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WIND ENERGYResearch Brief
Sustainable Industry Classification System™ (SICS™) #RR0103
Research Briefing Prepared by the
Sustainability Accounting Standards Board®
December 2015
www.sasb.org© 2015 SASB™
I N D U S T R Y B R I E F | W I N D E N E R G Y
WIND ENERGY
Research Brief SASB’s Industry Brief provides evidence for the disclosure topics in the Wind Energy industry. The brief
opens with a summary of the industry, including relevant legislative and regulatory trends and
sustainability risks and opportunities. Following this, evidence for each disclosure topic (in the categories
of Environment, Social Capital, Human Capital, Business Model and Innovation, and Leadership and
Governance) is presented. SASB’s Industry Brief can be used to understand the data underlying SASB
Sustainability Accounting Standards. For accounting metrics and disclosure guidance, please see SASB’s
Sustainability Accounting Standards. For information about the legal basis for SASB and SASB’s
standards development process, please see the Conceptual Framework.
SASB identifies the minimum set of disclosure topics likely to constitute material information for
companies within a given industry. However, the final determination of materiality is the onus of the
company.
Related Documents
• Wind Energy Sustainability Accounting Standards
• Industry Working Group Participants
• SASB Conceptual Framework
INDUSTRY LEAD
Henrik R. Cotran
CONTRIBUTORS
Andrew Collins
Bryan Esterly
Anton Gorodniuk
Jerome Lavigne-Delville
Nashat Moin
Himani Phadke
Arturo Rodriguez
Jean Rogers
Quinn Underriner
Gabriella Vozza
SASB, Sustainability Accounting Standards Board, the SASB logo, SICS, Sustainable Industry
Classification System, Accounting for a Sustainable Future, and Materiality Map are trademarks and
service marks of the Sustainability Accounting Standards Board.
Table of Contents
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Industry Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Legislative and Regulatory Trends in the Wind Energy Industry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Sustainability-Related Risks and Opportunities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Environment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Social Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Human Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Workforce Health & Safety . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Business Model and Innovation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Design to Mitigate Community & Ecological Impacts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Materials Efficiency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Leadership and Governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Materials Sourcing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Appendix
Representative Companies : Appendix I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Evidence for Sustainability Disclosure Topics : Appendix IIA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Evidence of Financial Impact for Sustainability Disclosure : Appendix IIB . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Sustainability Accounting Metrics : Appendix III . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Analysis of SEC Disclosures : Appendix IV . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
References
I N D U S T R Y B R I E F | W I N D E N E R G Y
I N D U S T R Y B R I E F | W I N D E N E R G Y | 1
INTRODUCTION
The Wind Energy industry, while the largest in the
renewable energy space, is still a nascent industry
in the worldwide energy space. While on a
country level, notably in northern European
countries such as Denmark, wind energy can
make up a significant percentage of electricity
production, it still only produces a fraction of
global energy. Furthermore, its intermittent
nature means that until storage technology
evolves significantly, wind energy will have to
exist in compliment to other base-load powers.
This industry, like all in the energy generation
space, has experienced decades of significant
government support. While there are some
regions of the world where the wind resources
and technological possibilities make wind energy
cost competitive with other sources, the industry
will need to continue its rapid pace of innovation
while minimizing environmental and social
concerns in order to maintain its governmental
and societal license to operate and financial
incentives.
There is increasing public concern about the
environmental and health impacts of both
nonrenewable and renewable energy generation.
Wind energy’s major advantage over conventional
energy sources, such as coal, is that it does not
produce greenhouse gases (GHG) or air pollutants
during generation. There are, however, other
renewable sources of energy generation, and the
industry needs to continue to address societal
concerns (e.g., turbine blades killing legally
protected species of birds, turbine size and noise
causing community pushback in the project
development phase) to maintain its license to
operate.
Management (or mismanagement) of certain
sustainability issues, therefore, has the potential
to affect company valuation through impacts on
profits, assets, liabilities, and cost of capital.
Investors would obtain a more holistic and
comparable view of performance if wind energy
companies report metrics on the material
sustainability risks and opportunities that could
affect value in the near and long term in their
regulatory filings. This would include both positive
and negative externalities and the non-financial
forms of capital that the industry relies on for
value creation.
Specifically, performance on the following
sustainability issues will drive competitiveness
within the Wind Energy industry:
• Ensuring worker health and safety to
reduce injuries and fatalities;
• Designing wind turbines so that wind
energy projects are less likely to face
community pushback over social and
environmental concerns;
• Designing wind turbines and managing
the production process to use materials
more efficiently and lower costs; and
• Managing the sourcing of key inputs to
minimize the cost, supply volatility, and
reputational risk that comes from
SUSTAINABILITY DISCLOSURE TOPICS
HUMAN CAPITAL
• Workforce Health & Safety
BUSINESS MODEL AND INNOVATION
• Design to Mitigate Community &Ecological Impacts
• Materials Efficiency
LEADERSHIP AND GOVERNANCE
• Materials Sourcing
I N D U S T R Y B R I E F | W I N D E N E R G Y | 2
manufacturing products that contain rare
earth metals and conflict minerals.
INDUSTRY SUMMARY
The Wind Energy industry is comprised of
companies that manufacture wind turbines,
blades, towers, and other components needed for
wind power generation.I Firms invest heavily into
research and development to produce wind
turbines for both onshore and offshore use that
can efficiently turn wind into electrical energy.
Companies that develop, build, and manage wind
energy projects are also a part of this industry.
However, as manufacturers represent the vast
majority of revenue generated by the companies
in this industry, this brief focuses primarily on
issues related to their activities.
Wind Energy Technology
There are generally three major categories of
wind turbines: small turbines, which generate 100
kilowatts (kW) or less of power, mid-scale
turbines, which generate between 100kW and
1000kW, and large turbines, which generate
more than one megawatt (MW) of power. In the
U.S., these represent 15 percent, 15 percent, and
70 percent, respectively, of the total turbines
manufactured. The percentage of large-scale
turbines will likely increase as manufacturing costs
decrease and states increase their Renewable
Energy Portfolio requirements (covered in the
following section, Legislative and Regulatory
Trends in the Wind Energy Industry).1
Small turbines are often for individual or small-
scale commercial use. The rest of the turbines are
sold to independent power producers or directly
to utilities companies that then construct large-
scale wind power-generating facilities. There is
I Industry composition is based on the mapping of the Sustainable Industry Classification System (SICSTM) to the
also a trend in this industry toward companies
diversifying their offerings to include the
installation and maintenance of the turbines for
these downstream customers.2
While there are differing technologies, a generic
turbine has three fiberglass blades attached to a
tall cylindrical steel tower, often ranging between
80 and 120 meters tall, with a gearbox to
increase the power of relatively slow rotations of
the blades. The blades are attached to a rotor,
and a nacelle houses the gears and generator
behind that rotor. Generally, these tall objects are
held in place with a concrete base.3
The main differences between turbines are from
the use of the aforementioned gearbox and the
use of direct-drive technology, which includes
using magnets to amplify the power of the
spinning blades. Direct-drive turbines have the
benefit of reducing the number of moving parts in
the unit, potentially increasing its lifespan and
reducing maintenance needs, since the gearbox is
the component of the wind turbine most subject
to failures.4 This makes these types of turbines
particularly attractive for offshore wind farms. Not
only do the higher average wind speeds offshore
put even more strain on these systems, but
getting maintenance crews out to sea is often
very costly.5 Direct-drive turbines also have the
added benefit of lower inertia, which means that
they can start to operate at significantly lower
speeds than those needed for standard turbines.6
Direct-drive turbines do, however, require large
amounts of rare earth materials, making them
expensive and prone to supply chain risks
(discussed later in the disclosure topic of Materials
Sourcing). Direct-drive turbines have been rising in
popularity, representing 18 percent of the total
market in 2006 and 22 percent in 2011. They are
Bloomberg Industry Classification System (BICS). A list of representative companies appears in Appendix I.
I N D U S T R Y B R I E F | W I N D E N E R G Y | 3
projected to reach 29 percent of the total market
by 2020.7
Wind energy project development consists of a
few key elements: analyzing and choosing
potential sites with satisfactory wind resources,
engaging with landowners and stakeholders to
gain access and licenses to operate on the land,
connecting the wind turbines to the electrical grid
so the energy can be sold, choosing a model of
wind turbine that best suits the area, financing,
and transporting the often massive wind turbines
to the development site.8
Industry Size and Segments
As of September 24, 2015, the Wind Energy
industry had approximate global annual revenues
of $28.9 billion.9 Only four publicly traded firms
on U.S. exchanges had primary operations in this
industry: China Ming Yang Wind Power Group,
Broadwind Energy, Cleantech Solutions, and
American Superconductor Corporation. Both
Ming Yang and Cleantech Solutions are
headquartered in China. Other major companies
manufacturing wind turbines include General
Electric (GE) and Siemens, although turbine
manufacturing forms a small component of their
overall business.II Vestas, GE, and Enercon had the
largest cumulative market share as of 2014, with
67 GW, 44 GW, and 37 GW, respectively, of the
376 GW installed globally. In 2014 alone, GE
(headquartered in the U.S.) was responsible for 11
percent of new installations, Siemens (Germany)
10 percent, Vestas (Denmark) 10 percent, and
Goldwind (China) 9 percent.10 These companies’
locations generally mirror the largest markets
worldwide. In 2014, China installed the most
wind power generating capacity, 23 GW (up from
16 GW in 2013). This is nearly five times as much
as the 4.8 GW the U.S. installed in 2014. In
II GE is classified under the Electrical & Electronic Equipment industry in the Sustainable Industry
absolute numbers, China also had installed the
largest amount overall at the end of 2014, with
115 GW, followed by 66 GW in the U.S. and 39
GW in Germany.11
This is a highly concentrated industry, with the
top four manufacturers that sell products in the
Chinese market (Gold Wind, Guodian United
Power, Ming Yang, and Envision) comprising
roughly 47 percent of the market in China in
2014.12 The top three companies selling products
in the U.S. market (GE, Siemens, and Vestas)
represented roughly 98 percent of the nameplate
capacity installed in the U.S. in 2014.13 The
significant capital costs and expertise required to
build wind turbines creates a high barrier to entry
for new companies. Furthermore, as wind
turbines represent a significant cost and have
expected usefulness for three decades, earlier
entrants who were able to cultivate a reputation
for quality work maintain a significant competitive
advantage.14
Key External Drivers and Cost Structure
Major drivers for this industry are costs of
competing energy sources and governmental
regulation (covered under Legislative and
Regulatory Trends in the Wind Energy Industry),
which both affect demand. Additionally, volatility
in the cost of key inputs, discussed later in the
Materials Efficiency issue, as well as capital costs,
can have large effects on industry profits.
