Navigant Research Blog

New Wind Turbine Battleground Focused on 4 MW Units

— September 28, 2017

The latest battleground in the ever tightening wind turbine market is with onshore wind turbines in the 4 MW range. Until now, this segment has had few offerings and only minor commercial deployments. No less than four turbine OEMs announced new 4 MW turbine models over the past few months. The overwhelming majority of annual onshore wind turbines installations are in the 2 MW to 3 MW range, and innovation continues to occur rapidly in that nameplate space.

Power Contract Auctions Prevail

However, a number of factors are pushing turbine OEMs to design more turbines with higher nameplate capacities. This includes the steady shift in Europe and other markets from fixed priced contracts for wind to highly competitive power contract auctions. These auctions squeeze power purchase agreement pricing for wind projects as low as developers and investors are willing to go, and taller tower, larger rotor, larger nameplate machines promise higher annual energy production (AEP). Larger turbines also maximize AEP in a geographically limited location. Europe in particular is already a population-dense continent and land availability for wind projects is becoming increasingly constrained.

There are also efficiencies of scale with producing the most megawatt-hours from each single wind turbine foundation and tower. This factor is more quantifiable with offshore wind, where foundations and installation cost is proportionally much higher than it is for onshore. In general, onshore turbines represent around two-thirds of onshore project CAPEX while offshore turbines represent one-third of offshore project CAPEX due to the higher foundation cost. This is why offshore wind turbines may double in size by 2025. The same principle applies (to a lesser degree) that the more AEP per turbine in the onshore realm, the better the project economics.

Competitors Abound

The following are summaries of the most recently announced turbines competing in this new 4 MW battleground:

  • GE Renewable Energy: GE Renewable Energy announced its first turbine offering in the 4 MW range with a new 4.8 MW unit that features a 158-meter rotor enabled by carbon blades. GE has historically avoided carbon fiber for most of its blades, but the demands of longer blades for this oversize turbine may have made carbon use unavoidable. The turbine will have around 30% higher AEP than GE’s previous 3 MW range turbines. Tower heights are 101 meters, 120.9 meters, 149 meters, and 161 meters. GE’s acquisition of Alstom Wind, LM Wind Power, and Blade Dynamics likely played a role in this new 4 MW platform.
  • Vestas: Vestas upgraded and uprated its 3 MW range to now include three models in the 4 MW range. This includes the high wind V117-4.0/4.2MW, which is designed to handle wind gusts up to 80 meters per second that would enable it to handle hurricane and typhoons. V136-4.2MW and the V150-4MW/4.2MW are medium to low wind turbines designed for most areas in Europe and other global markets.
  • Nordex: Nordex is uprating its 3 MW Delta series into a 4 MW-4.5 MW turbine with a 149-meter rotor for medium wind speeds. The turbines are planned for prototype testing in the third quarter of 2018, followed by several pre-series turbines and series production starting in 2019. The company touts the turbine’s wide power range from 4 MW to 4.5 MW, which is ideal for adapting individual installations to a specific grid operator’s requirements and to local wind conditions or noise restraints. Steel towers come in 105- and 125-meter hub heights and concrete-hybrid towers offer hub heights of 145 and 164 meters.
  • Enercon: Germany’s Enercon has been ahead of all other turbine OEMs with 4MW class turbines, having had its EP4 turbines (4-4.2 MW) E-126 and E-141 already commercially available roughly 2 years ahead of Vestas and others. In fact, the newest E-series turbines are downrated from a previous E-126 model that had exceeded 7 MW nameplate capacity as far back as 2012. The E-141 units feature concrete-steel hybrid towers to enable a 159-meter hub height. Enercon is also rapidly evolving its 4 MW class turbines with some radical design departures, which is thoroughly explained by Windpower Monthly.
 

Wind Project Construction Hits Record Pace Mid-Year

— August 31, 2017

The US wind market is in the midst of a wind plant construction boom. As of early August, 25,819 MW of wind projects were in various stages of advanced development or construction, according to the American Wind Energy Association’s (AWEA’s) U.S. Wind Industry Second Quarter 2017 Market Report. This represents a 41% increase in under construction projects over the same quarter in 2016 and the largest amount ever recorded by AWEA. The remarkable increase is the result of the long-term phaseout of the wind industry’s favored incentive, the Production Tax Credit (PTC).

The extension, which was secured by the industry through negotiations with Congress, is structured so that wind plants that began construction by the end of 2016 will receive 100% PTC value. Projects starting construction in 2017 will receive 80% of the PTC value, and the percentage will continue to decline through 2020 (2018: 60%; 2019: 40%; 2020: 0%). Most importantly, revised guidance provided by the IRS in May 2016 changed the construction window from 2 to 4 years. Therefore, projects on the tail end of the PTC window will be finishing construction through 2023.

Most companies seeking the maximum financial return on their wind projects aim to qualify their projects as having started in 2016 or 2017. The bar to qualify for start construction is not very high, which is one reason why so many projects are in various stages of advanced development and construction. To be considered under construction, a wind project developer must have started work of a significant nature on the project site or signed turbine or other equipment supply agreements representing at least 5% of the total expected project cost.

