a rapidly developing supply chain what is the key to success?
TRANSCRIPT
Trusted Intelligence woodmac.com
A rapidly developing supply chain – what is the key to success?
WIND ENERGY DENMARK 2021
Steen Broust Nielsen | 5 October 2021 | [email protected]
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Global Wind Session for DGI woodmac.comP O W E R & R E N E W A B L E S R E S E A R C H woodmac.com 2
Energy Transition Research OfferingsWe focus on the critical intersections of technologies, policies and actors reshaping the energy landscape
Grid Edge
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Cross Commodity Perspectives
Energy Transition
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https://www.woodmac.com/research/products/power-and-renewables/
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Global Wind Session for DGI woodmac.comCost pressure 2.0
10
0
20
120
30
130
50
90
40
60
110
100
70
80
46
’22e’12
49
86
111
GW
2010 ’11 ’24e’14’13 ’15 ’16 ’17 ’18 ’26e’19
96
114
’20 ’21e
48
’23e ’25e ’27e ’28e ’29e ’30e
33
117
4034
62
107
91
53 50
63
83
94
126
83
The supply chain is gearing up for a stable average 100GW demand in the next
decade, double the past 10 years
Global wind turbine demand 2010-2030e
Note: The data is based on 2021-Q1-Global Wind Market Outlook ; All the supply side forecasts in the report are based on Q1-2021 demand outlook
AMER ON APAC ONEMEARC ON Global OFF
~100%
growth
10 year average annual demand
Source: Wood Mackenzie
Cost pressure 2.0 1
Battle of supply chains 2
Watch your footprint 3
Be smart local 4
Tech2Scale 5
5
Global Wind Session for DGI woodmac.comTech to scale
Onshore Wind CAPEX forecasts 2019-2023e Global onshore wind demand 2019-2023e
Source: Wood Mackenzie
Supply chain face ‘perfect storm’ of cost escalations, competition from solar
and policy phase-out the next two years; resilience is tested
2019 2020 2021 2022 2023
1,150
0
1,350
1,000
1,200
1,400
1,300
900
1,100
850
950
1,450
1,500
1,050
1,250
USD / MW
ChinaEMEARCNorth America
Latin America APeC
0
10
20
30
40
50
60
70
80
90
100
110
2019
56
74
2020
109
2021 2022 2023
73 72
GW-33%
North America
Latin America
EMEARC
APeC
China
1 Cost pressure 2.0
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Global Wind Session for DGI woodmac.comCost pressure 2.0
Increase in costs across the value chain
Source: Wood Mackenzie
1
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Global Wind Session for DGI woodmac.comCost pressure 2.0
How wind supply chain is going to react ??
1
8
Global Wind Session for DGI woodmac.comTech to scale
Turbine OEMs Market Share Consolidation Market shares of top five component suppliers vs others 2020e
Source: Wood Mackenzie
Consolidation across the supply chain to intensify, tier I players garner share
60%
35%
70%
60%
56%
84%
40%
65%
30%
40%
44%
16%
0% 20% 40% 60% 80% 100%
Main bearings
Blades
Converters
Towers
Gearboxes
Generators
Top 5 Rest
Increase Decrease Similar
Future
85% 87%
44% 47%
58%68%
73%
15% 13%
56% 53%
42%32%
27%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100% GW
2025e2000 2005 2030e2010 2015 2020
1034 11 39 62 94 126
Rest Top five turbine OEMs
Component suppliers must ride on the future winning turbine OEMs to succeed
2 Battle of supply chains
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Global Wind Session for DGI woodmac.comWatch your footprint
Source: Wood Mackenzie
Key components have seen a consistent shift toward best cost APAC markets
Component suppliers must closely follow OEMs nacelle assembly facilities to remain competitive
0
10
20
30
40
50
60
70
80
90
100
75%
2010
(%)
12% 13%15%
56%
29%
69%
19%
2015
70%
18%
2020
15%
2025e
10%
EMEARC production capacityAMER production capacity APAC production capacity
0
10
20
30
40
50
60
70
80
90
100
(%)
67%54%
21%
25%
2010
15%
18%
2015
14%
68%
18%
2020 2025e
73%
11%
16%
0
10
20
30
40
50
60
70
80
90
100
73%50%
25%
15%
(%)
8%
2010
60%
42%
2015
1%
67%
32%
2020 2025e
1%
26%
Regional production capacity across key regions
Nacelles
0
10
20
30
40
50
60
70
80
90
100
(%)
9%4%
47%
2015
48%
57%
2010
34%
9%
2025e
62%
29%
2020
25%
8%
67%
Blades Gearboxes Generators
3
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Global Wind Session for DGI woodmac.comBe smart local
Source: Wood Mackenzie
Supply investments continue to be shaped by LCP despite lower volume
Supply chain must innovate new business models and restructure capacity if needed
0
10
20
30
40
50
60
70
80
90
100
110
120
130
140
2018
GW137GW
12%
88%
Global wind
1,142GW
No LCP
LCP
Brazil
South Africa
Morocco
Australia
Turkey
Indonesia
Taiwan
Egypt
France
Saudi Arabia
Argentina
Russia
Ukraine
1
▪ Brazil auction slow down created a demand vacuum in the regions
leading to supply chain bruises
▪ Developers and turbine OEMs are working to address these challenges
by commissioning projects ahead of scheduled PPAs to levelized
production
▪ Recent announcement from SGRE about “Onerous” projects, taking a
hit of EUR 230mn
Volume uncertainty
2 Diminishing domestic demand
▪ Wind component manufacturing facilities have been shut down in
Canada, Argentina due to weaker demand
3Currency exchange risks
Note: LCP (Local Content Policy)
LCP markets cumulative demand 2020-2030e Challenges in LCP markets
▪ Currency risks in markets like Argentina and Turkey among others
will deter future investments
Turbine OEMs are partnering with industrial companies to manufacture the components to
contain ballooning CAPEX investments in LCP markets
4
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Global Wind Session for DGI woodmac.comTech to scale
NPI trends 2015-2020 Modularization of components
Source: Wood Mackenzie
Frenetic pace of NPI led to shorter commercial life cycles
Suppliers must transition to modularization and standardization of components to lower tech and supply costs
3 4
14
5
1316
45
19
33 50
60
34
0
5
10
15
20
25
30
35
40
45
50
55
60
65
70
75
20192015
23
2016 2017
4748
2018 2020
No. of NPIs
50
55
73
+217%
Onshore Offshore
Shaft/BearingMS GDHubs Converters Nacelles
==~ ~
Controls / ScadaVarying blade lengthsGeneratorsTowers / Sections
5
Cost pressure 2.0 1
Battle of supply chains 2
Watch your footprint 3
Be smart local 4
Tech2scale 5
Will turbine OEMs and component suppliers face a double whammy of cost
increases from raw materials and logistics and price pressure from solar PV
and policy phase-out ?
Industry consolidation continue with turbine OEM’s still with highly specialized
supply chains – are there increasing economies at the end of the tunnel ?
Nacelle assembly is drifting to best-cost markets – where to go to position for
the future ?
Local content requirements escalate costs and drive complexity – how to
innovate to counter this challenge ?
The frenetic pace of New Product Introductions exert pressure on the supply
chain efficiencies – how do suppliers transition to modularization and
standardization ?
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