The rise of fracking (hydraulic fracturing) in the
U.S. has driven down domestic costs of natural
gas significantly. The average cost in the U.S.
between 2005 and 2010 was 44 percent higher
than the average cost between 2011 and October
6, 2015.15 The low cost of generating electricity
from natural gas has made investment in the
Classification System (SICSTM), while Siemens is not listed on U.S. exchanges.
I N D U S T R Y B R I E F | W I N D E N E R G Y | 4
building of natural gas power plants more
appealing to utilities, while driving down domestic
demand for wind energy projects.16 However, as
wind (and solar) energy costs reach parity with
natural gas in more markets, the capacity factor
of these plants has been dropping, making them
less certain investments.17
Total demand for electricity also affects demand
for wind energy components and projects. In the
U.S., demand for electricity is predicted to grow
at a slow rate, as the majority of sectors have
become electrified already and population growth
is slowing. Globally, however, the U.S. Energy
Information Administration (EIA) predicts that
energy consumption will rise 56 percent by 204018
as more sectors are electrified and manufacturing
operations expand,19 which represents a
significant opportunity for wind energy firms.
The industry has a slightly higher level of capital
intensity than the average manufacturing
industry, with $0.30 spent for every dollar of
wage costs in the U.S.20 The industry’s largest cost
segment is purchases, driven by rising steel prices.
Wage costs in the U.S. wind industry are more
than 50 percent higher than the average for the
manufacturing sector, accounting for 16.5
percent of revenue, as firms in this industry need
mostly skilled labor. The industry also faces
moderately high research and development (R&D)
costs: for example, Vestas spent 2.9 percent of its
revenue in 2014 on R&D.21 The median net
income margin for firms in this industry is a low
2.9 percent.22
If U.S. subsides do not continue, companies with
large U.S. market share will look both to members
of the North American Free Trade Agreement
(NAFTA) and Latin American countries to continue
their growth. U.S.-based manufacturers ship to
European countries as well, but the high cost of
shipping such massive components keeps nearly
half of U.S. exports to Canada.23 The major
Chinese firms in this industry will derive most of
their growth domestically, as the Chinese
government has committed to doubling its wind
power capacity between 2014 and 2020.24
Popular dissatisfaction with the pollution caused
by China’s rapid industrialization has fueled the
aggressiveness of this expansion. China’s Prime
Minister Li Keqiang has announced a “Combating
Air Pollution Action Plan” that aims to begin to
reduce China’s reliance on coal, providing a major
opportunity for even greater expansion of China’s
renewable energy sectors, such as wind power, in
the future.25
Intense price competition from Chinese
manufacturers in the past five years has caused
failures and consolidations of U.S. players, as the
higher-cost manufacturers were no longer
competitive. While exports are a relatively low
percentage of overall Chinese production—4.3
percent of total sales volume in 2013—they are
rising rapidly as the Chinese domestic industry has
nearly double the capacity of the annual
governmental target.26 Nonetheless, the ability of
U.S. companies to provide ongoing maintenance,
along with significantly lower shipping costs,
keeps them competitive. Shipping costs from
China to the U.S. are estimated to be around
$200,000 for a single turbine, or roughly a fifth of
the total cost.27
Firms have recently been moving toward
differentiating their offerings from competition,
especially international competition. They have
also been diversifying their revenue streams by
adding more local post-sale maintenance and
support services.28 These types of services can
constitute a substantial part of a firm’s income,
especially as these services often have higher
margins than wind turbine manufacturing. For
example, in fiscal year (FY) 2014, revenue from
these services constituted 14 percent of Vestas’s
I N D U S T R Y B R I E F | W I N D E N E R G Y | 5
total revenues and 31 percent of its operating
income.29 Vestas is the world’s largest maker of
wind turbines.
In the U.S., wind farms are concentrated in Texas
and Oklahoma in the Southwest, in California in
the West, and in Iowa and around the Great
Lakes in the Midwest.30 Given the high cost of
transporting wind energy equipment, much of the
manufacturing in the U.S. is heavily concentrated
in these same regions.31 Similarly, China-based
firms like Ming Yang and Cleantech Solutions do
functionally all of their manufacturing in China.32
The U.S. recently saw approval for its first
offshore wind project off the coast of Rhode
Island, with new large-scale land auctions
expected in early 2015.33 Offshore wind is
typically a better natural resource for electricity
generation than onshore wind, as it is stronger
and more reliable, and therefore able to generate
more power more often. Offshore projects also
receive generally lower levels of community
pushback and are closer to major coastal cities,
which are potential markets, making them more
attractive to companies.34
By the end of 2014, installed wind energy
capacity added up to roughly 5 percent of the
U.S.’s total electricity demand.35 This percentage
is likely to increase if the favorable trends
currently affecting the industry continue: a
general decrease in input prices; strong demand
increases from the U.S., China, and emerging
markets (recently, this has been especially true of
Latin America);36 and a continued solid rate of
technological advancement in materials efficiency
and turbine power output. A 2012 study by the
National Renewable Energy Laboratory (NREL)
found that there was a general consensus among
wind energy technology studies that the field
would see cost reductions in the range of 20 to
30 percent by 2030.37
Levelized cost of energy (LCOE), a metric
commonly used to compare the viability of
building new sources of energy, is the per-
megawatt hour (MWh) total cost of building and
operating a power generating plant over its
expected life.38 It includes everything from cost of
materials to capital costs to tax breaks. As of Q4
2014, Bloomberg calculated the LCOE for onshore
wind to be $85/MWh. For offshore wind, it was
as high as $2,176/MWh. For reference, the LCOE
for coal was $91/MWh and for nuclear energy it
was $140/MWh. A 2014 U.S. EIA study projected
that by 2019, accounting for regional cost
variances, wind projects could be even more cost-
competitive. They could have a lower bound of
$71/MWh for onshore wind and $169/MWh for
offshore wind in the U.S. Again, for comparison,
in this projection, coal would have a lower bound
of $87/MWh and nuclear would have $93/MWh.39
Investor interest in this industry is growing rapidly,
and this trend is expected to continue. There was
roughly $17.9 billion invested globally in new
wind generation capacity in 2000. In 2014 there
was $99 billion invested globally in new wind
energy capacity, an 11 percent increase over the
previous year.40
Valuation
Analysts examining alternative energy assets
evaluate each project by net present value (NPV),
internal rate of return (IRR), and payback period
metrics. Capacity factor of wind energy projects—
that is, how much electricity is actually being
produced (rather than the nameplate efficiency)—
is the main determinant a wind energy project’s
projected cash flows. By managing cost of
production, as well as by increasing capacity
factors of wind energy equipment, companies in
the Wind Energy industry are likely to increase the
NPV of wind energy assets for clients and shorten
their payback period, driving demand.41
I N D U S T R Y B R I E F | W I N D E N E R G Y | 6
LEGISLATIVE AND REGULATORY TRENDS IN THE WIND ENERGY INDUSTRY
The Wind Energy industry is a heavily regulated
segment of the economy, affected by national as
well as state policies that offer subsidies and
create demand through clean energy purchasing
requirements. It is also subject to environmental
legislation and conflict mineral disclosure
guidelines. The Wind Energy industry has seen its
revenue ebb and flow over the past decades in
response to varying levels of governmental
support. That support is put in place to attempt to
decrease national carbon emissions and reliance
on foreign sources of energy. The following
section provides a brief summary of key
regulations and legislative efforts related to this
industry.III
The Renewable Electricity Production Tax Credit
(PTC),IV which has been in place on and off since
1992, has historically been a significant driver of
production growth for the U.S. Wind Energy
industry.42 It initially offered a 2.3-cent/kilowatt
hour (kWh) tax credit for energy produced in the
first decade of a project’s life.43 It was allowed to
expire at the end of 2013, but in December 2014,
a retroactive one-year extension through
December 31 was granted. A further extension
was granted in March 2015, to January 1, 2017.44
According to many industry members, this small
extension did them little good due to the long
lead time of wind projects. A major industry
group, the American Wind Energy Association
(AWEA), wanted a six-year phase-out, as the year-
to-year uncertainty of the governmental support
was harming companies’ ability to finance wind
energy projects. If this credit is again allowed to III This section does not purport to contain a comprehensive review of all regulations related to this industry, but is intended to highlight some ways in which regulatory trends are impacting the industry.
expire in 2017 it could, at least in the short-term,
stunt industry growth.45 While firms in this
industry that manufacture wind turbines or
related products are not direct beneficiaries of
this tax credit, they benefit from the resulting
increased demand for wind energy projects.
Companies in this industry also benefited from
the Advanced Energy Project Credit, created by
the American Recovery and Reinvestment Act of
2009. It provided a 30 percent tax break for
creating (among other things) wind turbine
manufacturing plants, significantly cutting down
the cost of building a wind farm by bringing
down turbine costs.46 The expiration of this credit
at the end of 2013 caused some revenue
contraction for the industry, more of which may
be felt when the projects that started with the
help of this credit are completed in the coming
years.47
Besides the U.S., governments in other major
markets have also provided incentives for wind
energy and other renewable energy projects.
China has a myriad of governmental support
programs for the wind industry,48 but the main
governmental tool used is feed-in tariffs, which
offer a guaranteed payment rate for energy
produced. The Chinese government introduced
feed-in tariffs for onshore wind in 2009 with
payments ranging between €0.052/kWh and
€0.062/kWh, depending on the region.49 A feed-
in tariff for offshore wind was introduced in
2014, with rates ranging between $0.12/kWh and
$0.14/kWh. These rates are guaranteed for 20
years for projects put into operation before 2017,
after which the price will be reassessed based on
changes in technology. These payments drive
production of wind power capacity, as investors
IV It is worth noting here, that many of the regulations in this section deal with the renewable energy sector as a whole, i.e., they also include other types of energy technologies, like solar, hydroelectric, or geothermal.
I N D U S T R Y B R I E F | W I N D E N E R G Y | 7
know that once installed, their projects will have a
guaranteed cash flow.50 China is currently in the
midst of its 12th Five-Year Plan for Renewable
Energy, in which their National Energy
Administration set a goal of reaching 100 GW of
grid-connected wind power by the end of 2015.51
The Chinese government has claimed to have met
these goals52 and also announced the goals of the
13th Five- Year Plan for Renewable Energy, which
is aiming for 200 GW.53 This provides a certain
market guarantee for Chinese manufacturers. In
2014, E.U. leadership agreed to a goal of 40
percent GHG reduction by 2030, while obtaining
at least 27 percent of all of its energy from
renewable sources.54 To meet these goals, nations
make binding yearly commitments based on their
size and wealth.55
The U.S. federal government has purchasing
requirements related to renewable energy. The
Energy Policy Act of 2005 stated that by 2013,
the total amount of renewable energy purchased
by federal agencies could not be less than 7.5
percent of the total electricity purchased. This was
updated with a Presidential Memorandum on
December 5, 2013, which provided an updated
purchasing schedule. The memo raised the
minimum to 10 percent in FY 2015, with gradual
increases each year to 20 percent in FY 2020 and
subsequent years.56 With $5.8 billion in annual
energy costs, the federal government is the
largest utilities customer in the U.S., making these
requirements a significant driver of national
demand for renewable energy.57
Twenty-nine U.S. states and the District of
Columbia have Renewable Portfolio Standards
(RPS).58 These require a specified percentage of
electricity used in a state to be generated from a
renewable source. There are varying thresholds
among states. For example, New York has a quota
of 30 percent by 2015 and California has a goal
of 33 percent by 2020. In many states, these
requirements can be met by buying a credit that
has been unbundled from the underlying energy,
further facilitating growth in this industry and
generating demand for manufacturing and
maintenance services.59
Incentives for this industry could also come in the
form of advantageous tax structures in the future.
