Over the next ten years, the majority of wind farms in the UK and US will lose the support of the subsidy programmes they have operated under in recent decades. At the same time many owner operators are neglecting to address critical operational and performance related risks - according to ONYX InSight, a leading provider of predictive maintenance in the wind energy industry. This combination, of the withdrawal of subsidies and missing fundamentals, could leave many operators exposed in the coming merchant risk markets if they don't take action.

The future of subsidies in advanced wind energy markets is clear; and many wind farms stand to lose these protections relatively soon in their operating lifetimes. In the US, 2020 sees the close of the renewable electricity production tax credit (PTC), while any project beginning in 2019 will experience a 60% reduction in the value of this support and limited 10-year terms. By 2029, 94% of the UK's wind portfolio will operate subsidy free. These conditions will expose owner operators to a merchant market where they will be faced with fluctuating wholesale energy prices.

Despite this uncertainty, and while owner operators seek to hedge their future merchant exposure by financial means, many are ignoring the risks posed by under or over estimating power production, inefficient operational practices, unplanned downtime, operations and maintenance (O&M) costs and restricted data access. All of these factors have a major impact on wind farm profitability and reduce their ability to compete in a merchant market. Wind farm operators that fail to respond to these challenges will fall behind in a competitive market.

With owner operators looking to financial structures such as PPAs or proxy revenue swaps to guarantee income for their operations, it is essential they upgrade their O&M practices to provide the certainty around availability that will support these agreements. ONYX InSight's predictive maintenance services can increase asset availability by up to 2%, reduce the LCOE by 12% and extend components' useful life by up to 25%, improving wind farm profitability.

Once a financial agreement is in place, unplanned downtime poses a real threat to owners fulfilling their obligations, while it also increases O&M costs and eats into profits. Predictive maintenance is essential in enabling owner operators to have a clear view of turbine performance and optimise OPEX budgets by as much as 17%.

While the high cost of unplanned maintenance (typically around 40% of an OPEX budget) is easier to bear on a high performing wind farm, it can be difficult to manage on underperforming wind farms. By allowing operators to identify faults up to 12 months in advance, condition monitoring and predictive maintenance cut the cost of monitoring, repair and replacement. Across a wind farm, and even across a mixed portfolio, the reduction in overall OPEX can quickly cover the investment in a predictive maintenance programme, and raise long-term profitability and performance across both the best and worst performing assets.

"In a highly competitive merchant market, there is huge pressure on owner operators to ensure their wind farms are operating as efficiently as possible and maximising profits wherever possible. Predictive maintenance is the only way to ensure this." says Bruce Hall, CEO, ONYX InSight. "As more owner operators enter into financial agreements to secure the future of their wind farms, investing in predictive maintenance will ensure they can not only negotiate better deals but also deliver against them."

ONYX InSight's use of patented advanced analytics, machine learning and AI informed by the laws of physics helps owner operators get the most out of their assets and adopt best practice processes to help them to mitigate the risks of a merchant market.

ONYX InSight | www.onyxinsight.com