Performance-based maintenance contracts for offshore wind farms

Abstract

The pioneers in the early 21th century who built the first big offshore wind farms now have to compete with the quickly improving renewable energy technologies and see their farm being out-dated (See also: Dvorak, 2013 & Wind Energy Update, 2013). At present, wind farm owners face difficult decisions when finding the right O&M contract for their offshore wind farm after the warranty period with the original equipment manufacturer (OEM) has ended. Because of a lack of experience in this new O&M phase, decision-making processes are not yet structured or standardized. During the warranty period of approximately 5-10 years, traditional performance-based contracts based on availability guarantees are offered by the turbine manufacturer. To stimulate innovation and increase the energy output, some O&M activities may be better off outside the scope of the performance contract and need a different sourcing scenario. This leads to the aim of this research to compose a decision-making flowchart that can be used when finding a new sourcing strategy for the O&M of offshore wind farms in the post-warranty future.
It was concluded that these O&M activities can be segmented in three main items: the offshore turbine maintenance activities, offshore logistics and the onshore back-office maintenance operations. Increasing the maintenance efforts will improve the overall availability of the wind farm but will also increase the required resources to be devoted to O&M. For this reason, it is important to know the cost-drivers for the main O&M activities (Milborrow, 2010). Insights in these costs-drivers and performance shapers were combined and used as input for the decision-making tool. Next, three decision-making variables were derived from the Transaction cost theory and Agency theory that structures the outsourcing decision including the type of contract. First, the owners’ techniques and processes that are needed to transfer or take in-house a good or service were identified as the ‘proprietary nature’ which is an important decision variable when choosing between the O&M in-house or outsource option. Secondly, when outsourcing with a performance-based contract, a relatively high level of knowability of the performance is required compared to behaviour-based contracts. Thirdly, it was found that the type of contract is influenced by the dynamics of the environment because if the performance requirements change due to new innovations, the performance outcome becomes difficult to measure. The three decision-making options altogether lead to four scenarios that could offer a possible sourcing strategy after the warranty period: The Broker scenario, The Incubator scenario, The Coordinator scenario and The Controller scenario.
The decision-making flowchart and the four post-warranty sourcing scenarios contribute to a more efficient scoping of the current performance-based maintenance contract in the post warranty future, so that O&M costs can be minimized while keeping the performance high.