Currently, master limited partnerships (MLPs) (a
funding structure that is taxed like a partnership
but can be publicly traded on U.S. markets) are
only available for non-renewable energy sources
like oil and coal. If the currently stalled MLP Parity
Act eventually passes, wind energy project
developers could gain access to significantly more
and cheaper capital, which would in turn drive up
demand and reduce costs for wind energy
products.60 To take advantage of the previously
mentioned PTC, an investor must have a
significant tax liability, which limits the benefits of
the tax credit to pension funds and retail
investors. Allowing these major sources of capital
to be more easily invested in wind energy projects
through structures such as MLPs could therefore
prove to be a boon for the industry.61
Currently lacking this form of financing, both
wind and solar firms began to use the yieldco
model in 2013. In this structure, a parent
company can create a publicly traded subsidiary
with its long-term contracted assets. This divorces
the steady payments of a wind farm, for example,
from a company’s riskier operations. It also helps
it attract more and cheaper capital. The yieldco
structure mimics many of the benefits of the MLP,
as it is structured so that the depreciation on the
assets and costs void all or most of the tax burden
that the generated income creates. Then, the
earnings can be passed on untaxed, or mostly
untaxed, to investors. This avoids full double
taxation, with profits being taxed at the corporate
and investor level, as is the case in a traditional
corporate structure.62
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Companies in this industry are also subject to U.S.
regulation in environmental and social matters.
Project developers and utilities in the U.S. are
potentially subject to the Endangered Species Act,
the Migratory Bird Treaty Act, and the Bald and
Golden Eagle Protection Act. The U.S. Fish and
Wildlife Service and the U.S. National Oceanic and
Atmospheric Administration Fisheries Service
implement these acts.
The U.S. Department of the Interior passed a rule
in 2013 that allows the U.S. Fish and Wildlife
Service to issue 30-year take permits for
endangered species. This effectively shields wind
energy companies and power producers from the
large fines that generally accompany responsibility
for the death of a protected animal.63 Take
permits do not penalize company activities that
cause the death of protected animals, provided
the company proves it is making efforts to lessen
its impact on a species and its actions will not
have a long-term impact on the population. Many
in the media have criticized this as government
favoritism.64
The Wind Energy industry is required to adhere to
specific employee health and safety standards,
which, in the U.S., are enforced by the
Occupational Safety and Health Administration
(OSHA) of the U.S. Department of Labor. The
major concerns in this industry involve safely
handling electrical equipment and securing
workers, who often work at great heights during
the wind turbine installation process.65
In addition to these environmental and worker
safety laws, wind energy companies are also
subject to the Dodd-Frank Wall Street Reform and
Consumer Protection Act of 2010 and subsequent
rules adopted by the U.S. Securities and Exchange
Commission (SEC). These laws require companies
to publicly disclose their use of “conflict minerals”
if they are “necessary to the functionality or
production of a product” that the company
manufactures or contracts to be manufactured.
These minerals include tantalum, tin, gold, or
tungsten (3TG) originating in the Democratic
Republic of Congo (DRC) or adjoining countries.
Specifically, the provision requires SEC-registered
companies to determine if they have exposure to
DRC-sourced 3TG, and 3TG minerals are
commonly used in wind energy equipment.
Companies with exposure must subsequently
determine and report on the specific source.66 The
rules, which required companies to make their
first filings effective by June 2, 2014, have been
upheld by the U.S. District Court for the District of
Columbia, despite a legal challenge from trade
associations.67
SUSTAINABILITY-RELATED RISKS AND OPPORTUNITIES
Industry drivers and recent regulations suggest
that traditional value drivers will continue to
impact financial performance. However,
intangible assets such as social, human, and
environmental capitals, company leadership and
governance, and the company’s ability to innovate
to address these issues are likely to increasingly
contribute to financial and business value.
Broad industry trends and characteristics are
driving the importance of sustainability
performance in the Wind Energy industry:
• Product design to minimize ecological
and human health impacts: The Wind
Energy industry, through its potential to
reduce global GHG emissions compared
to traditional energy sources, has received
substantial government support around
the world in the past few years.
Maintaining a reputation as an
environmentally and socially beneficial
alternative to traditional energy sources is
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therefore vital to the industry’s success in
the short and long term.
• Cost reductions to scale impacts: The
Wind Energy industry needs to continue
to innovate to drive its costs down relative
to traditional power production. While
there is a global move toward renewable
sources of energy to decrease GHG
emissions, the most cost-effective means
of reducing GHGs are likely to gain
competitive advantages, particularly in an
environment of slow global growth. In
this context, efficiency in the use and
sourcing of materials will help wind
energy companies not only to reduce
impacts on the environment and society
from materials production, but also will
enable them to lower costs and drive
long-term industry growth.
As described above, the regulatory and legislative
environment surrounding the Wind Energy
industry emphasizes the importance of
sustainability management and performance.
Specifically, recent trends suggest a regulatory
emphasis on environmental protection, which will
serve to align the interests of society with those
of investors.
The following section provides a brief description
of each sustainability issue that is likely to have
material financial implications for companies in
the Wind Energy industry. This includes an
explanation of how the issue could impact
valuation and evidence of actual financial impact.
Further information on the nature of the value
impact, based on SASB’s research and analysis, is
provided in Appendix IIA and IIB.
Appendix IIA also provides a summary of the
evidence of investor interest in the issues. This is
based on a systematic analysis of companies’ 10-K
and 20-F filings, shareholder resolutions, and
other public documents, and highlights the
frequency with which each topic is discussed in
these documents. The evidence of interest is also
based on the results of consultation with experts
participating in an industry working group (IWG)
convened by SASB. The IWG results represent the
perspective of a balanced group of stakeholders,
including corporations, investors or market
participants, and public interest intermediaries.
The industry-specific sustainability disclosure
topics and metrics identified in this brief are the
result of a year-long standards development
process, which takes into account the
aforementioned evidence of interest, evidence of
financial impact discussed in detail in this brief,
inputs from a 90-day public comment period, and
additional inputs from conversations with industry
or issue experts.
A summary of the recommended disclosure
framework and accounting metrics appears in
Appendix III. The complete SASB standards for the
industry, including technical protocols, can be
downloaded from www.sasb.org. Finally,
Appendix IV provides an analysis of the quality of
current disclosure on these issues in SEC filings by
the leading companies in the industry.
ENVIRONMENT
The environmental dimension of sustainability
includes corporate impacts on the environment.
This could be through the use of natural resources
as inputs to the factors of production (e.g., water,
minerals, ecosystems, and biodiversity) or
environmental externalities and harmful releases
in the environment, such as air and water
pollution, waste disposal, and GHG emissions.
The possibility of wildlife deaths from turbines in
use in wind farms has led to some opposition to
wind farm development. This opposition has
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caused fines, delays, and even the closing of
projects. Furthermore, wind turbines and towers
use large amounts of steel, the production of
which can have significant environmental and
social impacts. With volatile commodity prices,
efficiency in the use of this natural resource,
without compromising on energy output, is key to
wind energy remaining cost competitive with
other electricity generating technologies.
Managing these environmental externalities and
the resulting impacts on project development, and
therefore on demand for wind energy products,
requires innovation in product design. Wind
energy companies can design turbines to
minimize biodiversity impacts of projects and
innovate to make efficient use of steel in turbines
and towers. The disclosure topics related to
company performance on such innovation, Design
to Mitigate Community & Ecological Impacts and
Materials Efficiency, are discussed below in the
Business Model and Innovation section.
SOCIAL CAPITAL
Social capital relates to the perceived role of
business in society, or the expectation of business
contribution to society in return for its license to
operate. It addresses the management of
relationships with key outside stakeholders, such
as customers, local communities, the public, and
the government.
As discussed above, wind farm development has
been met with some resistance, which has led to
fines and project delays. Part of this resistance is
due to the impacts on the local community of the
noise that turbines generate in use.
Manufacturers can design wind turbines to
minimize community impacts, thereby driving
greater demand for their products. This is
discussed below under the topic of Design to
Mitigate Community & Ecological Impacts.
HUMAN CAPITAL
Human capital addresses the management of a
company’s human resources (employees and
individual contractors), as a key asset to delivering
long-term value. It includes factors that affect the
productivity of employees, such as employee
engagement, diversity, and incentives and
compensation, as well as the attraction and
retention of employees in highly competitive or
constrained markets for specific talent, skills, or
education. It also addresses the management of
labor relations in industries that rely on economies
of scale and compete on the price of products
and services. Lastly, it includes the management
of the health and safety of employees and the
ability to create a safety culture within companies
that operate in dangerous working environments.
Wind turbine operations and maintenance (O&M)
services exposes workers to health and safety
risks, and resultant financial impacts. Safety
records are a key component of companies
receiving O&M contracts. A company’s ability to
protect employee health and safety, and to create
a culture of safety at all levels of the organization,
can directly influence the results of its operations.
Workforce Health & Safety
Many wind turbine manufacturers offer higher-
margin O&M services for wind farm owners or
operators together with the sales of their
products. These activities may include installation,
maintenance, monitoring, and repairing turbine
installations.
Furthermore, employees and contractors working
on O&M services are exposed to physical dangers
including falls from height, electrical hazards, and
moving mechanical parts. The safety record of
wind farm operations has the potential to affect a
company’s reputation and demand for its
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products and services. Company performance in
this area can be analyzed in a cost-beneficial way
through the following direct or indirect
performance metrics (see Appendix III for metrics
with their full detail):
• Total recordable injury rate (TRIR) and
fatality rate for direct employees and
contract employees.
Evidence
The wind farm O&M segment is held to a high
safety standard because the work is inherently
dangerous (employees often work at great
heights with electrical equipment).68 This potential
for danger also makes a company’s safety record
a key element in winning an O&M contract.69
Wind farm O&M services had a global revenue of
$9.25 billion in 2014, which is projected to nearly
double to $17 billion by 2020, due to the
expansion of the wind energy market and the
aging of existing turbines.70 Companies are
expanding into the O&M space to diversify their
offerings, as well as to boost their profit margins.
