Experienced wind technicians are in short supply, a direct result of the frenetic pace of wind plant deployment worldwide. The dearth of labour is not only being felt throughout the supply chain, but also in the operations and maintenance (O&M) business. Wind turbine service providers are hard pressed to meet industry needs. As manufacturer warranties and their associated O&M service contracts expire, a growing number of owners are scrambling to find windsmiths to carry out basic service work and checks. In Denmark, technicians working for the wind turbine owners association have closed the gates against the tide. Turbine owners are referred to a waiting list.
Nowhere is the skills shortage more apparent than in America. The boom-bust cycle of development caused by the on-again, off-again production tax credit that underpins the US wind market has made building the foundations of a long term industry, including a skilled labour force, nigh on impossible. With annual installation of wind plant in the US now hitting more than 5000 MW, the shortage of windsmiths is projected to worsen. Compounding the issue, the O&M contracts associated with turbine warranties are offering less and costing more as turbine manufacturers make the best of a seller's market. It all adds to the end cost of wind power.
Steve Scott, with Midwest based developer Outland Renewable Energy, says that while the wild growth of the industry is exciting for everyone in it, "We all need to be aware of and sensitive to the imbalance that occurs in an overly exuberant market." Scott sees what everyone sees: price rises and increased difficulty in finding enough technicians.
Outland's business model is based primarily on developing projects, but the company operates an O&M division to service the finished wind stations. That division also provides third party contracted labour to wind turbine manufacturers whose staff are stretched thin doing maintenance for warranty and O&M contract obligations. "Nobody has enough technicians in-house, it's just symptomatic of the imbalance between labour supply and demand," says Scott.
One of the drivers for the growth of a freelance wind turbine service business is the increasing cost of the warranty-based O&M provided by turbine manufacturers. "The trend is for the turbine supplier to try and shed more risk or alternatively price higher to accept the risk," says Michael Alvarez from developer UPC Wind. So far UPC has only bought turbines from GE Energy and Clipper and these come with warranty and O&M packages. Service is spotty, he says. "We entered into those contracts at arm's length and know exactly what we bought. The performance on those contracts against the warranty is inconsistent from plant to plant, even within the same supplier, but they do make efforts to respond to our inquiries and suggestions to improve performance."
Alvarez says GE and Clipper are having difficulty maintaining a consistent level of staff and adequate training -- and they are losing employees to other companies offering more money. "I think they are finding that a considerable issue in the marketplace. I mean we're seeing it at our own plants where the staff rotates out on a basis that's too frequent."
Kevin Devlin of developer PPM Energy says a two year warranty is now standard, down from a previous norm of five years. He also says the level of warranty and O&M service is going down as the price goes up. Today's larger, more sophisticated turbines are not improving the situation. "I wouldn't necessarily agree they are more reliable. These large multi-megawatt machines are very complicated. Arguably, a lot of people yearn for the smaller simpler machines of around ten years ago," says Devlin, who adds that the increasing size and weight of all the components involved requires bigger cranes, heavier equipment and more staff for maintenance.
Dave Luck, head of O&M for Enxco, which is both a wind project developer and the foremost third party provider of O&M in the US, has seen first hand how changes in warranty strategy are squeezing wind farm owners and creating business for third party providers. Luck notes that GE Energy, which regularly claims to have vastly improved turbine availability since having acquired its wind technology from now defunct Enron, changed its warranty strategy just over a year ago to no longer provide a warranty on the availability of its turbines but instead to only provide a warranty for their parts.
Third party push
Wind turbine suppliers new to the market with fewer resources will in particular seek to buy O&M services from third parties. German Repower recently made its first technology sale to the US after receiving a series of turbine orders from Enxco for a combined capacity of 350 MW. Enxco is to look after the machines, which are being installed in California and Washington this year. Enxco's Dave Luck believes the better conditions offered by third party service companies, compared with manufacturer warranties, will make them increasingly popular. Typically, third party cover stretches beyond the wind turbine to the entire balance of plant, including parts such as foundations and electrical switching gear. Turbine manufacturers only provide a warranty and O&M on the equipment they provide.
