1. The Blind Man in the Dark Room with an Elephant:
Estimating O & M Costs Post Warranty
Presented by: Andrew Chant, ORTECH Power
CanWEA: Montreal, Québec
November 2, 2010

2. WHO IS ORTECH Power?
• Offices in Mississauga, Ontario
• Division of ORTECH Consulting
• 40 professionals & technicians
• Over 40 years of experience in atmospheric
sciences, over 10 dedicated to the wind industry
• Principals of ORTECH Power have backgrounds as
renewable energy developers
• Client base of independent developers and
financial institutions and infrastructure investors
• Complete range of services to the wind industry
• Unique in that we bring financial and economic
analysis to wind projects; client base requires
conservative outlook – real peoples’ money

3. Defining the Elephant
What are O & M Costs?
In accountant-speak:
• O & M Costs are direct costs affecting turbine operations;
Revenue less O & M Costs gives Net Operating Income
before GS & A costs;
• O & M Costs do not include expenses such as municipal
taxes, payments to landowners, accounting and legal;
• These GS & A costs are generally fixed. except for royalty-
like lease costs, are site market specific and easy to predict;
• Some costs are borderline such as BoP Maintenance,
environmental monitoring;
• True O & M Costs are a measure of operating efficiency of a
wind facility.

4. How Important are O & M
Costs?
• Short answer – highly critical
• Combination of shortfall in production and
unplanned increase in O & M Costs of 12 to 15%
will produce negative rate of return
• Recent experience in US indicates most facilities
operating 10-11% under P50 estimates for a variety
of reasons:
i) Inherent inaccuracies in energy output forecasts –
is there a plus P50 or is the P50 the upper limit of
output?
ii) Grid curtailment issues
iii) Availability issues such as gearbox failures

5. Revenue & Op Costs
Sensitivity

6. How Big is this Elephant?
Forecasting O & M Costs
General Approach - Estimate each Type of O & M Costs including Contingency:
1. Routine Maintenance: Check gearbox lubricating oil, bearings,
temperature, torque testing of bolts, yaw alignment, all in accordance with
OEM’s operating & maintenance manual on monthly, semi-annual &
annual basis.
2. Planned Maintenance: Major repairs & refurbishment to all major
components such as gearboxes & generators; carried out in six to eight year
cycles depending on nature of site & operational history of turbines –
designed to reduce incidence of unplanned maintenance.
3. Preventative Maintenance: Consists of monitoring of turbine performance
with aim of carrying out major repairs & refurbishments on major turbine
components only when signs of deterioration begin to appear: should have
higher contingency than Planned Maintenance; consider condition
monitoring.
4. Unplanned Maintenance: Also known as Unscheduled/Reactive
Maintenance; caused by unexpected breakdown of turbine components;
most expensive form of maintenance in terms of repair costs and
downtime.
5. BoP Maintenance: Snow clearing, access road maintenance, substation and
connection point testing; generally covers everything excluded in turbine
OEM’s warranty & service contract coverage; often
contracted out.

7. Forecasting O & M Costs
• Routine/Scheduled Maintenance relatively
easy: 1 technician for every 8 to 10 WTGs
plus consumables
• Approximately $1,500 to $2,500/year/WTG in
consumables and tools including vehicles
for BoP maintenance
• Skimping on Scheduled Maintenance
unwise; leads to higher Unplanned/Reactive
Maintenance costs

8. Planned Maintenance
• Determine if facility is performing as expected; compare
actual output against wind adjusted output less factors
beyond control such as grid outages
• Look at operating history of wind facility; review SCADA
records & Operator’s Logs; what are the most frequent
problems?
• Separate WTGs into under, average and superior performers
• Look at component life cycles then adjust for complex terrain/
extreme weather = turbulence = higher mechanical stress on
gearboxes and drive trains
• Do thorough mechanical inspections using NDT techniques
or install condition monitoring to detect deterioration before
component failure
• Devise spare parts program; keep on hand spare yaw motors,
calculate frequency of lightning strikes – necessity to replace
blades

