GWEC Market Intelligence has published the second edition of its annual Wind O&M Service Provider Overview and Database, which shows that the global wind O&M service market is set to experience a major boom over the next five years. While the latest GWEC Market Intelligence market outlook expects a solid 3 per cent compound annual growth rate (CAGR) for new wind installations from 2020-2024, the CAGR for the aftersales and service market is expected to be in the double digits over the same period.
O&M plays a massive role in the development of the wind energy industry and the energy transition, as it ensures the long-term sustainability and growth of wind power globally. In addition, the aftersales and service business continues to be an increasingly important source of revenues for the wind industry.
According to the database, of the over 650 GW of wind power installed by the end of 2019, around 75 per cent of 488 GW is out of warranty, assuming a standard three-year warranty typically offered by wind turbine OEMs. This means that there is an increasing demand for O&M services to maintain the current global wind power fleet to keep turbines spinning and producing clean energy across the world.
Feng Zhao, Strategy Director at GWEC commented: “As wind power’s installed capacity base continues to grow across the world, the service business is now fully recognised as an increasingly important business opportunity for the wind industry. In fact, leading wind turbine OEMs generate around one-fifth of their revenues from their service business, with profitability in the service business being much higher than new turbine production”.
In general, there are now five main types of players actively providing O&M services in the wind sector: wind turbine OEMs; component suppliers; Independent Service Providers (ISPs); Specialised Independent Players; and, Asset Owners.
Wind turbine and component suppliers use their relationships with asset owners from the original equipment sales to sell their service offerings, however, some asset owners with large fleets provide their own in-house O&M services, or acquire Independent Service Providers and specialised independent players to perform these services to reduce dependency on OEMs. Nevertheless, turbine manufacturers will continue to play a major role in this market and provide highest-valued service solutions such as performance upgrades.
“As the O&M service market provides a stable revenue stream, we are seeing a diversification of players involved in the service market. New players are entering the market from outside the wind industry through acquisitions to expand their capabilities and increase their service offering. Although the players and strategies involved in O&M differ regionally and will depend on the maturity and challenges of a certain market, there is a clear trend globally of mergers and acquisitions to better capture and service this growing sector”, he added.