The fixed and variable operations and maintenance (O&M) costs are a significant part of the overall LCOE of wind power. O&M costs typically account for 20% to 25% of the total LCOE of current wind power systems Actual O&M costs from commissioned projects are not widely available.
Even where data are available, care must be taken in extrapolating historical O&M costs given the dramatic changes in wind turbine technology that have occurred over the last two decades. However, it is clear that annual average O&M costs of wind power systems have declined substantially since 1980. In the United States, data for completed projects suggest that total O&M costs (fixed and variable) have declined from around USD 33/MWh for 24 projects that were completed in the 1980s to USD 22/MWh for 27 projects installed in the 1990s and to USD 10/MWh for the 65 projects installed in the 2000s.
The data are widely distributed, suggesting that O&M costs, or at least their reporting, are far from uniform across projects. However, since the year 2000 O&M costs appear to be lower and to be more uniform across projects than was the case prior to 2000. This decline in O&M costs may be due to the fact more recent projects use larger, more sophisticated turbines and have higher capacity factors (reducing the fixed O&M costs per unit of energy produced).
Although what is included in the O&M costs is not clearly defined, in most cases the reported values appear to include the costs of wages and materials associated with operating and maintaining the facility, as well as rent (i.e. land lease payments). Other expenses, including taxes, property insurance, and workers’ compensation insurance, are generally not included.
Another important consideration for wind energy is the fact that O&M costs are not evenly distributed over time. They tend to increase as the length of time from commissioning increases. This is due to an increasing probability of component failures and that when a failure does occur it will tend to be outside the manufacturer’s warranty period. Although the data to support this hypothesis are not widely available, data for a limited number of projects in the United States suggest that this could be correct.
Unfortunately, not all sources separate out fixed and variable O&M costs, and it is not uncommon for O&M costs to be quoted as a total of USD/kW/year.
This section will thus present the two together to comparability of different sources. Fixed O&M costs typically include insurance, administration, fixed grid access fees and service contracts for scheduled maintenance. Variable O&M costs typically include scheduled and unscheduled maintenance not covered by fixed contracts, as well as replacement parts and materials, and other labour costs.Maintenance measures may be small and frequent (replacement of small parts, periodic verification procedures, etc.), or large and infrequent (unscheduled repair of significant damage or the replacement of principal components).
O&M costs appear to be the lowest in the United States at around USD 0.01/kWh (USD 10/MWh), perhaps due to the scale of the market and the long experience with wind power. European countries tend to have higher cost structures for O&M for onshore wind projects. O&M costs for offshore wind farms are significantly higher than for onshore wind farms due to the higher costs involved in accessing and conducting maintenance on the wind turbines, cabling and towers. Maintenance costs are also higher as a result of the harsh marine environment and the higher expected failure rate for some components. Overall, O&M costs are expected to be in the range of USD 0.027 to USD 0.054/kWh (USD 27 to USD 54/MWh).
Given that offshore wind farms are at the beginning of their deployment phase, O&M costs remain highly project-specific and it will take time for learning to reduce costs and for a clear trend to emerge. However, it is clear that reducing O&M costs for offshore wind farms remains a key challenge and one that will help improve the economics of offshore wind.
Total Installed Cost of Wind Power Systems For Onshore Wind
Modern wind power generation is experiencing a unique situation. After decades of cost reduction leading to competitive levels with conventional technologies, the investment cost per megawatt began rising for new wind projects. This was associated with increasing commodity prices (mainly raw material such as copper and steel, plus a bottleneck in certain sub-products), tightness in the international market for wind turbines, and other factors. Recent expectations, however, include reductions in investment cost, along with increased performance due to a range of wind turbine options, which may yield historically low cost of wind energy.
In addition, natural gas prices have experienced a significant market impact resulting from innovative drilling practices in some parts of the world, particularly the United States. The impact of wind technology advances, market influences, and the relative cost of natural gas will influence the cost competitiveness of wind relative to other generation options.
The installed capital costs for wind power systems vary significantly depending on the maturity of the market and the local cost structure. China and Denmark have the lowest installed capital costs for new onshore projects of between USD 1 300/kW and USD 1 384/kW in 2010. Other low cost countries include Greece, India, and Portugal. A detailed analysis of the United States market shows that the installed cost of wind power projects decreased steadily from the early 1980s to 2001, before rising as increased costs for raw materials and other commodities, coupled with more sophisticated wind power systems and supply chain constraints pushed up wind turbine costs. However, installed costs appear to have peaked. The capacity-weighted average installed cost of wind projects built in 2010 in the United States was USD 2 155/kW virtually unchanged from the 2009 figure of USD 2 144/kW in 2009. The initial data for 2011 suggest a slight decline in installed costs, driven by lower turbine costs.
The full year outlook for 2011 is therefore that installed costs should be slightly lower than 2010 in the United States and this trend should continue into 2012, as most developers are expecting further decreases in turbine prices for delivery in 2012. This trend is unlikely to be reversed in the short- to medium-term and will be replicated globally, as low-cost manufacturers (notably in China) start to enter the global market for turbines.
There are considerable economies of scale in wind power developments, as projects under 5 MW have significantly higher total installed costs than larger systems. However, there do not appear to be significant economies of scale beyond shifting into the 5 MW to 20 MW range or higher. In 2009 and 2010, the 6.8 GW (53 projects) installed at 100 MW to 200 MW capacity wind farms, had around the same total installed costs as the 257 MW (21 projects) installed in the 5 MW to 20 MW range. Without data from other regions to verify this trend in the United States, it is difficult to identify why this might be.