This study analyses the renewable energy services market in Europe with a special focus on the wind energy market. The second part of this study will focus on the biomass energy market. This study provides a market overview including the scope and definitions, market forces (challenges, drivers and restraints), revenue forecasts, geographical and competitive analysis. The country analysis focusses on the top seven markets that provide opportunities from 2010 to 2016. They are Germany, Spain, Italy, France, UK, Portugal and Denmark. The competitive analysis sheds light on the three types of industry participants – turbine manufacturers, independent service providers and project owners.
This Frost & Sullivan research service titled European Renewable Energy Services Market provides detailed analysis on market forces, competitive structure as well as pricing structure and geographies for the rapidly developing wind services market. The study is expected to benefit equipment suppliers, project owners, independent service providers, and other companies looking to enter or invest in this part of the value chain. In this research, Frost & Sullivan’s expert analysts thoroughly examine the following markets: offshore wind and onshore wind O&M (Operation & Maintenance) services market.
Growth in the Offshore Sector Energizes European Renewable Energy Services Market
The European renewable energy services market had been gaining rapid traction until mid 2008 when the financial crisis set in. Although 2009 was a successful year for the market, the lack of demand from project owners for setting up new wind farms in 2009 is going to negatively impact 2010 revenues. The market is picking up momentum and will return to previous growth rates in 2011 and beyond. The slow market growth rate in 2010 is affecting the number and volume of service contracts as well. A combination of factors including energy security, climate change, increased energy demand, ageing conventional power plants, as well as the competitiveness of wind energy have positively impacted market dynamics and helped spearhead growth in this domain. Customers are demanding highly efficient smart grids to optimize revenues and getting the most out of the turbine with the least downtime is becoming crucial, notes the analyst of this research service. Thus, corrective maintenance is boosting the prospects of the wind energy service market.
However, some challenges have clouded the market landscape. High O&M costs are proving to be roadblocks to progress in the wind energy services market even though the recession has brought prices down marginally in the new contracts signed. The reason for the high O&M costs is that wind turbine manufacturers (WTMs) have realized that services are a high margin portion of their revenue streams. Until recently, manufacturers were wholly focused on installations, but factors such as competition from other companies and evolving customer needs have forced them to consider services more seriously. An imbalance of demand and supply of O&M services has led to a new breed of service providers, the independent service providers (ISPs), who undercut the WTMs.
ISPs have been steadily venturing into the wind services market. Despite some disadvantages, they have become a force to reckon with in the market. ISPs offer their services at competitive prices and can work on a wide range of turbines. Apart from this, they have the advantage of local presence. All these factors are making ISPs more popular with project owners.
Another noteworthy trend is the mushrooming of in-house service teams. Due to economic considerations as well as dissatisfaction with service providers, project owners, who outsource the servicing of their wind asset portfolios, are beginning to invest in and start in-house service teams. This is particularly evident in the offshore wind industry.
Despite recent successes of ISPs in securing contracts, turbine manufacturers still hold approximately 65 percent of the market, while ISPs hold 28 percent. As ISPs become more competitive and aggressive, in the future, their market share is expected to increase, encroaching on the market share of the WTMs. To ensure successful business outcomes, WTMs must partner with ISPs, as the latter have the advantage of working with a variety of turbines. This is vital for end users that own multiple brands of turbines. In terms of the competitive scenario, the existing market participants hold sway over the market, making it difficult for new entrants, says the analyst. Companies must possess the right skill sets, financial wherewithal, and brand name to gain the cutting edge in this market. Participants must understand the nuances of the market and rapidly cater to end-user demands. Recent trends indicate that predictive maintenance has been gathering momentum. Products such as condition monitoring systems and supervisory control and data acquisition (SCADA) are gaining traction. Project owners hope this will have a positive effect on the corrective services that have to be employed, reducing O&M costs.
Expert Frost & Sullivan analysts thoroughly examine the following market sectors in this research:
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The following technologies are covered in this research: