Shifting Power of Negotiations from OEMs to IPPs
By Lakshman Sutrave, November 17, 2017
Talk to early investors in the wind energy space in India, and they’ll tell you that their outlook was very different then. A large part of the business plan for Independent Power Producers (IPPs) revolved around tax benefits and subsidies. Operations and maintenance (O&M) practices were usually outsourced to the wind turbine manufacturers.
For the OEMs, it was a seller’s market.
It’s interesting to see how things have changed over the years. IPPs have gained enough expertise in wind technology working with OEMs over the years. Many now know that as business has grown tougher with shrinking tariffs and reduced tax / depreciation benefits, they need to be smarter around plant operations.
Many now ask questions on how OEMs can improve plant efficiency to get the most from their investments. A key factor in this equation is in sharing data generated by the turbines.
Wind turbines generate a lot of data around their operations and downtimes, which OEMs use to improve their product evolution. IPPs are now looking to mine this data for insights on where they lose Units, and what & when corrective actions were taken by the OEMs to fix them.
This demand has understandably caused some consternation amongst the OEMs, who are now facing more pointed questions, thanks to data analytics. But with increasing competition between OEMs and the evolution of the market, many now feel that in the current buyer’s market, data is a resource that can help both parties negotiate better.
We’re beginning to see a change in the contracts and operations due to this:
- Contracts framed between IPPs and OEMs have become more Generation-based than Machine availability-based – Lesser risk on IPPs Revenue Generation
- IPPs coming up with new projects include the data sharing clause in the contract, which the OEMs agree to, in order to maintain their customers
- Some OEMs offer access to their own Analytics solutions, thereby sharing data and gaining customer confidence
- IPPs with analytics solutions like Retina Empower often help O&M teams of OEMs identify key reasons for losses / breakdowns resulting in a faster turnaround
With the future getting more data driven, this trend bodes well for IPPs, who can now take more informed decisions about their portfolio and revenues.
About Retina Empower
Retina Empower is a predictive analytics solution that helps you identify under-performing assets and prescribes next course of action using machine learning & data science algorithms. The solution also alerts on probable failures at the component level and assigns performance index scores that help taking proactive actions.
BCT has developed powerful monitoring and predictive analytics solutions for the Renewable Energy industry. BCT’s renewable energy solutions for wind power and solar power are built using RETINA – our patent-pending predictive analytics platform that helps clients increase energy generation, improve machine availability and identify asset performance degradations proactively. The solutions are OEM-agnostic and provide insights critical for driving renewable business operations. (www.renewables.bahwancybertek.com)