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Moving to a Digitalized Business is Key to Reducing Costs

Over the last several years, governments around the world have been rallying around the renewable energy market, creating incentive programs and tax breaks to spark investment in wind energy. 

In Europe, for example, the Horizon 2020 Fund, which was established in 2014, administers funding in three phases through 2020. For energy investments specifically, €150 million is up for grabs for wind energy projects from 2016-2020. An additional €367 million is available for techologies that lower the cost of energy, according to WindEurope. (Note: not all projects funded from this source will be in the wind energy sector). The funding is broken out into smaller programs for projects that reduce costs, improve performance reliability, increase market uptake and connect the grid and power markets.

These incentives have a shelf life within the next couple of years, so it's imperative that operators and developers take advantage of them while they are available, but also invest in technologies that reduce their cost of energy far into the future. 

Moving to a digitalized business model helps developers and owner/operators achieve such goals. 

For example, digitalization provides forward visibility into which sites have optimal development potential. Then once installed and operational, it provides forecasts for when maintenance should be scheduled, where and when replacement parts will be needed, and life extension actions that reduce overall costs and optimize reliability and revenue. Developers are able to build multiyear budgets and maintenance forecasts, leverage better terms with their suppliers and have the data needed to more accurately dispute warranty claims.

Digitalization is not a new business model. It’s been implemented in aerospace & defense, social applications and even some aspects of healthcare. In aerospace, for example, digitalization has enabled “Power by the Hour” or “Performance Based Logistics." Imagine only paying for your wind assets when they work? Basically, operators would pay for the wind turbines when they were operational, and not pay when they are down.  Benefits of this type of business include improved product availability and a reduction in the cost of ownership. Compensation would be tied to the supplier’s ability to create products that produce and generate revenue, which would become instrumental in aftermarket service supply chains as it combines locked-in pricing, cost sharing and performance-based compensation.

 “Power by the Hour” may be a few years down the road in wind, but it’s a topic of discussion that’s worth having today.