International Journal of Prognostics and Health Management, Vol. 7, No. 1, 2016

PHM-Based Wind Turbine Maintenance Optimization Using Real Options

Xin Lei1, Peter A. Sandborn1
1CALCE, Department of Mechanical Engineering, College Park, MD, 20742


A simulation-based real options analysis (ROA) approach is used to determine the optimum predictive maintenance opportunity for a wind turbine with a remaining useful life (RUL) prediction. When an RUL is predicted for a subsystem in a single turbine using PHM, a predictive maintenance option is triggered that the decision-maker has the flexibility to decide if and when to exercise before the subsystem or turbine fails. The predictive maintenance value paths are simulated by considering the uncertainties in the RUL prediction and wind speed (that govern the turbine’s revenue earning potential). By valuating a series of European options expiring on all possible predictive maintenance opportunities, a series of option values can be obtained, and the optimum predictive maintenance opportunity can be determined. A case study is presented in which the ROA approach is applied to a single turbine.

This article is available through the publisher or to CALCE Consortium Members for personal review.

[Home Page] [Articles Page]
Copyright © 2016 by CALCE and the University of Maryland, All Rights Reserved