Global Opportunities in Wind Power
-
Upload
frost-sullivan -
Category
Technology
-
view
2.826 -
download
2
Transcript of Global Opportunities in Wind Power
Frost & SullivanFrost & SullivanWind Power – Overview and Opportunities Wind Power – Overview and Opportunities
Helping Our Clients Accelerate GrowthThrough Best Practices in
Growth, Innovation and Leadership
February , 2012
Table of Contents
1. Introduction to global wind power industry2. Drivers and recent changes 3. Competitive landscape: recent changes and 2012 -2013 predictions4. Value chain and adjacent markets5. Major technology developments 6. Concluding remarks
Asia, mainly, China has become #1 region for new installations and will continue to increase its capacity
Frost & Sullivan Conclusion:• Aggressive growth in installed capacity during last few years made China #1 market for new installations, the
government goals and plans will continue to drive new additions • The US is a “stop-and-go” market due to the policy mechanisms • Europe is still an important region for off-shore wind power development, leading the global industry in number of
installations and technology development
New annual installed capacity in MW, 2003-2010
2003 2005 2008 2010
5,440 6,339 8,641 18,956
2,608 2,424 8,351 9,307
1,685 1,799 6,298 5,021
1,372 1,765 1,737 2,140
408 1,430 1,655 1,527
99 502 1,595 1,438
Source: GWEA, 2011
Major market drivers for wind energy: long-term need is intact…
Frost & Sullivan Conclusion:• The long-term demand for renewable energy is likely to stay on the political agenda, thus giving at least some
certainty to investors and the industry • Wind power as the most mature large-scale renewable energy technology has a good chance to withstand the
current headwinds. More so, the cost of wind electricity is nearly on par with conventional power
Wind energy market: key drivers and restraints, 2011-2012 Availability of grid infrastructure enables integration of wind power in the European power system
Demand and supply imbalance of energy is driving effort for energy independence
EU 2020 target to meet 20 per cent of energy needs from renewable sources by 2020
Wind power generation technology advancement
Growth Drivers
Market Restraints
Lack of expertise in offshore wind technology
Weaker demand for wind energy leading to overcapacity in the market
Financial crisis has resulted in stricter lending terms, causing project financing issues
Planning and bureaucratic issues delay project permits and executions
Source: Frost & Sullivan, 2011
…short-term: declining macro environment - the cost of funding has increased
Strained national budgets; widening debt crisis in Europe
ASP pressure from ongoing supply/demand mismatch
Fiscal constraints
Demand is shifting globally from Europe to
Asia
Growth is slowing down
Factors of Influence New Market Trends
Heightened emphasis on bankable, qualified products and capacity
4
1
2
3
Revisions of renewable energy subsidies
Rising finance costs
Emergence of new players: “buy Chinese, borrow Chinese”, corporations
Exit of lower-tier players, consolidation of industry
Access to R&D and latest technology becomes vital
Frost & Sullivan Conclusion: While the new capacity additions will be curtailed in the near term (2011-2013), we still see significant longer term opportunities for wind energy worldwide based on country targets for clean energy and long-term demand. At near term, fiscal tightening aimed at alleviating the EU sovereign debt levels could impact subsidies at the time when the private sector is only starting to emerge as a source of funding.
Source: Frost & Sullivan, 2011
Current policy developments increasingly put risk on subsidies
Key Wind Markets, Annual Installations MW, 2011-2012
\
Country Policy Development Impact on Wind
France Wind support hasn’t been changed, contrary to solar
Spain
Proposal to cut FIT by 35%, plus other measures translating into insufficient returns
UK
New system based on long-term fixed contracts is proposed, which may reduce return for wind farms.
GermanySolar FIT reduced, proposal to cap the market, Wind still supported.
US
Fed cash grant expires in Dec, Fed budget for clean energy programmes cut by the US Senate.
Neutral
Negative
Positive
India
1,460
2,900
EuropeUSA
5,000
6,000
4,000
China
2011 2012 Annual installations, MW
9,300
9,600
Frost & Sullivan Conclusion:The market conditions are putting extra pressure on the wind OEMs to reduce prices and bring wind power on par with conventional electricity
Note: The graph is not drawn to scale
Note: All figures are rounded. Source: Frost & Sullivan, 2011
19,000
17,000
Competition is fierce, the Chinese has got global ambitions
Cumulative installed capacity by manufacturer, 2010
Frost & Sullivan Conclusion:• Having inundated domestic market and running from the upcoming industry consolidation, the biggest Chinese
wind OEM announced plans for global expansion • While they managed to win a few contracts lately, it’s early to talk about the upcoming Chinese dominance similar
to the solar industry • Expansion by buying approved site for wind power development is more likely than large-scale sales of equipment
in the near term
Four largest Chinese wind OEMs
Will the Chinese conquer the global wind manufacturing?
Wind project developer/owner priorities, 2011
Frost & Sullivan Verdict:• An entire offer including on-the-ground servicing teams and support has to be taken into account when comparing
incumbent and Chinese turbine producers. While smaller developers, constrained by cost of capital, may be tempted to “buy Chinese, borrow Chinese”, we don’t anticipate utilities and large corporate investors choosing Chinese products in the near-medium term.
