Yesterday I had the pleasure to meet my friend J. here in Hamburg.
J. works for V., a very big Danish wind turbine manufacture. Specifically he works in what looks like the new battle field for our industry – multi brand wind turbine operation and maintenance (O&M).
Basically it means that V. is offering not only Service for its own wind turbine models – it’s providing it also for competitors models, like Siemens/Gamesa, GE and the like.
There are several good reasons to do that - for instance:
- Operational synergies. If you have wind farms already under maintenance in a specific area adding MW under maintenance will have a lower marginal cost.
- Knowledge of the business already accumulated. iI you have thousands of WTGs under maintenance you should have a very clear idea of what could go wrong next during the life of the turbine. This also include more in house knowledge to propose to the customer solutions like “fix it, don’t buy a new one”.
- Scale factor in procurement: cheaper spare parts due to a very robust supply chain.
Additionally, customers could find interesting the “one stop shop” solution – for instance big utilities owning wind farms with several wind turbines brands might like the idea of having a single counterparts taking care of all the portfolio.
What strikes me the most is the possibility to implement technical retrofits solutions such us the vortex generators on competitors' WTG models. This basically means that when a wind turbine manufacturer discover a new technique to get more energy out of a turbine it could be able (in some cases) to apply this solution to the turbines of competitors.
I suspect that the market will probably move to a consolidation in the Service business arena, were several small to medium companies are operating locally
V. gave a clear example of it purchasing 2 O&M companies, UpWind Solutions in the US and Availon in Europe.
I also believe that sooner or later a war on intellectual property infringement will start, as several components are “tailor made” (that is, fabricated for a specific wind turbine manufacturer).
For sure you can reverse engineer them, but build them again could lead to legal problem. The same apply to the software of the WTG: many improvements are due to new algorithms and control system, and if you want to implement them you will probably need to put your hands on the software of the competitors.