Turbine availability guarantee

June 2023: Siemens Energy withdraws its guidance after finding failure rates higher than expected on onshore turbine components at its Siemens Gamesa subsidiary, and the stock loses more than a third in a single session. What the market read that day was the cost of guarantees: warranty replacements, and availability payments owed to operators over years of service contracts. The availability guarantee is the commercial centerpiece of the long-term service contract (full service agreement) signed with the manufacturer for ten, fifteen years or more. The manufacturer promises a rate, usually between 95 and 97%, nearer the top onshore, lower offshore where access depends on wave height. It is measured in time (hours the turbine is available over the hours in the period) or in energy (actual output over possible output at measured wind). The IEC 61400-26-1 standard, in its 2019 edition, sets the categories used to count, and the contract says which are excluded: grid curtailment, force majeure, wind out of range, often externally caused losses. Below the threshold, the manufacturer pays an amount based on lost energy, usually capped at a fraction or all of the annual service fee. Availability above a second threshold sometimes earns a bonus. The interplay with insurance plays out on machinery breakdown. A gearbox failure triggers the physical damage policy and, after the deductible in days, business interruption; the same downtime lowers availability and can trigger the manufacturer's payment. The policy often provides for crediting sums received under the guarantee, or reserves recourse against the manufacturer. On a serial defect, the contractual guarantee carries most of the weight, and the underwriter checks the cap on availability payments before pricing BI.

• IEC 61400-26-1:2019, Availability for wind energy generation systems