Abby-Watson-Gamesa

Wind Energy Update

Operations & Maintenance Summit USARepair Strategies for Reducing O&M Costs

Dallas / April 15, 2015

2

Repair Strategies

►Market Dynamics

►Repair Strategies Repair-as-Service

Repair Circuit

Reconditioning and Upgrades

Inventory Storage

►Evaluation Cost – Benefit Analysis

Questions to Ask

Advantages

Disadvantages

►Take-Aways

Repair Strategies to Reduce O&M Costs

3

Market Dynamics

►Post-warranty fleet is growing

Increased demand for repair solutions in the NA marketplace

Manufacturing supply chain moving overseas

Partnerships between OEMs and Repair Centers

Repair Strategies to Reduce O&M Costs

4

Repair Strategies to Reduce O&M Costs

Component repairs are the most consistent and direct way to reduce Cost of Energy

Cost of Energy is calculated using the following formula:

COE = ICC + FCR + LRC + O&MAEPNET

COE = Cost of Energy ($/kWh)

ICC = Initial Capital Cost ($)

FCR = Fixed Charge Rate (%/year)

LRC = Levelized Replacement Cost ($/year)

O&M = Operations and Maintenance Costs ($/kWh)

AEP = Annual Energy Production (kWh/year)

5

Repair Strategies to Reduce O&M Costs

The most commercially-available repairs are also some of the most valuable

Credit: Akwasi F. Mensah and Leonardo Duenas-Osorio, “A closed-form technique for the reliability and risk assessment of wind turbine systems,” Energies 2012, v. 5 p. 1741

6

Repair Strategies

►Repair-as-Service

Send a damaged core to a repair center for tear-down, inspection, and quote to repair

Repair Strategies to Reduce O&M Costs

Advantages• RCA data• lower individual

repair cost

Disadvantages• Longer lead times• variable costs

7

►Repair Circuit

Pull a repaired component from repair center stock, return failed core in exchange

Repair Strategies to Reduce O&M Costs

Advantages• Shorter lead

times• Fixed cost

Disadvantages• Higher repair cost• No RCA data

Repair Strategies

8

►Reconditioning and Upgrades

Replace failed components and known “weak” points

Implement design upgrades

Repair Strategies to Reduce O&M Costs

Advantages

• High quality standard

• Maximizingcomponent life

Disadvantages • Higher repair cost

Repair Strategies

9

►Offsite Inventory Storage

Store repaired component at repair center

Repair Strategies to Reduce O&M Costs

Advantages

• Warranty preservation• Reduced carrying costs• Certainty of

maintenance and proper storage

Disadvantages• Delays due to

shipment to site

Repair Strategies

10

Repair Strategies to Reduce O&M Costs

Key to Success:Cost/Benefit Analysis

Credit: Akwasi F. Mensah and Leonardo Duenas-Osorio, “A closed-form technique for the reliability and risk assessment of wind turbine systems,” Energies 2012, v. 5 p. 1745

CIM = Component Importance MetricsCAM = Component Availability MetricsCCM = Component Cost Metrics

11

EvaluationCost-Benefit Analysis

►Annual Energy Production (AEP): 5,948 MWh/turbine/year, or roughly 16 MWh/turbine/day

(8760 hours/year x 2 MW turbine nameplate x 35% net capacity factor x 97% availability)

► $63/MWh (Average PPA rate = $40/MWh + $23/MWh for the PTC)

► $1,008/day - Average cost of down turbine in lost production

Repair Strategies to Reduce O&M Costs

Component Cost Lead Time Total Cost

Repair-as-Service $55,000 6 weeks $55,000 + ($1,008 x 42) = $97,336

Repair Circuit $85,000 1 week $85,000+ ($1,008 x 7) = $92,056

In this scenario, Repair Circuit is a better value Despite higher component cost

12

How long in business?

Is this their primary business?

Is there a supply chain in place for replacement components?

In-house testing capabilities?

Reporting and RCAs?

Typical lead times?

Engineering support?

Storage availability?

Warranties?

Repair Strategies to Reduce O&M Costs

EvaluationCost-Benefit Analysis

13

EvaluationRepair Strategy Advantages

►Reduce COE/LCOE

►Repair circuit: lead time advantage “Just in time” inventory management

Working capital advantage

►Improve component reliability Design upgrades

Enhanced material standards

►Leverage offsite storage Place “pause” on warranty clock

Reduce inventory carrying costs

Increased component availability

Repair Strategies to Reduce O&M Costs

14

►Cost-benefit analysis:

Incremental cost vs. value

o Evaluating repair options for optimum life cycle at lowest cost

Warranty considerations

o Value of warranty vs calculated down time

►Proprietary designs

Restricted access to design documents

Beware of “will fit” assumptions

►Component serialization and tracking

Maximizing warranty benefits

Repair Strategies to Reduce O&M Costs

EvaluationRepair Strategy Challenges

15

Take-Aways

1. Increased demand in North America placing pressure on existing repair center supply chain

2. Electrical component repairs are the most commercially-available and critical to reducing LCOE

3. Evaluating repair strategies against performance and risk assessment is critical

4. Warranties add value, but only to the extent they can be properly utilized

5. Internal analytics are the key to evaluating repair strategy and enhanced maintenance needs

Repair Strategies to Reduce O&M Costs

16

Título presentación / Presentation Title

Questions?