As demand for maintenance increases, so does the price of independent O&M contracts, but the rise is only little more than inflation, Luck says, although costs for replacement parts have gone up quite a bit. O&M costs are hard to pin down because of the many variables, but Luck estimates maintenance of modern turbines comes in at around $25,000 to $40,000 per turbine per year. Outland's Scott gives a range of $15,000 to $30,000 per megawatt per year, but says prices are rising much faster than inflation. "There are bad things that can happen when the market gets too hot," he says. "In the end it drives up the operating costs and therefore squeezes the cost of the wind plant." Rising costs are providing a reason developers are interested in sourcing their O&M needs in-house.
Keeping it in-house
Many wind plant owners follow the O&M model used by FPL Energy, the largest owner and operator of wind projects in the US. It has built up years of experience by keeping its O&M in-house. Using third party labour for O&M is not a palatable option for Manny Sanchez, FPL Energy's vice president of O&M for the company's fleet of wind turbines. Costs for contracted, third party O&M have risen three-fold over a short period of time, he says. The company is on course to be running 7000 turbines, or 5000 MW of wind capacity, by the end of the year. As much as 800 MW will come online at the end of this year under FPL ownership.
From FPL's perspective, the owner always knows best. Sanchez says the interests of a third party -- whether a turbine manufacturer or a dedicated wind turbine service company -- are not aligned with the owner at all times. With GE turbines, for example, FPL was originally contracting the turbine manufacturer's two year warranty and associated O&M, but decided to drop it.
"It's very hard to make a clear alignment, therefore, the relationship is almost never a good one," says Sanchez, primarily citing higher costs. "We have a great relationship with GE but we did not have one on the warranty and O&M side, so in 2005 we stopped doing that." Sanchez says FPL typically fights to avoid manufacturer provided O&M unless the requirement to do so is set in stone.
Other owners, such as PPM Energy (owned by Spanish utility Iberdrola) and UPC Wind, also recognise the conflict of interests and are intent on ramping up their own in-house O&M capabilities, if they can. "The market and build rate is getting so big now, so fast, and there are so many new entrants, we're quickly running out of the experienced workforce and are having to look afield for people who can do this work," says PPM's Devlin. The problem is location specific, he says, because much wind development in America has been concentrated in certain regions such as Minnesota, Texas, the Columbia Gorge in Oregon, or Southern California where all available local talent quickly gets scooped up.
"We're going to be engaging this problem shortly," says UPC's Alvarez. The company's five-year O&M contracts with GE and Clipper are due to expire in three years. Alvarez says UPC is beginning to plan now for taking over maintenance. "We'll be exposed not only to a warranty expiration but also no O&M service so the time to put the pieces in place for our own operation is now." This includes UPC plans to build its own 24-hour monitoring system for all its wind plants. The company has three wind farms operating, two more in construction and 3500 MW in its development pipeline.
Other companies are still open to the options. Mike Kelly of Horizon Wind, owned by Portuguese utility Energias de Portugal, says his company contracts its technicians and O&M services out, but that Horizon is considering handling the O&M itself or using the turbine providers to maintain and operate the turbines. Citing a shortage of workers, Kelly says, "We do clearly see a trend in more and more third party operations and maintenance service companies entering the market."
The largest provider in the third party space is Enxco, which started solely as an O&M provider back in the early days of California's first wind boom. The company maintains roughly 3300 turbines in America totalling 1164 MW, most of them older machines. Enxco's competitors are smaller companies providing more regionally focused O&M services and labour on considerably fewer machines. These include Energy Maintenance Service in the Midwest, Run Energy in Texas and newcomers like Ireland's B9 Energy Services and Outland. Veteran Californian project developer Seawest also featured more prominently in the past as an O&M provider, but has since stepped away from actively pursuing third party contracts since being acquired by American utility AES.
