wind:research study on onshore maintenance services concludes high growth rates in the global market despite of hard competition and fallen prices in local markets
In its recent study about the worldwide wind onshore maintenance market wind:research, market research institute specialising in the wind energy industry, investigates the market, competition and perspectives for wind onshore turbine maintenance worldwide. The wind:research study observes three different development scenarios in the market for onshore wind. First, instead of offering full service portfolios most market players focus on a specialised service range, which opens the market for external service providers and leads to a change in competition structures. Second, the lack of experts causes staffing shortages, which makes for a difficult situation for all players. Third, in hindsight of the local competition and stagnation or reducing demands, many market players offer their maintenance services in global markets, which may lead them to miss local opportunities.
The study is based on the status quo, which shows a rather high future capacity (GW) in Canada, South America and Asia while the western European market is nearly exhausted in terms of siting. In the past decade the global onshore wind market has grown enormously – from a total capacity of 91 GW in 2007 to 539 GW in 2018. Whilst growing, the global market still becomes difficult to assess regarding different and changing country specific framework conditions. North America has different support schemes for wind power with an average part of 24 percent onshore wind in the renewable energy mix. South America holds the most auction systems to support wind power with an average of 16 percent onshore wind in the renewable energy mix. Europe forces “Feed-in-tariffs” and auction systems to strengthen wind power; the actual amount of onshore wind in the renewable energy mix reaches up to 38 percent. In Asia, a feed-in-tariff system is still the dominating support scheme – with auction systems consistently increasing. Onshore wind represents 23% in the renewable energy mix.
The maintenance sector of the current global onshore wind market offers different opportunities, but also holds risks for manufacturers, service providers (maintenance support suppliers, who work for manufacturers and operators [MSSs] and independent service providers [ISPs]) and operators. While manufacturers can keep high availability of main components, hold long-term contracts and expand fleet services, they they lose flexibility due to their corporate structures. Upcoming multibrand services, the loss of highly skilled people and insufficient monitoring of running maintenance due to subcontracting pose risks for manufacturers. While putting manufacturers at risk, multibrand flexibility generally establishes good circumstances for service providers. Based on the current situation, service providers are able to react fast and focus on their core competencies. Risks they face include the absence of maintenance requests, market orientation solely to clients and not being able to keep up high quality in controlling of maintenance processes. Operators show dependencies towards both, service providers and manufacturers, but may be able to use those as opportunities. They are currently able to boost a high selection of suppliers, buy flexible independent service providers and extend their profits. However, the lack of specialists and difficulties through reorganisation of companies whilst having to bear the costs of defect components by themselves may imply trouble for operators.
Further, the study gives an outlook for three future scenarios: a presumably worst case scenario, a base case scenario and a best case scenario. The worst case scenario would cause market stagnation, showing a rise in the global market volume from 6 billion € in 2018 to 7 billion € in 2025. The base case scenario shows a normal increase based on the current market development with a market volume of 6 billion € in 2018 and 9 billion € in 2025. In the best case scenario wind:research presumes a market boost, raising the global market volume from 6 billion € in 2018 to 11 billion € in 2025.
Maintenance contracts that operators hold are mostly divided into basic (39.3 percent) and full service (51.8 percent) contracts (the subdivision further depends on technicality, nationality, age specificity and corporate philosophies). Partly service contracts are rather rare, they only make up 8.9 percent of the total maintenance contracts. The price development of those contracts is continent-specific: Prices in North America have risen in the years 2013 to 2015, but fell constantly since 2016 because of siting decisions. Higher infrastructure costs result from growing installed capacities. The rise of South American investments in onshore wind lead to substantial cost increases from 2015 on. Most countries have not set clear development goals in terms of installed capacity. Dynamic developments in the European market like the price-fall in Germany and Spain seem to be stabilizing. While the Asian market shows continuity on paper, it is an uneven mix between high prices in Japan and low prices in China and India.
Stating an outlook for the wind onshore maintenance market, wind:research included several key drivers in its analysis. Using the methodology of desk and field research, wind:research considered and analysed upcoming auction systems, market consolidation, pricing of turbine services, global market changes and staff topics amongst others, to predict the market development precisely. Also interviews with experts from different ISPs, MSSs, OPs and OEMs have contributed to determine the current and future market situation. Trends in the market suggest a higher importance for wind onshore expansion goals in general according to an increase in the global share of renewable energies, but also show decreasing political support for wind energy subsidies. Furthermore, the decrease in public acceptance and the delay of project pipelines however make the market less attractive. But governmental decisions supporting new technologies and concepts, e.g. for electricity storage and P2X, lead to higher attractiveness.