• One reason is that reputational risks from accidents with wind turbines are high, which hasn’t been discussed lately, in contract with cost advantages Chinese equipment can deliver.
• Technology improvement along with proven track record of faultless operations are the key pre-requisites, which Chinese manufacturers will still have to attain.
Reducing equipment, construction/operation costs
Increasing reliability of proven technology
More stable cash flows from geographic diversification
Bankable equipment
Access to low-cost finance
4
1
2
3
5
• In order to capitalize on these trends, successful wind turbine manufacturer will have to:
• Optimize inventory/plant utilization levels• Own proprietary and reliable turbine
technology • Balance cost cuts and warranty extension • Offer a range of equipment
• Can Chinese leading wind turbine producers deliver it?
• Or will increased concerns with wind turbine’s quality present a chance for international players to re-gain market share in China?
Source: Frost & Sullivan, 2011
Weather warning: headwinds for wind industry in 2012-2013
Major market developments in 2012-2013
Uncertainty of demand
Raising financing costs cutting out smaller developers
Intensifying competition in equipment segment
Strong buyer’s market 4
1
2
3
Frost & Sullivan Conclusion:• 2012 will become a tough year for wind OEMs as a decline in wind turbine prices is likely, mainly due to
overcapacity in turbine production• Chinese players especially may be subject to declined profitability through falling ASPs. The wind turbine
manufacturing in China is likely to become consolidated. Even top 10 producers may be reshuffled
Source: Frost & Sullivan, 2011
Tables of Contents
1. Introduction to global wind power industry2. Drivers and recent changes 3. Competitive landscape: recent changes and 2012 -2013 predictions4. Value chain and adjacent markets5. Major technology developments 6. Concluding remarks
Looking for investment opportunities… equipment production segment hardly presents any opportunities
Equipment Manufacturers
Production Equipment Suppliers
Project Developers/Owners
Component Suppliers
Planning and Construction
Service Providers
Traditional Approach to Value Chain
Extended Value ChainEquipment Manufacturers:
1
1
• Concentrated market with 10-15 major players globally. Examples: Vestas, GE Energy, Gamesa, Enercon, Suzlon, Siemens Wind, Nordex
• Opportunities: • Not abundant as the equipment
supply is concentrated and dominated by large multi-discipline industrial powerhouses
• Offshore wind power presents some opportunities but the competitions is fierce
• A potential market segment to look into: pure – play offshore wind technology developers: Bard Engineering, Multibrid (Areva Wind since June 2010), DarWinD, Scanwind, Clipper, DeWind (Daewoo) etc.
• Long-term opportunity - floating wind technology developers
X
X
Source: Frost & Sullivan, 2011
Looking for investment opportunities… project development may have a few hidden gems, but still risky
Equipment Manufacturers
Production Equipment Suppliers
Project Developers/Owners
Component Suppliers
Planning and Construction
Service Providers
Traditional Approach to Value Chain
Extended Value ChainProject development :
2
2
• Overall, this segment is in a slightly better position than OEMs, and is likely to benefit from ASP reduction and intensified competition among turbine producers
• However, uncertainty about the future of the government support in the short term may make it risky
• Market structure is less concentrated but utilities form a major force. However, there is a fair number of smaller developers
• Opportunities: • Mid-size and small size on-shore
wind project developers finding it difficult to finance their projects at present conditions
• Offshore wind development is dominated by utilities due to high Capex
X
X
Source: Frost & Sullivan, 2011
Looking for investment opportunities… components are plenty but many major parts have been vertically integrated into wind OEMs
Equipment Manufacturers
Production Equipment Suppliers
Project Developers/Owners
Component Suppliers
Planning and Construction
Service Providers
Traditional Approach to Value Chain
Extended Value ChainComponent manufacturers :
3
3
• Thousands of suppliers are present, with all critical components having been vertically integrated into wind OEMs
• Offshore wind could present opportunities in Europe, however, critical components tend to be manufactured by industrial powerhouses
• Opportunities: • HVDC cables may come in short
supply as offshore wind segment picks up in Europe. Major suppliers: ABB, Siemens, Nexans, Prysmian
• Off-shore installation vessels: A2Sea (49% bought by Siemens in 2010)
• Foundations: Burntisland Fabrications, BiFab, WeserWind
X
X
Source: Frost & Sullivan, 2011
Source: EWEA & Frost & Sullivan
Component % onshore % offshore
Tower 26 40
Rotor Blades 22 25
Gearbox 13 19
Power Converter 5 5
Others 34 15
Wind Energy Market: Main Cost Components of a Wind Turbine (Europe), 2009
Wind Energy Market: Major Components of a Wind Turbine (Europe), 2009
1
2
3
Wind Energy Market: Main Components of a Wind Turbine (Europe), 2009
4
5
Foundation
Component Onshore Offshore
6
Bearings
Tower
Control System
Gearbox
Blades
Generator
Transformer
7
8
9
Power Converter
Relevant Irrelevant
Pitch
Rotor
Blades
Wind direction Brake
Low-speed shaft
Gear box
Generator
Controller
Tower
Yaw drive
Yaw motor High-speed shaft
Nacelle
Anemometer
Wind Vane
Looking for investment opportunities… scouting other components markets is worth a try …
ComponentTechnological
complexityCompetitive
structureProcurement
practicesBarriers to
entrySupply-
demand gap
Bearings High Consolidated Outsourced Very high Shortening
Blades Moderate ConsolidatedTrend towards
in-house High Low
Control System Moderate Consolidated In-house High Very low
Foundation (offshore) Moderate Consolidated Outsourced Moderate Very low
Gearbox High Consolidated Outsourced Very high Shortening
Tower Low FragmentedTrend towards
in-house Low Very low
• It is by virtue of the complexity of the technology, long-term agreements with turbine manufacturers and the utmost focus on quality that makes most wind turbine component markets difficult to enter, with the exception of towers.
