Frost: Increasing Installed Capacity Drives Euro Wind Service Markets
April 9, 2008 // Published as a news service by IHS
According to Frost & Sullivan, operation and maintenance (O&M) of wind projects, which was ignored in the past, is now being looked at more seriously due to increasing installed capacity and high costs.
Recent analysis from Frost & Sullivan of the European wind service markets found earned revenues of €1.58 billion in 2007, with estimates to reach €4.54 billion in 2014.
"The total installed wind capacity in Europe is increasing at 20% per annum," said Frost & Sullivan research analyst Gouri Nambudripad.
"Frost & Sullivan estimates that Europe has installed 55 GW [gigawatt] of wind energy projects by 2007, representing 65% of the global capacity."
While the wind energy market is growing at a tremendous rate, analysts said the service market is struggling to keep pace.
Original equipment manufacturers (OEMs) are finding it hard to maintain service levels, leaving the door open for independent service providers (ISPs) and project developers, who are now forced to think of opening their own divisions to focus on operation and maintenance.
A trend involving ISPs working for wind turbine manufacturers is already developing, analysts said, with manufacturers are subcontracting service and maintenance work to ISPs.
Traditional participants in the wind services market (wind turbine manufacturers) are slowly facing competition from new entrants (ISPs and in-house divisions of customers, such as utilities). Analysts said the entry of ISPs in the past few years has put the spotlight on price.
"In more established markets, such as Germany, ISPs are beginning to undercut OEMs with comprehensive packages and reduced prices," said Nambudripad. "Customers feel that the servicing prices charged by the OEMs are excessive, sometimes 25%-30% of total costs of the wind farm."
Going forward, turbine manufacturers need to heighten their focus on providing quality service by hiring, training and retaining more qualified staff, analysts said. They also need to look at a range of service packages to keep their clients happy.
Source: Frost & Sullivan.