The Big Three

Other key highlights from AWEA’s quarterly report include an update to the installed capacity in 2017: a modest 357 MW during Q2 and 2,357 MW year-to-date. This brings the US total to 84,405 MW, with more than 52,000 turbines operating in over 41 states. The turbine vendor market share represented by installations so far in 2017 reinforces an ongoing trend: the big three turbine OEMs, Vestas, General Electric, and the recently merged Siemens Gamesa Renewable Energy (SGRE), represented 97% of all turbines installed in the first half of 2017.

Intense competition has led some vendors to reduce supply chain and manufacturing commitments in the US market. However, this is not a market that can be competitively sourced via a high proportion of imported supply chain. Massive towers, blades, and the nacelle drivetrain componentry ideally are manufactured within the country. The big three continue to have outsized commitments to domestic manufacturing or sourcing from vendors based in the United States, an approach that secures their substantial market shares.

Power Purchase Agreements

Corporate purchases of wind power and other renewables capacity continue to be a major trend exhibited in AWEA’s quarterly report. Power purchase agreements (PPAs) signed during the first half of 2017 totaled 1,697 MW; 37% of that capacity was through direct corporate purchase where companies like Apple, General Mills, T-Mobile, and others contracted PPAs. Notably, direct utility ownership represented 45% of capacity in advanced development. Direct utility ownership of wind plants has typically represented a low percentage of installed capacity. Yet, utilities are motivated to buy directly into wind when it is on a sale that is eventually going to subside.

Future US quarterly market reports can be found at AWEA’s market report link. Also worth noting is that AWEA recently launched an interactive map that tracks the growing number of wind projects online and the hundreds of manufacturing facilities supported by the wind industry.

 

2016 Reshuffles the Top 10 Global Wind Turbine Manufacturers

— June 8, 2017

Navigant Research’s annual World Wind Energy Market Update ranking of the top 10 wind turbine vendors is closely observed every year. This benchmarking goes back 22 years—before other similar analyses existed and when commercial wind turbines had 50 meter rotors and a top nameplate size of around 750 kW. Today in 2017, there are rotor diameters pushing beyond 140 meters for some onshore turbines and 164 meters for offshore turbines. Nameplate capacities for onshore are mostly between 2 MW and 4 MW and 9 MW for offshore, and 10 MW capacities are just around the commercial corner.

In 2016, a total of 54.3 GW was installed globally, a 14.0% annual decrease. This annual downturn is largely the result of China dropping from 30.2 GW installed in 2015 to 23.3 GW in 2016 due to changing incentive rates in that market. The new wind capacity added in 2016 brings new cumulative wind capacity up to 486.8 GW globally, a 12.1% annual increase.

The downturn in China from an unbelievable amount of capacity installed in 2015 to a merely astonishing level installed in 2016 resulted in a shake-up of the top 10 ranking, as a few Chinese vendors dropped in capacity and rank against their peers. Merger and acquisition (M&A) activity also effected the ranking, with GE now including Alstom wind activity and Nordex including Acciona activity.

The Top 10 in 2016

The actual megawatts and market share numbers installed in 2016 are available in the full report, but the following summary describes the year 2016 annual top 10 ranking:

  • Vestas regained its longtime No. 1 status globally for annual wind installations with double-digit growth rates. It even achieved higher capacity additions in the United States over GE Energy, which has normally held a perennial lead.
  • GE Energy saw its strongest year to date and moved from 3rd place in 2015 capacity in last year’s Navigant Research World Wind Energy Market Update report to 2nd place for 2016 capacity. Its acquisition of Alstom’s wind turbine division helped, but it was largely momentum with GE Energy’s wind portfolio that drove its move upwards.
  • Goldwind fell in 2016 to 3rd place from its briefly held No. 1 position in 2015, when it rode the cresting wave of the record Chinese market.
  • Gamesa took 4th place in 2016, underlining why it was a target for M&A with Siemens’ wind division, a mega-merger that was made official in April 2017. Despite no Spanish home market, Gamesa saw continued success in a variety of global growth markets, propelling it from 8th place globally in 2014 and 5th in 2015 to 4th in 2016.
  • Enercon had a strong 2016, moving up the ranks to 5th place in 2016, thanks to a strong domestic German market, a reputable direct drive turbine portfolio, and well-diversified sales internationally.
  • Siemens again fell two positions in the 2016 top rankings to 6th place from 4th in 2015—and from 2nd in 2014, when it nearly took the top slot from Vestas. In 2016, a commanding lead in its offshore wind division could not offset lower installation rates in its onshore segment.
  • Nordex broke into the top 10 category, taking 7th place globally. This jump in 2016 was due largely to its acquisition of Acciona in 2015, which rapidly shifted Acciona’s international success to the Nordex Group.
  • The final three top 10 companies in order were all Chinese: Envision, Ming Yang, and United Power. All three saw lower installation totals in 2016 than in 2015 as the Chinese market cooled. Envision moved up the rankings within the large group of Chinese turbine OEMs.

Top 10 Wind Turbine Suppliers Market Share, World Markets: 2016

(Source: Navigant Research)

 

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.

 

Blog Articles

Most Recent

By Date

Tags

Clean Transportation, Digital Utility Strategies, Electric Vehicles, Energy Technologies, Policy & Regulation, Renewable Energy, Smart Energy Practice, Smart Energy Program, Transportation Efficiencies, Utility Transformations

By Author


{"userID":"","pageName":"Wind Energy","path":"\/tag\/wind-energy","date":"12\/17\/2017"}