Navigant Research Blog

Wind Turbine Manufacturer Trends in the US Market in 2016

— April 28, 2017

The data for year 2016 wind installations has been published in Navigant Research’s annual World Wind Energy Market Update report. There are an endless number of observations, trends, and key data points, but this blog focuses on one area: wind turbine manufacturer market share trends in the US market.

How Did Vestas Manage to Overtake GE Energy in Its Domestic Home Market?

Of the 8.2 GW built and connected in 2016 in the United States, Denmark-based Vestas surpassed US-based GE Energy for the first time in the era of the modern wind industry. Vestas took 45% market share to GE Energy’s 41%. This is somewhat surprising given GE Energy’s long-standing domestic advantage over its foreign competitors. One reason for Vestas’ success in the United States is that it has made major investments in localizing its manufacturing and supply chain in the country. From a domestic content perspective, Vestas is now comparable to GE—if not stronger—since GE has shifted in recent years to importing gearboxes from China while Vestas sources primarily from a supplier manufacturing in the state of Georgia.

Vestas also centralized its blade and tower manufacturing and nacelle assembly in Colorado, which is in the middle of the windy central plains corridor of the United States. GE outsources blades and towers to manufacturers located throughout the central plains. However, its nacelle assembly for the United States is primarily done in Pensacola, Florida, requiring higher transportation costs to get the nacelles to the central plains states of the United States, where most wind capacity is being added. In a cutthroat competitive turbine pricing environment, the additional costs of transport can win or lose contracts.

Why Are Other European Wind Turbine Manufacturers Not Getting Higher Market Share in the United States?

The remaining market share left to other foreign manufacturers is minimal, with Siemens at 9%, Gamesa at 3.5%, and a catchall “others” category that primarily represents Nordex at 1.4%. Siemens’ market share has dropped, even though it has made significant manufacturing and supply chain commitments to the United States. Yet, there is a view among corners of the wind industry that Siemens has not made enough investments in its geared onshore turbine platform to remain competitive, leading to fewer onshore sales—especially in the United States, where there is a preference for geared turbines.

Some of the numbers bear this out. In 2016, Siemens’ 805 MW installed in the United States represented 8.9% market share. By contrast, in 2012, Siemens installed 2,628 MW in the United States and captured 23% market share—ahead of Vestas with 11% share, according to Navigant Research’s wind capacity database. This strong share was primarily from sales of the SWT2.3-108 machine. Four years later and 100% of installed capacity in the United States was from the same SWT2.3-108 unit.

For the others, such as Nordex, Senvion, and Gamesa, those companies have not had as much localized manufacturing and supply chain activity as Vestas, GE, and Siemens, which makes it more difficult to compete on cost. Gamesa initially localized its supply chain in Pennsylvania, and it should be lauded for its efforts to revitalize blue collar and unionized factory jobs in that state. However, it may not have been a strategically wise decision to locate far away from the higher growth markets of the US central plains.

For a wealth of global and country-level wind market data and analysis, see this year’s annual World Wind Energy Market Update report from Navigant Research.

 

US Wind Market Installs 8.2 GW in 2016

— February 22, 2017

The United States had a strong year for wind energy capacity installation, with 6,478 MW commissioned in 4Q 2016. This capped off a total of 8,203 MW total for the year, according to the 4Q 2016 market data recently released by the American Wind Energy Association.

In 2Q 2016, Navigant Research forecast that final 2016 capacity additions were likely to be 8,200 MW, representing its most accurate annual capacity forecast to date. Navigant Research forecasts that there will be 45 GW of total new wind installations between 2017 and 2023, assuming there are no changes to the existing Production Tax Credit (PTC) phaseout timeline.

Key Takeaways of 2016

Total cumulative wind energy capacity installed in the United States now stands at 82,183 MW, with more than 52,000 wind turbines operating in 40 states. Nineteen states commissioned a total of 47 projects during the fourth quarter. Texas led with 1,790 MW, followed by Oklahoma (1,192 MW), Kansas (615 MW), North Dakota (603 MW), and Iowa (551 MW).

Texas continues to lead the nation with 20,321 MW of installed capacity, the first state to pass 20,000 MW. This success is thanks to a combination of energy demand, strong wind resources, a relatively easy development environment, and Texas’s proactive and massive expansion of transmission capacity. In 2016, Oklahoma surpassed California to become the third-ranked state in the nation with over 6,600 MW of installed capacity, and Kansas surpassed Illinois as the fifth-ranked state with more than 4,400 MW.

The United States also commissioned its first offshore wind project during the fourth quarter, the 30 MW Block Island wind project off the coast of Rhode Island. Among other offshore developments was an auction conducted just before the end of the year and won by Norway’s oil giant Statoil with its offer to pay the US Department of the Interior $42.5 million to lease an area of ocean off Long Island, New York. The space could be used to support more than 1 GW of offshore wind, providing validation of offshore wind’s future in the United States.

Market Developments

There are now 10,432 MW under construction and 7,913 MW in advanced development in the US wind market, a combined total of 18,344 MW of wind capacity. The industry also qualified significant additional project capacity for the full value of the PTC at year-end through safe harbor and physical construction without finalizing project capacities. This means substantial wind project capacity has until the end of 2020 to be commissioned.

Out of the 8,203 MW installed in 2016, Vestas (43%) and GE Renewable Energy (42%) led in market share, followed by Siemens (10%), Gamesa (4%), and Nordex USA (1%). Goldwind, Vensys, and Vergnet each composed less than 1% share. This is the first time in history that Denmark-based Vestas surpassed US-based General Electric in a given installation year. One likely reason is Vestas’ major commitment to siting its supply chain in centrally located Colorado, providing potential cost reductions relative to General Electric (which assembles its nacelles in Pensacola, Florida, requiring further transport to the major centrally located state markets).

Project developers signed 816 MW of power purchase agreements (PPAs) during 4Q 2016, contributing to a total of 4,040 MW of PPAs signed during 2016. Utilities and rural electric cooperatives represent 56% of total project capacity contracted (2,266 MW) during 2016. For the year, non-utility purchasers had 39% of the remaining capacity contracted (1,574 MW). Of the 8,203 MW commissioned during 2016, 67% of that capacity has a PPA or Public Utility Regulatory Policies Act contract in place. The remaining capacity is under utility or direct ownership (12%), has a merchant hedge contract in place (12%), or is fully merchant (9%).

 

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