35 interviews (online, telephone and face-to-face) represent-
ing 10 wind farms in total. These accounted for around 750MW installed
energy production capacity out of a total of 2.4 GW installed capacity.
Thus the study represents roughly one third of installed offshore wind
farm capacity. It can be assumed from the scope of the survey that the
findings of this study are by and large an accurate representation of cur-
rent industry conditions.

Much data and information disclosed by wind farm operators and other
parties must be treated as confidential. In the following report infor-
mation and data of a confidential nature are presented as aggregate,
anonymised data only.

3.4 Offshore wind farms – an overview

3.4.1 Existing offshore wind farms

Currently commercial wind farms have been successfully installed and
commissioned in Denmark, Sweden, The Netherlands, Finland, Great Brit-



7 Appendices

7.1 List of figures
Figure 1 | Annual Investment in Offshore Wind Energy in the EU 2011-2030 ... 33

Figure 2 | Offshore wind farm CAPEX per MW 2011-2030 ............................. 34
Figure 3 | Investment per MW capacity by distance from shore ..................... 44

Figure 4 | O&M cost per annum according to year of commercial operation ..... 48
Figure 5 | Contributing factors to wind farm O&M costs ................................ 51

Figure 6 | O&M costs for selected ages of turbine ........................................ 55
Figure 7 | Share of O&M cost during wind farms life time ............................. 56

Figure 8 | Share of downtime by cause ...................................................... 64
Figure 9 | Development of O&M Strategies – SSE Example ............................ 77

Figure 10 | Maintenance approaches used currently and in future .................. 85

Figure 11 | Share of O&M work done by third parties .................................. 108

Figure 12 | Share of maintenance work taken by in-house staff, OEMs and other
contractors ..................................................................................... 109
Figure 13 | Monthly ‘Weather days’ at Egmond Aan Zee, operating years 1-2 . 115

Figure 14 | Norfolk offshore wind farm wave statistics ................................ 120
Figure 15 | O&M expenditure of all European Wind Farms to 2030 ................ 127

150 | Appendices


7.2 List of tables
Table 1 | O&M Cost Elements ................................................................... 19

Table 2 | Operating wind farms, 1 October 2010 ......................................... 26
Table 3 | Power Production from Offshore Wind in the EU (2011-2030) .......... 28

Table 4 | Forecasts for Installed Offshore Wind Energy Generation Capacity in
Europe to 2020 ................................................................................. 29
Table 5 | Planned wind farms, October 2010 ............................................... 31

Table 6 | Typical life cycle stages of wind farms – year 1 and 2 ..................... 37


Table 9 | Typical life cycle stages of wind farms – end of life cycle ................ 40

Table 10 | Location adjustment factor for investment and installation costs..... 41

Table 11 | Investment Costs For Current Offshore Wind Farms ...................... 43

Table 12 | Average Investment Costs per MW Related to Offshore Wind Farms 45
Table 13 | Operations and maintenance cost types ...................................... 46

Table 14 | Breakdown of approximate O&M Costs (€k) ................................. 49

Table 15 | OPEX as share of CAPEX annually .............................................. 58

Table 16 | Reliability characteristics .......................................................... 62
Table 17 | Downtime hours by cause ......................................................... 66

Table 18 | Components subject to inspection and inspection focuses .............. 74

Table 19 | Typical gearbox condition monitoring techniques , ........................ 95

Table 20 | Maximum operating capacities of different transport vessel types .. 116

Table 21 | Journey duration and maximum wave heights for safe transit to
Norfolk offshore wind farm ................................................................ 117
Table 22 | Percentage of time sea states are acceptable for safe journeys to
Norfolk offshore wind farm ................................................................ 117

Table 23 | Comparison of transfer methods ............................................... 124

151 | Appendices


Company profile
T.A. Cook & Partner Consultants GmbH

T.A. Cook is a management consulting firm focusing on Asset Performance
Management with offices in Berlin, Birmingham, London, Raleigh and Rio
de Janeiro. The core competence of the consulting business is the sus-
tainable implementation of asset, operations and service-oriented excel-
lence. As a change management specialist, the firm delivers measurable
value enhancement and bottom-line productivity gains. In order to
achieve these results T.A. Cook offers a wide range of professional ser-
vices which ensure that all business processes - from strategy definition
through management to organisational design - are effective, efficient
and sustainable. Complementing the consulting business, the T.A. Cook
Academy has become a leading organiser of international conferences and
seminars relating to Asset Performance Management. Annual events in-
clude the MainDays summit as well as conferences centered on topics
such as Shutdowns &Turnarounds and Capex Management.

T.A. Cook’s clients are typically businesses, their suppliers and contractors
working with significant industrial assets across multiple sectors. The
company has particular expertise in the petrochemicals, plastics, pharma-
ceutical, transport, mining and food sectors as well as excellent
knowledge of the regulated environments occupied by gas, water and
electricity utilities.

T.A. Cook Research & Studies

The Research & Studies team is responsible for market analyses. We ana-
lyse markets and niche markets from the perspective of supply and de-
mand, providing our clients with a sound basis for the development of
future strategies and successful decision-making. Independent, in-depth
research forms the basis of all our studies, prognoses and concepts. Our
core target groups are plant operators in the process industries and their
technical service providers.

176 | Appendices


Contact:

T.A. Cook & Partner Consultants GmbH

Sabine Honigmann

Leipziger Platz 2, 10117 Berlin, Germany Tel: +49 (0) 30/88 43 07-0, Fax:
+49 (0) 30/88 43 07-30, Email: s.honigmann@tacook.com

177 | Appendices

Offshore Wind Farm O&M Costs, Performance and Best Practices

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