Published on February 13th, 2019 | by Joshua S Hill0
Global Wind Turbine Supply Chain Valued At $540 Billion Over Next Decade
February 13th, 2019 by Joshua S Hill
The global wind turbine supply chain could be worth as much as $540 billion over the next decade, according to new figures published by research firm Wood Mackenzie Power & Renewables, but price pressure will quickly begin to affect component suppliers as turbines become more powerful.
Wood Mackenzie Power & Renewables published its new Global wind turbine technology market report 2018 report earlier this month, outlining the latest wind turbine technology developments and trends through a 10-year outlook. Locked behind a traditional industry-specific pay-wall, the report’s available information is slim.
“Global wind annual installations are expected to grow 40% in the next decade – from 53 [gigawatts (GW)] in 2018 to over 75GW by 2027,” said Shashi Barla, Wood Mackenzie Power & Renewables senior analyst. “Pressure to lower the levelized cost of electricity (LCoE) is accelerating technology developments, which is causing a wider proliferation of next-generation 4.X/5.X/6.X [megawatt (MW)] turbines. As a result, we expect a 20% decline in the total number of turbines deployed, from over 20,000 turbines in 2018 to just over 16,000 by 2027.”
This is not so much groundbreaking news as just the natural observations of the industry as it has been trending over the last couple of years. With technology developments pushing wind turbine power ratings higher, fewer turbines are necessary to accomplish higher overall capacity additions — something which is true for both onshore and offshore. In other words, where once it took 100 2 MW wind turbines to achieve a 200 MW project, it now might only take 33 or 40, depending on the size of onshore turbine.
Similarly, if we look offshore, the 659 MW Walney Extension, which was completed in September 2018, is currently the largest offshore wind farm in the world and consists of a combination of 40 7 MW and 47 8.25 MW wind turbines. In a few years, however, the proposed 2.4 GW Hornsea Project Three could make use of turbines rated 10 MW or higher, such as MHI Vestas’ 10 MW turbine announced in September or the 12 MW Haliade-X turbine which GE Renewable Energy announced in March 2018 and which is aiming for commercialization by 2021.
This same technological advance will trickle down to impact component suppliers, as well, with fewer components being required for fewer but larger turbines. Further, turbine manufacturing is being centralized in a specific few companies.
“We expect the global market share among the top five turbine OEMs to rise to more than 73% by 2027, compared to just 54% in 2016,” Barla added. “It is therefore imperative that component suppliers secure strategic relationships with these winning OEM to solidify their own future success.”
Continued technological pressure is also affecting the industry in other ways, as longer blades and taller towers are required for more powerful turbines, creating logistical challenges that are expected to be answered by new transportation methods and on-site/closer-to-site manufacturing — a trend which will further favor the increase in average project capacity size. Wood Mackenzie further claim that turbine original equipment manufacturers (OEMs) “continue to leverage independent suppliers to out-source component manufacturing, while the component design continues to move inward.”
“After exploiting the low-cost footprint advantage in China, Western turbine OEMs are now searching for out-sourcing partnerships with Chinese component suppliers as a way to squeeze costs further,” explained Barla.
“Offshore growth in Asian markets will facilitate expansion opportunities for independent blade suppliers, as western markets are primarily served by turbine OEMs in-house capacity. As blade length increases on next-generation turbines, carbon fibre utilization for structural blade support is expected to increase its share of the market, from 25% in 2018 to around 57% by 2027, due to support light-weighting and other advanced properties.
“In the corporate space, China’s NGC currently dominates the domestic Chinese gearbox market. As noted in our research, turbine OEMs will likely scout for new suppliers in order to fend off the threat from growing NGC dominance. In western markets, Siemens’ decision to phase out direct drive turbines will likely increase the market share for gear suppliers, such as Winergy and ZF. Additionally, turbine OEMs like Siemens Gamesa (offshore turbines) and Goldwind are working to reduce the dysprosium content in their permanent magnet generator designs to less than 1% in order to combat the volatility in rare earth metals pricing.”