Even if an owner finds an O&M business strategy that achieves the right balance between a combination of in-house resources or third party resources, there is a further level of complexity, says Josh Magee of Emerging Energy Research (EER), an advisory service. There is also the issue of component supply, which both third party and in-house professionals will need to deal with. Several key components will inevitably need to be replaced or will fail over the life cycle of a wind plant, each falling into expected near, medium or long term dates as they wear out at different rates.
"Depending on each component market you are interested in, there is either an emerging market for O&M replacement supply or there is really no capacity available and very little in the way of an integrated plan among the component suppliers on how to service that market," says Magee. Aside from gearboxes and bearings, which have known shortages in the industry supply chain, blades could prove a real concern, he feels. While yacht builder Knight and Carver is ramping up a new blade facility to make replacement blades at lengths of around 25 metres for older and smaller turbines, retrofitting bigger blades could be a problem, says Magee. "There is essentially no coherent strategy for blade replacement supply in the one megawatt and greater class of turbine in America," he says. "We're not quite there yet where blades are in large scale need, but we will be there soon. That issue of component sourcing for O&M is an entire issue that really has not been addressed."
Enxco's Luck, on the other hand, cautions looking too far ahead on blade supply. "History would tell us that ten years from now, somebody will come up with a blade design that is superior in design and people will be retrofitting for efficiency gains," says Luck. "Projecting too far out in the future and saying I'm just going to keep buying the same thing for ten or twenty years, I'm not sure about that."
Training a workforce
Many in the industry doubt enough workers are being trained to match current or projected demand. Dave Surplus with B9 Energy expects the US industry alone to need as many as 6000 new technicians over the next two or three years and the schools, he says, are only turning out around 200-300 per year in total. B9 is an established O&M provider in Europe, having been ScottishPower's major contractor. It is now entering the US market of third party O&M services and has hired technicians from school training programs.
Such programs are relatively new. Among the schools offering or developing them are Iowa Lakes Community College, Columbia Gorge Community College in Oregon, Texas State Technical College, Minnesota West Community and Technical College, and Mesalands Community College in New Mexico. Iowa Lakes, considered the premier program, is the senior one on offer, at three years old. The students are in high demand. "We have companies who request meetings with our first year students, just trying to build a relationship or loyalty, despite the fact these students won't graduate for another eighteen months," says the program's Craig Evert.
The wind industry is helping fund the programs. PPM Energy recently donated $250,000, split between Iowa Lakes Community College and Columbia Gorge Community College. Students at Columbia Gorge are under an hour from PPM's three Klondike wind plants, which will total 320 MW when construction finishes on a third stage. At the site, a decommissioned turbine nacelle is provided at ground level by PPM for the school's field trips for on-site training.
"We have been putting a lot of our effort into these colleges, right in the hotbeds of where we have either operating wind plants, development or both," says PPM's Jan Johnson. The funding and any extra support provided by PPM cannot guarantee graduates will work for PPM upon completion of the degree but the company sees the effort as a pre-emptive step to increase the wider pool of talent. FPL has taken a similar path, having partnered with Texas State Technical College to provide the school with FPL experts and faculty teaching help, allow interactions with the company on and off campus, provide paid internships with FPL, and help provide equipment and other resources.
Luck says Enxco has taken a different approach, securing most of its employees through in-house training, but is highly supportive of the various school programs and regularly offers internships to workers associated with the programs. "We see value in those, if nothing else to take pressure off the industry."
But with the sparse number of technicians coming out of the schools, it is uncertain how much pressure is really being taken off, says Magee. "I think you've seen a few movements in the right direction but I don't think anybody in the industry would say right now that the level of activity is sufficient. Those types of manoeuvres are steps in the right direction, but the level of activity in terms of what is going on and what is needed is just not there and the results are exactly what you're seeing with workers getting poached left and right," he concludes.