• From the analysis, it can be seen that as the onshore wind energy market has been maturing, the components market has become more consolidated either through companies dropping out or through mergers and acquisitions.
• The opportunity for new entrants lies in the growing offshore wind energy market as well as component markets such as towers that do not require complex technology.
Wind Energy Market: Summary of Market Attractiveness of Wind Energy Components (Europe), 2009
Looking for investment opportunities… however, procurement practices have to be taken into account …
Source: Frost & Sullivan, 2011
Looking for investment opportunities… vibrant wind services industry is set to flourish as wind plant owners strive to max output
Equipment Manufacturers
Production Equipment Suppliers
Project Developers/Owners
Component Suppliers
Planning and Construction
Service Providers
Traditional Approach to Value Chain
Extended Value ChainService providers:
4
4
• Traditionally dominated by wind OEMs, the service industry is changing as ISPs are increasingly active and see their market share rising (28% in 2009)
• OEMs form alliances with ISPs to outsource certain jobs
• Key independent service providers in EU: GES,
B9 Energy, Voith Industrial Services Wind
• Opportunities:
• Regional ISPs having good relations with OEMs and servicing a number of wind farms. Usually started by engineers, such companies can benefit from a private equity investor’s growth oriented mindset
• Offshore wind services is a growing sector as evidenced by a few O&G services Cos diversifying into it
X
X
Source: Frost & Sullivan, 2011
Looking for investment opportunities… vibrant wind services industry is set to flourish as wind plant owners strive to max output
Equipment Manufacturers
Production Equipment Suppliers
Project Developers/Owners
Component Suppliers
Planning and Construction
Service Providers
Traditional Approach to Value Chain
Extended Value ChainService providers:
4
4
• Traditionally dominated by wind OEMs, the service industry is changing as ISPs are increasingly active and see their market share rising (28% in 2009)
• OEMs form alliances with ISPs to outsource certain jobs
• Key service providers: GES, B9 Energy, Voith
Industrial Services Wind
• Opportunities:
• Regional ISPs having good relations with OEMs and servicing a number of wind farms. Usually started by engineers, such companies can benefit from a private equity investor’s growth oriented mindset
• Offshore wind services is a growing sector as evidenced by a few O&G services Cos diversifying into it
X
X
Source: Frost & Sullivan, 2011
Research is focussed on cost-reduction technologies and offshore turbines
Compared to offshore wind, onshore wind is considered mature. Many established turbine manufacturers are operating in this market. Barriers to entry are very high giving leeway only for breakthrough technologies either in turbine technologies or in turbine components.
Offshore Technologies
Offshore wind is the future of wind energy in Europe. Considering the strong head start they have compared to other regions, they are likely to lead the market.
Onshore Technologies
Gearbox
Generators
Turbines
Towers
Blades
Planetary gear solutions, gearless turbines.
Permanent magnet generators, high-temperature superconducting generator.
Multi-megawatt power rated turbines, individual pitch control turbines.
Taller towers moving close to hub heights up to 150 mts.
Longer blades, stall-regulated blades, variable pitch blades, carbon fiber to replace fiberglass.
Energy Storage Technologies
Pumped Hydro Storage
CAES Flywheels Battery Storage (Lithium-ion)
Stage of Development
Developed
NascentSource: Frost & Sullivan
Deepwater Turbines
Floating wind turbine generators, higher rotor speeds, lower torque, downward facing turbines.
Planetary gearing and medium speed generators
Leaders in research and development are primarily large wind OEMs and component manufacturers
Emerging Technologies Companies Operating in this Sphere
Direct drive permanent magnet generator
High-temperature superconducting generator
Advanced converters (higher wind speed cut-offs) (Areva’s Multibrid GmbH)
Deepwater wind turbines
Blade designs (alternative to fiber glass)
Source: Frost & Sullivan
Wind Energy Market: Companies Involved in Emerging Technologies (Europe), 2009
Converteam acquired by GE in September, 2011.
Contact Details
“The Growth Partnership Company”
Alina BakharevaResearch Manager – Renewable Energy, Energy & Power SuppliesTel: +44 207 915 7829
Email: [email protected]
Frost & Sullivan
www.frost.com
Rachel Hutchinson Director, Business Development Tel: +44 207 343 8344
Email: [email protected]