25-04-06
Rapid expansion in the installed capacity of
renewable power plants in Europe will be accompanied by the rising need for
related power plant services with revenues estimated to rise to $ 1.2 bn by
2012, according to market researchers Frost & Sullivan.
Frost & Sullivan finds that European Renewable Power Plant Servicing Market
earned revenues of $ 417.9 m in 2005 and says that servicing companies will need
to offer cost-effective, value-added services to their clients to promote uptake
levels.
"Country-specific policies and incentives to foster renewable energy supply
complemented by activities at the European level, mainly through the European
Commission, are expanding the renewable power plant industry," notes Frost &
Sullivan Research Analyst Rajat Kumar.
"This will create huge growth potential for the European renewable power plant
servicing market."
At the same time, renewable power plant operators with limited experience in
the actual running of their plants are increasingly outsourcing their servicing
activities, including day-to-day operation and maintenance, to third-party
specialists.
While this trend of outsourcing non-core activities is allowing plant operators
to focus on their core competencies, third-party services providers also offer
the additional advantage of minimized service risks through the provision of a
fixed-price contract for an appreciable length of time. However, scepticism
regarding outsourcing these servicing activities continues to persist with many
operators preferring to carry out the operation and regular maintenance
themselves rather than relying on specialized servicing companies.
"The utilities, with their vast experience in the operation of power plants,
suffer from a traditional mindset and remain reluctant to outsource their
servicing requirements," explains Mr Kumar.
"They prefer to employ a full-time staff to carry out these services and view
power generation as a core activity instead of looking at the power plant as an
asset whosejob is to earn a return just like any other asset."
This situation is similar for industrial power plants with most generally
reluctant to cede control over plant maintenance and operation. However, this
sector is increasing the amount of maintenance activities outsourced by it.
Moreover, with competition intensifying, industrial plants will be under
pressure to continue with the outsourcing approach.
Faced with growing price competition, service providers will need to offer
clients improved service offerings with maximum value. Potential strategies in
this regard could include the bundling of several services to make the final
offer more attractive as well as catering to niche markets in order to
differentiate their offerings from that of other service providers.
"Moving towards a complete asset management of the power plant is a strategy
that promises to give a big boost to the market in the medium and long term,"
concludes Mr Kumar.
"However, for this to happen, the historic perspective of the utilities, that
view operations and maintenance as their core competency, has to change."
Source: Power Engineering Magazine