The margin differences between turbine sales and
O&M services for companies involved in this
industry can be substantial. For example, Gamesa
made 84.7 percent of its $3.8 billion revenue in
2014 from wind turbine manufacturing, and 15.3
percent from its O&M activities. However, 69.4
percent of its operating income came from wind
turbine manufacturing and 30.6 percent came
from O&M.71 Growth in O&M operations is
therefore seen as important for the financial
condition of companies in the industry going
forward.
Safety improvements can increase operational
efficiency of wind farms. Due to the nascent
nature of this industry, there is currently no
comprehensive repository of industry-wide safety
information. However, there is company-level
evidence of the benefits of focusing on safety. For
example, after significant organizational safety
pushes, Vestas reduced instances of lost-time
injuries per one million working hours from 46.7
in 2005 to 1.6 in 2014.72 Vestas notes that it
“work[s] closely together with customers to fulfill
the demand for the highest level of safety in [its]
operations as this adds certainty for their business
case.”73 Companies that can ensure operational
safety, particularly in O&M operations, will likely
be able to create significant value for their
shareholders in the near-term.
Gamesa, in its Q1 2015 earnings call, discusses the
importance of safety to the growth of its business:
“[h]ealth and safety, as we've repeated time and
again, is one of the most outstanding drivers of our
company. And the evolution of safety indices in
terms of frequency and severity is in line with our
objectives. And the first quarter of 2015 was very
favorable too because it's improved all of the ratios
we have achieved throughout the year 2014. And
the trend is still very positive in terms of frequency
indices and severity indices.”74
This issue will likely also become more significant
with the rapid growth of offshore wind. Installed
offshore capacity has more than doubled, from
3.55 GW of installed capacity to 8.3 GW between
2011 and 2014.75 Furthermore, offshore wind is
projected to grow to be 10 percent of all globally
installed capacity by 2020.76 There are currently
four different government agencies involved in
the offshore regulatory environment, but offshore
wind currently has little specific regulation. Some
members of the industry believe that companies
will need to come up with a comprehensive
system and ensure best-practice safety outcomes
to address the safety risks in order to placate
potential regulators or else face a greater
regulatory burden.77 The nature of offshore work
also means that workers are exposed to greater
potential danger as they must be brought by
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helicopter or boat to the work site. Poor weather
conditions off the coast can increase these safety
concerns.78
Value Impact
A strong safety culture and record is integral to
gaining and maintaining contracts in the growing
wind turbine O&M market. Successful companies
can increase their profit margins, diversify their
offerings, and increase their market share through
success in this space.
Injuries or fatalities can result in one-time costs,
including regulatory penalties, and legal costs
from personal injury litigation. These costs can
lower profitability and lead to contingent
liabilities. Frequent accidents resulting in injuries
or fatalities may also lead to chronic impacts on
company value that stem from lower employee
morale and lost productivity, ultimately lowering
intangible assets.
The probability and magnitude of the impact of
this issue will increase as more companies move
into the O&M space and more companies increase
their exposure to this market segment.
The TRIR and fatality rate are indicative of a
company’s safety environment and culture, and
the likelihood that it will face costs associated
with accidents or fatalities. Past incidents also
provide an understanding of the magnitude of
possible future incidents.
BUSINESS MODEL AND INNOVATION
This dimension of sustainability is concerned with
the impact of environmental and social factors on
innovation and business models. It addresses the
integration of environmental and social factors in
the value-creation process of companies,
including resource efficiency and other innovation
in the production process. It also includes product
innovation and efficiency and responsibility in the
design, use phase, and disposal of products. It
includes management of environmental and social
impacts on tangible and financial assets—either a
company’s own or those it manages as the
fiduciary for others.
Companies in this industry are in a position to
anticipate the social and environmental
externalities that may cause communities to reject
the large-scale installation of wind farms.
Similarly, companies can anticipate and prevent
potential violations of ecological laws such as the
Endangered Species Act in the operation of wind
farms.
These concerns are creating new innovation and
business opportunities for both manufacturers
and project developers in the Wind Energy
industry. Companies that are able to expend
human and financial capital to develop creative
solutions to these issues are in a position to gain
or maintain a favorable market position.
Companies are also committing R&D resources to
lowering their usage of steel, their costliest input,
while maintaining or improving energy output of
turbines. Wind energy firms that successfully
reduce the cost of wind turbines through such
innovation, thereby lowering project costs, could
see expansion in market share, while aiding the
overall adoption of wind energy technologies.
Increasing the cost-effectiveness of wind energy
in reducing global GHG emissions will also ensure
that the industry continues to enjoy a supportive
policy environment, even if governments move
from policies targeted at certain renewables
industries like wind to more technology-agnostic
policies that simply aim to lower GHG emissions
in the most cost-effective manner, such as by
placing a price on carbon.
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Design to Mitigate Community & Ecological Impacts
Building wind farms is fraught with regulatory
and financial obstacles: according to the
American Wind Energy Association, only one in
ten projects moves from being conceived by a
developer to being built.79 Once developers find
an adequate site, they must secure land rights
and they generally need to produce an ecological
impact report.80 Obtaining permits for wind
energy projects can be slowed or even stopped if
community members and/or environmental
regulators push back against the development.
This can happen if these stakeholders perceive the
project to infringe on their quality of life—e.g., if
turbine noise is a concern, or if the turbines have
the potential to cause an unreasonable amount of
harm to local wildlife.
Wind projects’ approval processes directly impact
equipment manufacturers, as the processes will
determine demand for the manufacturers’
products. While manufacturers do not control the
project approval process, they can design their
products to have as little ecological and
community impact as possible. For example, they
can design quieter turbines, or turbines that will
have a lower impact on local bird or bat
populations. This could give wind energy
manufacturers a competitive advantage and
potentially increase their market share over time,
as it could cut down the time needed to get
permits for wind projects.
Company performance in this area can be
analyzed in a cost-beneficial way through the
following direct or indirect performance metrics
(see Appendix III for metrics with their full detail):
• Average A-weighted sound power level of
wind turbines, by wind turbine class;
• Backlog cancellations associated with
community or ecological impacts; and
• Description of efforts to address
ecological and community impacts of
wind energy production through turbine
design.
Evidence
Companies in this industry can differentiate their
offerings by optimally manufacturing products to
cause fewer impacts on quality of life and the
environment, which in turn can substantially
streamline the permitting process for their
customers.
In December 2014, a federal judge halted the
installation of a 122-turbine wind farm in West
Virginia run by Invenergy, an independent wind
power generation firm. The judge ruled that the
project was likely to be in violation of the
Endangered Species Act and ordered the project
to be halted until it received a take permit for the
endangered Indiana bat.81 The issuing of take
permits to wind farms is something that has been
opposed by various environmental groups. So far,
however, there is no indication that this protective
policy will be reversed.82
Even so, delays such as this will not only be costly
to the companies involved, but they will also
generally affect manufacturers and wind farm
construction companies in the Wind Energy
industry by creating volatile demand and a higher
risk profile for future wind energy projects. In the
U.K., where bird and bat risk assessments are also
an explicit part of the permitting process, 6
percent of proposed wind projects are rejected for
failing to pass these assessments.83
Companies may not only face project delays due
to concerns about species impacts, but may also
be required to pay fines. The utility company
Pacificorp was fined $2.5 million in January 2015
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for killing two golden eagles without a take
permit at two of its wind farms in Wyoming,
which was a violation of the Migratory Bird Treaty
Act.84 By designing turbines that minimize
biodiversity impacts, wind equipment
manufacturers could aid project developers in
demonstrating that they are taking measures to
minimize both short- and long-term impacts on
species. This could make it easier for wind energy
developers to obtain permits, and it would
minimize the potential for fines. If a company is
strictly a manufacturer, being able to offer a
product that lowers the potential for fines can be
positioned as a competitive advantage and can
help assuage criticism against the industry that
could, in the long term, affect its license to
operate.V 85
Smaller private firms such as Ogin are designing
innovative turbines that would result in fewer bird
deaths and potentially mitigate delays caused by
the need to secure endangered species permits.
Ogin’s work in this area, combined with efficiency
increases, has resulted in Ogin turbines replacing
73 older turbines in California’s Altamont Pass.
The pass is an area known both for its rich wind
resources as well as being a major migratory route
for birds. This demonstrates the potential for
increased market share that can come from
innovations that lessen wind turbines’ ecological
impacts.86
In Maine, an organization called the Citizens Task
Force on Wind Power has formed as an umbrella
organization to aid communities that are resisting
wind projects in their localities. One of the main
reasons protestors cite for their actions is that the
constant noise from many wind turbines affects
their quality of life.87 These types of organized
efforts are happening in communities all across
V It is worth noting though that siting decisions have the largest impact on this issue. As of October 2015 only 2.8 percent of industry revenue comes from
the U.S.,88 and can be costly to investors in wind
energy, potentially lowering demand for wind
energy products.
Similar protests have occurred in other countries.
The issue of noise and how it would impact local
fishers and farmers was one of the major
concerns cited by the armed groups of protesters
that have been blocking the development of the
396 MW Marena Renovables wind project in
Oaxaca, Mexico. This project, which would be the
largest wind energy project in Latin America, is
now in jeopardy, and places its investor, the
Macquarie Mexican Infrastructure Fund, at risk of
losing its 1.1 billion-peso ($83 million)
investment.89 Similarly, uncertainty over how
turbine noise would affect a threatened
humpback dolphin species caused delays, and
ultimately relocation, of a wind farm in Taipei.90
To address these challenges, Siemens, a major
electrical equipment manufacturer with a wind
turbine product line, has developed a turbine that
has a noise-adjusted mode. The turbine can
intelligently vary between “day of the week, time
of day, or wind speed and direction” so as to
optimize output and minimize noise.91
Ming Yang, the largest wind turbine
manufacturer publicly traded in the U.S., notes
noise measurement as one of the factors in
testing its wind turbines in its FY 2014 Form 20-F:
“We had also obtained from WINDTEST … a
leading wind turbine testing firm in Germany …
reports on power performance measurement,
acoustic noise measurement and power quality
measurement for our 1.5MW wind turbines in
Zhanjiang.”92 To operate in some markets, wind
power turbines are required to be able to reliably
be below certain sound limits. For example, in
project developers, so the focus of this issue is on turbine design.
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Denmark, there are specific decibel levels for
different levels of population density that wind
farms must adhere to prior to operations.93
Wind turbines also received community pushback
about the shadow flicker effect the rotation of
the blades can cause. The complaints range from
the strobe effect being an annoyance to claims
that it can cause medical issues, although there is
no conclusive evidence of this. In some markets,
there are regulatory limitations. For example, in
Germany, wind farms are allowed only eight
hours per year of actually casting a shadow on a
community structure.94 In response to these
consumer complaints and regulatory effects, wind
turbine manufactures such as Vestas have
engineered products that attempt to minimize the
shadow falling on communities.95
Pattern Energy, a San Francisco-based
independent power company (therefore not in
this SICS industry), notes in its FY 2014 Form 10-K
that “local opposition to wind turbine installations
is growing in certain markets due to concerns
about noise, health and other alleged impacts of
wind power projects.”96 Related to community
pushback, in its FY 2014 Form 10-K, Broadwind
Energy discloses one of its risk factors as being
“public perception and localized community
responses to wind energy projects.”97
Value Impact
Companies that put their efforts into R&D to
lower community and ecological impacts will be
able to gain market share and raise their revenue.
Such actions would lower a project’s overall risk
profile. For project developers, this could lower
the cost of capital directly. For manufacturers, this
could provide a competitive advantage, leading to
higher revenue and market share and lowering
the company’s cost of capital.
Additionally, fines resulting from laws protecting
endangered species would affect project
developers and operators, which could lower
future demand for turbines that were used in
such projects. Community and ecological impacts
could also create reputational risks for wind
energy companies, affecting their intangible
assets and long-term growth.
The continued growth of this industry will likely
increase the profile of pushback to these projects
as more areas are affected. This increases the
probability and magnitude of impacts on company
value in the medium-term.
Analysts can compare different turbines’ average
A-weighted sound power level to better
understand how the manufacturer is addressing
one of the major causes of community pushback.
The backlog cancellations associated with
community or ecological impacts also can indicate
how well a company’s product offerings help their
customers mitigate community and ecological
impact related concerns.
Materials Efficiency
Governments worldwide have supported the
Wind Energy industry for its potential to displace
other energy technologies that are significantly
larger net producers of GHGs. The industry’s
long-term future is dependent upon its ability not
only to produce more power, but to do so at a
comparably lower cost than other energy sources.
Steel is one of the largest cost components of
turbines. How efficiently companies use this
input, without sacrificing energy output, can
determine their competitiveness and is, in the
aggregate, vital to the success of the industry.
General trends in wind turbines have shown rapid
growth in size compared with their 1980 average
of 15 meters.98 A recent NREL report found that
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an increase in U.S. turbine height from the 2014
average of 80 meters to 140 meters would make
roughly 237,000 square miles of the U.S.—an
area roughly 45 percent larger than the state of
California—viable for wind energy production due
to the increased stability and speed of winds at
those greater heights. To make this cost-effective,
however, companies will have to find innovative
ways to continue to increase turbine tower height
while using less steel.99 This engineering feat
comes with the added efficiency challenge of
making the towers in pieces that are still small
enough to be transported by truck under highway
overpasses.100
Company performance in this area can be
analyzed in a cost-beneficial way through the
following direct or indirect performance metrics
(see Appendix III for metrics with their full detail):
• Top five materials consumed;
• Average top head mass per turbine
capacity, by wind turbine class; and
• Discussion of approach to optimize
materials efficiency of wind turbine
design.
Evidence
This industry has, on average, four percent higher
materials costs than other manufacturing
industries, averaging 60 percent of revenue.101 For
some companies this can be even higher. For
example, in FY 2014 Suzlon Energy spent 68
percent of revenue on raw materials and
components.102 Steel purchase is one of the main
cost components for wind energy companies—a
typical wind turbine is 89 percent steel.103 The
remaining components of an average turbine are
roughly 5.8 percent fiberglass, 1.6 percent
copper, 1.3 percent concrete, and then less than
three percent combined for various adhesives,
aluminum, and plastics, among other
components.104 An analysis of the effect of
changing commodity prices in the Spanish wind
industry showed that increases in the price of
steel have been responsible for about 38 percent
of the increase in the raw material cost of a
typical wind turbine tower between 2006 and
2010.105 Indeed, the volatility of steel prices
continues to be a major source of concern for
firms in this industry, with prices reaching lows of
$533 and highs of $1,203 per metric ton in the
past seven years.106
In January 2015, Bloomberg analysts credited
industry analysts’ higher consensus share price for
wind turbine producers, compared to the previous
year, to cost-cutting measures and the
subsequent increase in firm margins. Much of this
was due to decreases in steel usage. Indeed, the
Bloomberg Intelligence wind peer group saw
operating margins rise by 124 basis points over
the previous year.107
Broadwind Energy states in its FY 2014 Form 10-
K, “The primary raw material used in the
construction of wind towers and gearing products
is steel in the form of steel plate, bar stock,
forgings and castings … Raw material costs for
items such as steel, our primary raw material,
have fluctuated significantly and may continue to
fluctuate … In the event of significant increases or
decreases in the price of raw materials,
particularly steel, our margins and profitability
could be negatively impacted.”108 Similarly, in its
FY 2014 Form 10-K, Cleantech Solutions discloses
that “any restrictions on the supply or the
increase in the cost of the materials used by us in
manufacturing our products, especially steel,
could significantly reduce our profit margins … in
recent years, raw materials, including steel, which
is our principal raw material, have been subject to
significant price increases.”109 China Ming, in its
FY 2014 Form 20-F, states, “Our future success
highly depends on our ability to keep pace with
the rapid technological changes in the wind
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power equipment industry. In order to maintain
and enhance our competitive position that we
currently enjoy and to continue to grow our
business, we need to design, develop and market
new and more cost-efficient wind turbines and
introduce new products to meet growing market
demands and changing technical standards.”110
GE has been investing heavily into a technology
that will allow new 120-meter towers to use 20 to
30 percent less steel than a traditional 100-meter
tube tower due to a wider base, which reduces
the need to reinforce the tower walls.111
Vestas patented a similar technology in 2014 for a
steel tower that uses a negligible amount of extra
steel to make a 3 MW turbine tower 20 meters
taller. This is done by increasing the diameter of
the base of the tower rather than reinforcing all
of the steel. This taller tower allows the turbines
to reach more fertile wind energy and can boost
annual energy production on low-wind sites by
eight percent.112
Value Impact
Companies that are able to spend R&D resources
on designing their products to more efficiently
use expensive metal inputs such as steel can lower
their cost structure over time. These companies
will be better positioned to mitigate the
operational risks associated with the supply and
price volatility of raw materials. This can lower a
company’s risk profile relative to its competitors.
In addition, increasing materials efficiency while
maintaining energy output can increase the
competitiveness of individual products if cost
savings are passed down to customers,
contributing to revenue growth in the long term
through increased market share.
Analysts can examine and compare the largest
materials categories to understand the related
pricing risk and opportunity a company faces. The
average turbine weight scaling relationship and
weight to specific power relationship both can
indicate how efficient a manufacturers’ design is
with these materials.
LEADERSHIP AND GOVERNANCE
As applied to sustainability, governance involves
the management of issues that are inherent to the
business model or common practice in the
industry and are in potential conflict with the
interest of broader stakeholder groups
(government, community, customers, and
employees). They therefore create a potential
liability, or worse, a limitation or removal of
license to operate. This includes regulatory
compliance, lobbying, and political contributions.
It also includes risk management, safety
management, supply chain and resource
management, conflict of interest, anti-competitive
behavior, and corruption and bribery.
Wind energy firms currently rely on sensitive and
critical materials, such as conflict and rare earth
minerals, whose sourcing has been linked to
violence, disease, and environmental damage. The
sourcing of such materials could expose
companies to reputational and operational risks.
Therefore, the ability of a firm’s leadership and
governance structures to manage risks and
opportunities associated with the sourcing of such
materials will be important for shareholder value.
Materials Sourcing
Wind energy companies source rare earth
minerals, mainly neodymium and dysprosium, for
use in their turbines. Among these, neodymium
stores are the largest concern, as vast quantities
are needed per turbine and there is currently no
known low-weight magnet substitute.
Dysprosium, which can be used to increase the
I N D U S T R Y B R I E F | W I N D E N E R G Y | 18
lifespan of magnets, is notoriously difficult to
mine.113 Direct-drive turbines, which have been
rapidly expanding in popularity because of their
reliability, can use ten times more of these rare
earth metals than a more traditional drive train.114
The mining of these rare earth minerals has been
associated with environmental and human health
effects in China. There are also conflict minerals
used in the drive train.
Governmental support of this industry is a key
demand driver. This places wind energy firms at a
particularly high reputational risk if they are
connected to the sourcing of rare earth metals
and conflict minerals associated with violence,
illness, and environmental degradation. The
potentially negative publicity associated with this
could make continued support of the industry
politically unpopular.
Apart from reputational risks, wind energy firms
are exposed to risk of supply chain disruptions
and input price increases or volatility when these
rare earth metals or conflict minerals are used in
their products.
Sourcing risks related to rare earth minerals and
metals arise due to their low substitution ratio,
the concentration of deposits in only a few
countries, and geopolitical considerations. Wind
energy companies also compete with other
industries that rely on these minerals, including
the transportation, hardware, and infrastructure
industries. This, along with supply constraints, can
result in significant price increases and supply
chain risks related to these minerals.
Furthermore, the use of conflict minerals also
exposes wind energy companies to regulatory
risks associated with the Dodd-Frank Act.
Companies face pressure to track and eliminate
the use of minerals responsible for conflict in the
Democratic Republic of Congo (DRC) from a
number of fronts, including legislation,
nongovernmental organizations (NGOs), and wind
turbine customers.
Companies can gain competitive advantage by
being transparent about related risks, working
actively to source materials from reliable suppliers
or regions that have minimal environmental or
social risks associated with them, and supporting
research for alternative inputs. These measures
will decrease wind energy companies’ exposure to
reputational and resource scarcity risks, protecting
shareholder value.
Company performance in this area can be
analyzed in a cost-beneficial way through the
following direct or indirect performance metrics
(see Appendix III for metrics with their full detail):
• Percentage of materials costs for products
containing critical materials;
• Percentage of tungsten, tin, tantalum,
and gold smelters within the supply chain
that are verified conflict-free; and
• Discussion of the management of risks
associated with the use of critical
materials and conflict minerals.
Evidence
Most turbines use rare earth metals, mainly
neodymium and dysprosium, for the magnets in
their turbines. These are a significant cost, as the
gear box of a two-megawatt turbine can contain
roughly 800 pounds of neodymium and 130
pounds of dysprosium.115 As of November 3,
2015, these materials would cost $19,600 and
$15,800, respectively.116 For reference, wind
turbines cost roughly between $750,000 and $1
million per megawatt.117 These key inputs
represent a risk to companies, as the price of
neodymium has fluctuated wildly in the past 10
years, from a low of $16,290/ton in 2009, to a
high of $178,000/ton in 2011, to a price of
$57,200/ton in 2015. Similarly, Dysprosium was
I N D U S T R Y B R I E F | W I N D E N E R G Y | 19
$83/kg in 2009 and $1,450/kg in 2011, and is
$350/kg in 2015.118
The increased usage of the rare earth metals by
wind energy manufacturers, as well as by other
industries such as electric car manufacturers,
could increase the demand for neodymium by as
much as 700 percent over the next 25 years.
Additionally, the demand for dysprosium may go
up by 2,600 percent over the same period, adding
to the potential for significant future price
increases.119 Peter Kelemen, a professor of
geochemistry at the Earth Institute at Columbia
University, has noted that wind power has
increased by a factor of 10 over the last decade,
and that “[i]f wind is going to play a major part in
replacing fossil fuels, we will need to increase our
[worldwide] supply of neodymium.”120
Vestas has expressed concern over these supply
constraints and the future risk they place on its
business, and therefore has attempted to design
turbines that use less rare earth metals. While
different turbine designs will have slightly
different ratios, direct-drive turbines use about 10
times more rare earth metals than conventional
geared turbines, causing Vestas to pursue more
efficient conventional turbines.121
China alone has around 30 percent of worldwide
rare earth metal deposits, and controls more than
90 percent of worldwide production.122 The
inherent risk that this situation creates for foreign
firms was made apparent in July 2010, when
China cut its export quota for rare earth minerals
by 40 percent (a clear cause of the price volatility
discussed above), driving rare earth prices up
significantly.123 This caused major firms in the
industry to express concern over the future supply
of the material.124 At the end of December 2014,
China revoked its quota after losing an appeal to
the World Trade Organization, which ruled that
the Chinese government did not have reasonable
grounds for a trade quota.125 However, the
concentration of rare earth minerals’ production
in China continues to pose supply risks for wind
energy companies, particularly those with
operations outside of China.
Use of these rare earth metals also exposes firms
in the Wind Energy industry to another category
of risk: reputational. As a “green” energy industry
that historically has relied on governmental
subsidies in many parts of the world, and will
likely continue to do so in the short and medium
term, the Wind Energy industry will need to
continue to be perceived as a positive alternative
to conventional energy production technologies
to continue receiving such support. Similarly, in
many markets, some consumers believe that wind
energy causes net positive externalities, making
them willing to pay above market prices for wind-
based electricity production, electricity being an
otherwise homogenous good. A 2013 global
survey found that 32 percent of U.S. commercial
consumers and 50 percent of Indian consumers
were willing to pay more on their utility bills if the
energy was generated from a renewable
source.126 This image clashes with reports from
China about the environmental and human health
effects of the mining of neodymium and
dysprosium widely used in wind turbines. There
are reported instances of toxic waste byproducts
from the production of neodymium being
improperly disposed of by miners, which is
causing a significant rise in cancer rates in some
parts of northern China.127
In recognition of the reputational and input risks
involved with the use of rare earth metals, some
companies, such as Enercon, have attempted to
make a turbine without the use of neodymium.128
If its attempts (or similar ones) are successful,
such companies could benefit from a lower risk
profile, and therefore lower costs of capital
compared to peers.
I N D U S T R Y B R I E F | W I N D E N E R G Y | 20
The industry also faces risk around the use of
conflict minerals. Artisanal and small-scale mining
in the DRC is responsible for much of the current
global output of 3TG. While such mining is an
important source of livelihood to the local
population, it also is helping to finance armed
conflict in the region and has significant
ecological impacts. Several legislative and project-
based efforts are underway globally to improve
traceability and due diligence of the supply of
minerals from the DRC. These have the potential
to affect wind energy companies and their
customers and suppliers. They could also provide
incentives and resources for leadership in supply
chain management. These incentives include the
United States Agency for International
Development’s Responsible Minerals Trade
Program, which includes the creation of a pilot
conflict-free supply chain.129 Companies that do
not engage in this type of supply chain
management open themselves up to the types of
reputational risk discussed previously with rare
earth metals.
The SEC estimates that costs to comply with the
Conflict Minerals provision of the Dodd-Frank Act
will include a total of $3 billion to $4 billion in the
first year and at least $200 million each year
afterward. Other estimates suggest compliance
costs may be as high as $16 billion.130 However,
the SEC expects that non-reporting companies
that are part of reporting companies’ supply
chains will bear much of the cost of the final
rule.131 The new disclosure rule was expected to
affect approximately 6,000 issuers and their
275,000 suppliers.132
Broadwind Energy, in its FY 2014 Form SD, a
specialized disclosure document used for
Reasonable Country of Origin Inquiries around
conflict minerals, states that “[w]e conducted an
analysis of our products and found that 3TG can
be found in our towers, weldments, and gearing
products … we have concluded that our supply
chain remains ‘DRC conflict undeterminable.’”133
American Superconductor Corporation, a
manufacturer of wind turbine components,
discloses in its FY 2014 Form 10-K, “New
regulations related to conflict-free minerals may
force us to incur significant additional
expenses.”134
Apart from regulatory costs, global prices of 3TG
have shown high volatility, sometimes related to
the conflict in the DRC. A 31 percent increase in
tin prices in 2008 coincided with a rebel offensive
against the DRC’s primary tin trading center. The
DRC also leads in the global production of
tantalum, with various estimates suggesting it is
responsible for 8 to 20 percent of global
production.135 Due to supply constraints and rising
demand, the price of tantalum increased from
$110 per kg in 2011 to nearly $300 per kg in
2012.136 If these price trends continue, they could
take away from the already slim margins of wind
turbine manufacturers and create a long-term
impact for those players not investing in
alternatives.
Value Impact
Failure to effectively manage the sourcing of
critical and sensitive materials can affect the cost
structure of companies over time through higher
input costs. Companies may also face regulatory
compliance costs associated with the sourcing of
conflict minerals.
If companies do not investigate their supply chain
they may face significant reputational risk that
could result in lower sales. Reputational risk and
lower sales could also result from the sourcing of
rare earth minerals linked to environmental and
health effects from extraction activities. Impacts
on reputation could affect companies’ intangible
assets and therefore long-term growth potential.
I N D U S T R Y B R I E F | W I N D E N E R G Y | 21
The increasing scarcity or unavailability of certain
key materials used by wind energy companies, as
well as the price volatility of such materials, can
increase companies’ risk profiles if they rely
heavily on such materials and are unable to
source them effectively. Company’s R&D costs will
likely increase as they look for ways to use less of
these materials. As a result, such companies can
face a higher cost of capital. Companies could
also lose revenues due to production disruptions
from problems with the supply of critical and
sensitive materials.
These risks will likely increase in probability and
magnitude as the industry scales up, direct-drive
turbines rise in popularity and as the industry
increasingly competes with others for the
sourcing of critical and “conflict-free” materials.
The percentage of materials cost for critical
materials indicates how sensitive a company’s
profitability is to shifts in critical material pricing.
The percentage of 3TG verified conflict-free
indicates the company’s potential risk for
reputational damage related to 3TG sourcing.
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APPENDIX I FIVE REPRESENTATIVE WIND ENERGY COMPANIESVI
VI This list includes five companies representative of the Wind Energy industry and its activities. This includes only companies for which the Wind Energy industry is the primary industry, companies that are listed on U.S. exchanges or traded over the counter, and for which at least 20 percent of revenue is generated by activities in this industry, according to the latest information available on Bloomberg Professional Services. Retrieved on October 6, 2015.
COMPANY NAME (TICKER SYMBOL)
Vestas Wind Systems (VWDRY)
Gamesa (GCTAY)
China Ming Yang Wind Power Ltd. (MY)
Broadwind Energy (BWEN)
Cleantech Solutions (CLNT)
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APPENDIX IIA: Evidence for Sustainability Disclosure Topics
Sustainability Disclosure Topics
EVIDENCE OF INTERESTEVIDENCE OF
FINANCIAL IMPACTFORWARD-LOOKING IMPACT
HM (1-100)
IWGsEI
Revenue & Cost
Asset & Liabilities
Cost of Capital
EFIProbability & Magnitude
Exter- nalities
FLI% Priority
Workforce Health & Safety 58 - - Medium • • Medium • Yes
Design to Mitigate Community & Ecological Impacts
56 93 1 High • • • High • • Yes
Materials Efficiency 67 87 2 High • • High No
Materials Sourcing 33 93 3 Medium • • • Medium • Yes
HM: Heat Map, a score out of 100 indicating the relative importance of the topic among SASB’s initial list of 43 generic sustainability issues. Asterisks indicate “top issues.” The score is based on the frequency of relevant keywords in documents (i.e., 10-Ks, 20-Fs, shareholder resolutions, legal news, news articles, and corporate sustainability reports) that are available on the Bloomberg terminal for the industry’s publicly listed companies. Issues for which keyword frequency is in the top quartile are “top issues.”
IWGs: SASB Industry Working Groups
%: The percentage of IWG participants that found the disclosure topic likely to constitute material information for companies in the industry. (-) denotes that the issue was added after the IWG was convened.
Priority: Average ranking of the issue in terms of importance. 1 denotes the most important issue. (-) denotes that the issue was added after the IWG was convened.
EI: Evidence of Interest, a subjective assessment based on quantitative and qualitative findings.
EFI: Evidence of Financial Impact, a subjective assessment based on quantitative and qualitative findings.
FLI: Forward Looking Impact, a subjective assessment on the presence of a material forward-looking impact.
24I N D U S T RY B R I E F | W I N D E N E R G Y
APPENDIX IIB: Evidence of Financial Impact for Sustainability Disclosure Topics
Evidence of
Financial Impact
REVENUE & EXPENSES ASSETS & LIABILITIES RISK PROFILE
Revenue Operating Expenses Non-operating Expenses Assets Liabilities
Cost of Capital
Industry Divestment
RiskMarket Share New Markets Pricing Power
Cost of Revenue
R&D CapExExtra-
ordinary Expenses
Tangible Assets
Intangible Assets
Contingent Liabilities & Provisions
Pension & Other
Liabilities
Workforce Health & Safety • • • •
Design to Mitigate Community & Ecological Impacts
• • • • • •
Materials Efficiency • • • •
Materials Sourcing • • • • •
H IGH IMPACTMEDIUM IMPACT
I N D U S T R Y B R I E F | W I N D E N E R G Y | 25
APPENDIX III SUSTAINABILITY ACCOUNTING METRICS – WIND ENERGY
TOPIC ACCOUNTING METRIC CATEGORY UNIT OF
MEASURE CODE
Workforce Health& Safety
(1) Total recordable injury rate (TRIR) and (2) fatality ratefor (a) direct employees and (b) contract employees Quantitative Rate RR0103-01
Design to Mitigate Community & Ecological Impacts
Average A-weighted sound power level of wind turbines, by wind turbine class
Quantitative dB(A) RR0103-02
Backlog cancellations associated with community or ecological impacts
Quantitative U.S. Dollars ($) RR0103-03
Description of efforts to address ecological and community impacts of wind energy production through turbine design
Discussion and Analysis
n/a RR0103-04
Materials Efficiency
Top five materials consumed, by weight Quantitative Metric tons (t) RR0103-05
Average top head mass per turbine capacity, by wind turbine class
Quantitative Metric tons per megawatts (t/MW)
RR0103-06
Discussion of approach to optimize materials efficiency of wind turbine design
Discussion and Analysis
n/a RR0103-07
Materials Sourcing
Percentage of materials costs for items containing critical materials
Quantitative Percentage (%) RR0103-08
Percentage of tungsten, tin, tantalum, and gold smelters within the supply chain that are verified conflict-free
Quantitative Percentage (%) RR0103-09
Discussion of the management of risks associated with the use of critical materials and conflict minerals
Discussion and Analysis
n/a RR0103-10
26I N D U S T RY B R I E F | W I N D E N E R G Y
APPENDIX IV: Analysis of SEC Disclosures | Wind Energy
The following graph demonstrates an aggregate assessment of how representative U.S.-listed Wind Energy companies are currently reporting on sustainability topics in their SEC annual filings.
Wind Energy
Workforce Health & Safety
Design to Mitigate Community & Ecological Impacts
Materials Efficiency
Materials Sourcing
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
TYPE OF DISCLOSURE ON SUSTAINABILITY TOPICS
NO DISCLOSURE BOILERPLATE INDUSTRY-SPECIF IC METRICS
-**
93%
87%
93%
IWG Feedback*
* Percentage of IWG participants that agreed topic was likely to constitute material information for companies in the industry.
** The “Workforce Health & Safety” disclosure topic was introduced after SASB convened IWGs and per stakeholder feedback.
I N D U S T R Y B R I E F | W I N D E N E R G Y | 27
REFERENCES
1 IBISWorld, Industry Report 33361a Wind Turbine Manufacturing in the US, September 2014, pp. 12-13. 2 Ibid, p. 8. 3 James Evans, “Wind Turbine Design Seeks to Maximize Energy Capture: Primer,” Bloomberg Industries Industry Primer (BI WINDG command), Bloomberg Professional Services, accessed January 11, 2014. 4 Prachi Patel, “GE Grabs Gearless Wind Turbines,” MIT Technology Review, September 23, 2009, accessed January 12, 2015, http://www.technologyreview.com/news/415425/ge-grabs-gearless-wind-turbines/. 5 James Evans, “Direct-Drive Turbines Use Force of Rare-Earth Magnets,” Bloomberg Industries Industry Primer (BI WINDG command), Bloomberg Professional Services, accessed January 11, 2014; Patel, “GE Grabs Gearless Wind Turbines.” 6 Court Rye, “Top 5 Wind Turbines for Low Speed Wind Conditions,” Wind Power Authority, September 11, 2011, accessed December 2, 2014, http://windpowerauthority.com/top-5-low-speed-wind-turbines/. 7 Laura Wood, “Wind Turbines Go back to Basics,” Business Wire, December 18, 2012, accessed January 4, 2015, http://www.businesswire.com/news/home/20121218005603/en/Research-Markets-Wind-Turbine-Gearbox-Direct-Drive#.VKyH3HsTGwg. 8 Vestas, Key Aspects in Developing a Wind Power Project, accessed January 16, 2015,
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12 Ibid, p. 38. 13 U.S. Department of Energy, 2013 Wind Technologies Report, August 2014, p. 15. 14 IBISWorld, Industry Report 33361a Wind Turbine Manufacturing in the US,” September 2014, p. 24. 15 The U.S. natural gas price is represented by the Henry Hub spot price. Author’s calculation based on data from Bloomberg Professional service, accessed on October 6, 2015, using the NGUSHHUB <GO> command. 16 Michael Specter, “The Trouble with Cheap Oil,” The New Yorker, December 5, 2014, accessed January 7, 2015, http://www.newyorker.com/news/daily-comment/trouble-cheap-oil. 17 Tom Randall, “Solar and Wind Just Passed Another Big Turning Point,” Bloomberg Business, October 6, 2015, accessed October 20, 2015, http://www.bloomberg.com/news/articles/2015-10-06/solar-wind-reach-a-big-renewables-turning-point-bnef. 18 “EIA projects world energy consumption will increase 56% by 2040,” U.S. Energy Information Administration, July 25, 2013, accessed January 11, 2015 http://www.eia.gov/todayinenergy/detail.cfm?id=12251. 19 International Energy Agency, Worldwide Trends in Energy Use and Efficiency, 2008, p. 22, accessed October 19, 2015, https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=2&ved=0CCQQFjABahUKEwiFtZ6M3rPIAhXLM4gKHbobDKk&url=https%3A%2F%2Fwww.iea.org%2Fpublications%2Ffreepublications%2Fpublication%2FIndicators_2008.pdf&usg=AFQjCNG3Ham6HJQrHwOS25vsa35RWrc-yQ&sig2=JTBGqURB_PayOANh0iTo_Q&bvm=bv.104615367,d.cGU&cad=rja. 20 IBISWorld, Industry Report 33361a Wind Turbine Manufacturing in the US, September 2014, p. 29. 21 Author’s calculation based on data from Bloomberg Professional service, accessed on October 6, 2015, using Equity Screen (EQS) for U.S.-listed companies and those traded primarily OTC that generate at least 20 percent of revenue from their Wind Energy industry segment and for which the Wind Energy industry is a primary SICS industry. 22 Author’s calculation based on data from Bloomberg Professional service, accessed on October 1, 2015, using the BICS <GO> command. Firms considered were U.S.-listed firms for whom wind energy is the primary industry. The data represents global revenues of companies listed on global exchanges and traded over-the-counter from the Wind Energy industry, using Level 5 of the Bloomberg Industry Classification System. 23 IBISWorld, Industry Report 33361a Wind Turbine Manufacturing in the US, September 2014, p. 17. 24 David Shukman, “China on world’s ‘biggest push’ for wind power,” BBC, January 7, 2014, accessed January 20, 2015, http://www.bbc.com/news/science-environment-25623400.
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66 “SEC Adopts Rule for Disclosing Use of Conflict Minerals,” U.S. Securities and Exchange Commission press release, August 22, 2012, Accessed April 8, 2013, http://www.sec.gov/news/press/2012/2012-163.htm. 67 “Recommendations for companies pending appellate review of the SEC conflict minerals rules,” Hunton & Williams LLP, February 5, 2014, http://www.lexology.com/library/detail.aspx?g=e8dd78f8-6105-4ce0-8782-615fab7490d4. 68 “Green Job Hazards,” U.S. Department of Labor, accessed November 1, 2015, https://www.osha.gov/dep/greenjobs/windenergy.html. 69 Paul Dvorak, “Deciding between an ISP and OEM for wind-farm maintenance,” Windpower Engineering & Development, July 10, 2013, accessed October 20, 2015, http://www.windpowerengineering.com/maintenance/deciding-between-an-isp-and-oem-for-wind-farm-maintenance/. 70 “Global Wind Turbine Operations and Maintenance Market Worth $17 Billion by 2020,” PRNewswire, April 2, 2015, accessed October 2, 2015, http://www.prnewswire.com/news-releases/global-wind-turbine-operations-and-maintenance-market-worth-17-billion-by-2020-498453671.html. 71 Author’s calculation based on data from Bloomberg Professional service, accessed on October 20, 2015, using the GAM SM EQUITY FA <GO> command. 72 Vestas Wind Systems, 2014 Annual Report, February 11, 2015, p. 9.; Vestas Wind Systems, 2008 Annual Report, February 11, 2009, p. 7. 73 “Sustainability,” Vestas, accessed November 11, 2015, https://www.vestas.com/en/about/sustainability#!safety. 74 Gamesa, Q1 2015 Earnings Call, May 9, 2015, p. 2. 75 Data from Bloomberg Professional service, accessed on November 16, 2015, using the BI WINDG <GO> command. 76 “Global Offshore,” Global Wind Energy Council, 2015, accessed November 11, 2015, http://www.gwec.net/global-figures/global-offshore/. 77 Paul Dvorak, “To avoid government ‘help’, write best safety practices for offshore wind now,” Windpower Engineering & Development, November 24, 2014, accessed November 2, 2015, http://www.windpowerengineering.com/construction/avoid-government-help-write-best-safety-practices-offshore-wind-now/. 78 European Agency for Safety and Health at Work, Occupational safety and health in the wind energy sector, 2013, p. 48, accessed November 10, 2015, https://osha.europa.eu/en/tools-and-publications/occupational-safety-and-health-in-the-wind-energy-sector. 79 “Siting Wind Farms requires choosing a proper location,” American Wind Energy Association, accessed January 11, 2015, http://www.awea.org/Issues/Content.aspx?ItemNumber=853. 80 American Wind Energy Association, The Wind Energy Siting Handbook, February 2008, accessed January 29, 2015, p. 16, http://www.awea.org/Issues/Content.aspx?ItemNumber=5726. 81 “Federal Court Rules Massive Wind Energy Project in Violation of Endangered Species Act,” PR Newswire, December 9, 2014, accessed January 11, 2015, http://www.prnewswire.com/news-releases/federal-court-rules-massive-wind-energy-project-in-violation-of-endangered-species-act-78886682.html. 82 Bonner Cohen, “Environmentalists Oppose Wyoming Wind Project,“ Heartland, April 16, 2014, accessed January 4, 2015, http://news.heartland.org/newspaper-article/2014/04/18/environmentalists-oppose-wyoming-wind-project; Mark Duchamp, “USFWS public enquiry about the issue of eagle ‘take’ permits to windfarms (licenses to kill eagles),” Save the Eagles International, 2014, accessed December 30, 2014, http://savetheeaglesinternational.org/submissions/submission-to-usfws-2014.html. 83 Leo Hickman, “Wind myths: Turbines kill birds and bats,” The Guardian, February 27, 2012, accessed January 20, 2015, http://www.theguardian.com/environment/2012/feb/27/wind-energy-myths-turbines-bats. 84 “PacifiCorp pleads guilty, will pay $2.5M for eagle and other bird deaths at Wyoming wind farms,” StarTribune, January 6, 2015, accessed January 13, 2015, http://www.startribune.com/business/287720771.html. 85 “Conservation Groups Call for National Planning Effort by Feds on Wind Energy,” American Bird Conservancy, April 24, 2014, accessed October 28, 2015, http://abcbirds.org/article/conservation-groups-call-for-national-planning-effort-by-feds-on-wind-energy/. 86 Jon Gertner, “FloDesign's Jet-Engine Turbine Will Change The Way You Think About Wind Power,” Fast Company, September, 2013, accessed January 11, 2015, http://www.fastcompany.com/3014820/flodesigns-jet-engine-turbine-will-change-the-way-you-think-about-wind-power; “Shrouded Wind Turbine Hopefully Prevents Bird, Bat Collisions,” Sustainable Business, June 3, 2014, accessed December 22, 2014. 87 “Maine residents push back against wind power farms,” Bangor Daily News, February 18, 2010, accessed January 12, 2015, http://bangordailynews.com/2010/02/18/politics/maine-residents-push-back-against-wind-power-farms/.
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88 Ethan Lindsey, “Northwest Communities Push Back against Wind Power,” Oregon Public Broadcasting, June 25, 2009, accessed December 29, 2014, http://www.opb.org/news/article/northwest-communities-push-back-against-wind-power/. 89 Louise Dunne, “Dutch Wind Farm in Trouble in Mexico,” Radio Netherlands Worldwide, September 11, 2012, http://www.rnw.nl/english/article/dutch-wind-farm-trouble-mexico. 90 Sean Lin, and Tsai Ying, “EPA asks wind power firm to move turbine,” Taipei Times, July 30, 2014, accessed January 29, 2015, http://www.taipeitimes.com/News/taiwan/archives/2014/07/30/2003596260. 91 “Key Technologies,” Siemans, accessed January 13, 2015, http://www.energy.siemens.com/hq/en/renewable-energy/wind-power/wind-turbine-technology/key-technologies.htm#content=Turbine%20noise%20control. 92 China Ming Yang Wind Power Group LTD, FY 2014 Form 20-F for the period ending December 31, 2014 (filed April 30, 2015), p. 54. 93 Dora Anne Mills and James F. Manwell, “A Brief Review of Wind Power in Denmark, Germany, Sweden, Vermont, and Maine: Possible Lessons for Massachusetts,” January 11, 2012, accessed October 28, 2015, http://www.mass.gov/eea/docs/dep/energy/wind/briefreview.pdf. 94 Vestas, Green light for green energy, accessed January 10, 2015, http://nozebra.ipapercms.dk/Vestas/Communication/Productbrochure/TurbineOptions/VestasShadowDetectionSystem/. 95 Ibid. 96 Pattern Energy, FY 2014 Form 10-K for the period ending December 31, 2014 (filed March 2, 2015), p. 36. 97 Broadwind Energy, FY 2014 Form 10-K for the period ending December 31, 2014 (filed February 26, 2015), p. 11. 98 Marcio Loos, et al. “World’s First Carbon Nanotube Reinforced Polyurethane Wind Blades,” Case Western Reserve University, accessed January 29, 2015, http://engineering.case.edu/emac/news/Carbon-Nanotube-Reinforced. 99 “Upward Spiral,” The Economist, October 1, 2014, accessed October 5, 2015, http://www.economist.com/news/science-and-technology/21621624-best-results-make-taller-turbines-do-weld-them-onsite-upward-spiral. 100 “NREL Investigates the Logistics of Transporting and Installing Bigger, Taller Wind Turbines,” National Renewables Energy Laboratory, July 30, 2014, accessed January 29, 2015, http://www.nrel.gov/wind/news/2014/14383.html. 101 IBISWorld, Industry Report 33361a Wind Turbine Manufacturing in the US, September 2014, p. 22. 102 Suzlon Energy, 2014 Annual Report, August 26, 2015, p. 133. 103 United States Geographical Survey, Wind Energy in the United States and Materials Required for the Land-Based Wind Turbine Industry From 2010 Through 2030, 2011, p. 7, accessed November 2, 2015, http://pubs.usgs.gov/sir/2011/5036/. 104 Ibid. 105 Eric Lantz, Ryan Wiser, and Maureen Hand, IEA Wind Task 26: The Past and Future Cost of Wind Energy, National Renewable Energy Laboratory, May 2012, p. 6. 106 SteelBenchmarker, Report #211 Price History: Tables and Charts, January 26, 2015, accessed January 26, 2015, http://steelbenchmarker.com/files/history.pdf; John Miller, “Rise in Steel Prices Alarms Buyers,” The Economist, July 4, 2013, accessed January 29, 2015, http://www.wsj.com/articles/SB10001424127887324260204578583963765249172?autologin=y. 107 Tobias Nystedt and James Evans, “Wind Turbine Cost Cut, Brazil Support Higher Recommendation,” Bloomberg Intelligence (BI WINDG <GO> command), Bloomberg Professional Services, January 14, 2015, accessed January 16, 2015. 108 Broadwind Energy, FY 2014 Form 10-K for the period ending December 31, 2014 (filed February 26, 2015), pp. 7, 12. 109 Cleantech Solutions International Inc., FY 2014 Form 10-K for the period ending December 31, 2014 (filed March 30, 2015), p. 13 110 China Ming Yang Wind Power Group LTD, FY 2014 Form 20-F for the period ending December 31, 2014 (filed April 30, 2015), p. 14. 111 Herman Trabish, “Is GE’s Space Frame Tower the Future of Wind Power?” The Energy Collective, March 9, 2014, accessed January 29, 2015, http://theenergycollective.com/hermantrabish/351156/photos-ges-space-frame-tower-future-wind-power. 112 “Vestas Announced Her New Large Diameter Steel Tower,” Alternative Energies, March 10, 2014, accessed January 29, 2015, http://www.alternative-energies.net/vestas-announced-her-new-large-diameter-steel-tower/. 113 Renee Cho, “Rare Earth Metals: Will We Have Enough?” Columbia University Earth Institute, September 19, 2012, accessed January 13, 2015, http://blogs.ei.columbia.edu/2012/09/19/rare-earth-metals-will-we-have-enough/. 114 “Material Use,” Vestas, accessed January 13, 2015, http://vestas.com/en/about/sustainability#!material-use. 115 Dan Stover, “The Myth of Renewable Energy,” Bulletin of the Atomic Scientists, November 22, 2011, accessed October 11, 2015, http://thebulletin.org/myth-renewable-energy.
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116 Author’s calculation based on data from Bloomberg Professional service, accessed on November 3, 2015, using the BI WINDG <GO> command. 117 Patrick Smith, “Unmasking turbine prices,” Wind Power Monthly, January 31, 2014, accessed October 10, 2015, http://www.windpowermonthly.com/article/1228426/unmasking-turbine-prices. 118 Author’s calculation based on data from Bloomberg Professional service, accessed on October 18, 2015, using the BI WINDG <GO> command. 119 Elisa Alonso et al., “ Evaluating Rare Earth Element Availability: A Case with Revolutionary Demand from Clean Technologies,” Environmental Science and Technology, February 3, 2012, p. 3406; Travis Fisher and Alex Fitzsimmons, “Big Wind’s Dirty Little Secret: Toxic Lakes and Radioactive Waste,” Institute for Energy Research, October 23, 2013, accessed January 2, 2015, http://instituteforenergyresearch.org/analysis/big-winds-dirty-little-secret-rare-earth-minerals/. 120 Cho, “Rare Earth Metals: Will We Have Enough?” 121 “Powering Sustainability,” Vestas, accessed January 13, 2015, http://vestas.com/en/about/sustainability#!material-use. 122 “China Drops Its Export Limits on Rare Earths,” Associated Press, January 5, 2015, accessed November 4, 2015, http://www.nytimes.com/2015/01/06/business/international/china-drops-its-export-limits-on-rare-earths.html?ref=topics&mtrref=topics.nytimes.com&gwh=18B52AA214CAD83B3E8C534CAEC30865&gwt=pay&_r=0. 123 Jeff Nesbit, “China’s Continuing Monopoly over Rare Earth Minerals,” U.S. News and World Report, http://www.usnews.com/news/blogs/at-the-edge/2013/04/02/chinas-continuing-monopoly-over-rare-earth-minerals. 124 Stuart Biggs, “Rare Earths Leave Toxic Trail to Toyota Prius, Vestas Turbines,” Bloomberg News, January 6, 2011, accessed January 1, 2015, http://www.bloomberg.com/news/2011-01-05/china-rare-earths-leave-toxic-trail-to-toyota-prius-vestas-wind-turbines.html. 125 “China scraps quotas on rare earths after WTO Complaint,” British Broadcasting Company, January 5, 2015, accessed January 15, 2015, http://www.bbc.com/news/business-30678227. 126 Jeff St. John, “Consumers Want Green Energy from the Utility if the Price Is Right,” Greentech Media, November 19, 2013, accessed January 5, 2015, http://www.greentechmedia.com/articles/read/Consumers-Want-Green-Energy-From-the-Utility-If-the-Price-is-Right. 127 Fisher and Fitzsimmons, “Big Wind’s Dirty Little Secret: Toxic Lakes and Radioactive Waste”; Simon Parry and Ed Douglas, “In China, the true cost of Britain's clean, green wind power experiment: Pollution on a disastrous scale,” Daily Mail, January 26, 2011, accessed December 19, 2015, http://www.dailymail.co.uk/home/moslive/article-1350811/In-China-true-cost-Britains-clean-green-wind-power-experiment-Pollution-disastrous-scale.html. 128 “ENERCON WECs produce clean energy without neodymium,” Enercon, April 29, 2011, accessed December 19, 2015, http://www.enercon.de/en-en/1337.htm. 129 International Telecommunication Union (ITU), Greening ICT supply chains – Survey on conflict minerals due diligence initiatives, 2012. 130 Ernst & Young, Conflict Minerals – What you need to know about the new disclosure and reporting requirements, 2012, http://www.ey.com/Publication/vwLUAssets/Conflict_minerals/$FILE/Conflict_Minerals_US.pdf. 131 IPC, Summary of the Final SEC Rules on Conflict Minerals, 2012, http://www.ipc.org/3.0_Industry/3.3_Gov_Relations/2012/IPC-Summary-of-the-Final-SEC-Rules-on-Conflict-Minerals.pdf. 132 “Time to get Started Conflict Minerals,” PWC, May 2013, accessed December 8, 2015, https://www.pwc.com/us/en/audit-assurance-services/publications/assets/pwc-conflict-minerals-compliance-process.pdf. 133 Broadwind Energy, FY 2014 Form SD for the period ending December 31, 2014 (filed May 26, 2015). 134 American Superconductor Corporation, FY 2014 Form 10-K for the period ending March 31, 2015 (filed May 28, 2015), p. 18. 135 BSR, Conflict Minerals and the Democratic Republic of Congo: Responsible Action in Supply Chains, Government Engagement and Capacity Building, May 2010. 136 Chelsea Craven, “Why US Tantalum Imports – And Prices – Are Skyrocketing,” Metal Miner, April 3, 2013, http://agmetalminer.com/2013/04/03/why-us-tantalum-imports-and-prices-are-skyrocketing/.
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