Managing Wind Turbine Reliability and Maintenance via Performance-Based Contract

Performance-based contracting (PBC) is reshaping the acquisition, operation, and maintenance of capital equipment. Under the PBC scheme, we propose a holistic approach for lowering the cost of wind turbine ownership while meeting the availability requirement. Our effects are focused on integrated firms who design and market wind turbines, and also provide maintenance and repair service. PBC differs from conventional service contracts in that the wind farmers compensate the service provider for the system performance, not the spare parts and repair labor. We explore the analytical relationship between system cost, reliability and spare parts stocking. This analytical insight into the system performance allows the turbine manufacturer to optimize design, production, and after-sales services. The study aims to create a theoretical basis to facilitate the transition of the maintenance paradigm from a material-based contract to a performance-based contract in the power industry.