9. Planned Maintenance
(Cont’d)
• Based on operations analysis and mechanical inspections,
plan major repair and refurbishment “campaign”
• Schedule for low wind/ good weather months to reduce
revenue loss
• Start with under-performing wind turbines
• Organize replacement component plan - refurbished or new
gearbox goes in, gearbox for refurbishment goes to OEM
• Advantages:
i) Catch deteriorating components before catastrophic failure
ii) Spreads crane costs over a number of turbines – estimated
savings approximately $25.000/WTG
iii) Reduces downtime
iv) Lowers but does not eliminate Unscheduled or Reactive
Maintenance contingency reserves

10. Staring Down the Beady-Eyed Bean Counters
Justifying the Up-Front Costs
Reactive v. Planned Maintenance Costs
Component Reactive Planned Savings
Gearboxes
Refurbishment $250,000 $125,000 $125,000
Crane Costs $100,000 $77,000 $23,000
Downtime (Days) 14-21 2 12-19
Lost Revenue @
$1,008/WTG/Day $17,640 $2,016 $15,624
Subtotal $367,640 $204,016
Add 30%
Contingency $110,292 $61,205 $49,087
Total $477,932 $265,221
Gross Savings
Planned v. Reactive $212,711

11. Staring Down the Beady-Eyed Bean Counters
Justifying the Up-Front Costs (Cont’d)
Gross Savings
Planned v. Reactive $212,711
Assume 25 Year
Economic Life/WTG = 3 Repair & Refurbishment Cycles
Gross Savings/WTG = $638,133
Annual Gross Savings/WTG $31,907
Less:
(i) Carrying Costs
Spare Component Inventory $3,600
(ii) Condition Monitoring $2,500
Net Annual Savings/WTG in 2010 Dollars $25,807
Net Annual Savings for 50 WTG 100 MW Facility $1,290,350
Net Lifetime Savings in 2010 Dollars over 20 Years $25,807,000

12. Lifetime Savings: Planned v.
Reactive Maintenance
Net Operating Income for a Proactive and Reactive O & M Routine
$20.00
$21.00
$22.00
$23.00
$24.00
$25.00
$26.00
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
Year
NetOperatingIncome($millions)
Reactive
Proactive

13. New Developments: Current Status of O & M
Servicing Market
• To obtain warranty OEM’s require that WTGs be serviced by turbine manufacturer for
minimum two year period following commissioning.
• Lenders will require warranty plus reserves for major repairs and refurbishment.
• Previously manufacturers offered a “serial defect” clause in warranty; required
replacement of all of a particular component if a percentage (15-20%) failed in the facility
– no longer available.
• Because of serial defect experience OEM’s shortened warranty period from 5 years to 2.
• Now re-entering the O & M Servicing market with various offerings:
– i) terms of 2, 5, 8 and 10 years
– ii) coverage from full service to parts only or remote monitoring.
– iii) costs range from $40,000 to $100,000+ per turbine annually depending on turbine model and
size.
• Obviously seen as area of growth.
• Tendency for senior management to opt for longer term “full service” package since
shifts O & M & technology risk to service provider.

14. New Elephants in the Room
Larger & Unproven Turbines on the Market
An Example: GE 1.5 versus the GE 2.5
Features:
Nameplate Capacity 1.5 2.5
Hub Height (m) 64.7/80/85 75/85/100
Rotor Diameter (m) 77 100
Swept Area (m²) 4,657 7,854
Gearbox Type Multi-staged planetary helical Combined Spur Planetary
Gear Ratio 1:72 1:117.4
Generator Type Asynchronous, double fed induction Synchronous permanent
magnet
Generator RPM 1,500-1,800 1,650
First Installed 2005 2006
Number Installed 2010 (est.)* 14,000 200
*Source: German Wind Energy Association & GE Energy Website

15. Conclusions
• Using basic principles of operations analysis, understanding
component life cycles and applying simple cost accounting
methods, it is possible to quantify the savings from a planned
maintenance program
• Can be adopted to specific site conditions and WTG
characteristics
• Although there are upfront costs, over time there are larger
and substantial savings
• Planning for future O & M Costs means assessing site &
turbine characteristics, estimating future repair &
refurbishment costs, evaluating the value of the certainty of
OEM service contracts and understanding the degree of risk
you are prepared to assume.
• The purpose of this presentation is to provide a framework
for this risk analysis. .

16. Good Luck with Your Elephant Training Program
Remember: Watch Where you Step
They are Hard to Paper Train
Presented by: Andrew Chant, ORTECH Power
CanWEA: Montreal, 2010
Tel: 905-822-4120 ext 463
achant@ortech.ca