The Future of the North European Wind Energy Supply Chain a report by Morten B Keller Chief Executive Officer, MAKE Consulting
The role of the North European wind energy supply chain is undergoing significant change. With Southern European supply capacity being sufficient to meet demand and the expanding North American nacelle assembly capacity driving local sourcing of components, the North European wind energy supply chain’s role as the world’s leading export hub is coming to an end. Increasing competition in commoditised product segments is driving European low cost country sourcing and North European suppliers are finding themselves challenged to adapt to new market dynamics. To survive, these suppliers need to harvest emerging opportunities in the high-performance offshore wind sector or globalise their manufacturing footprint.
Overcapacity
Within Europe the combined wind turbine generator (WTG) nacelle assembly capacity is more than 24GW. This is a capacity that exceeds the expected level of demand in Europe in 2010 by more than 100%.
Historically Europe has been an export hub, using this overcapacity to serve developing overseas markets. The localisation of large nacelle assembly capacity in Europe has led to the creation of a deep and experienced supply chain with large capacity across all components, parts and services. In recent years, between one-quarter and one-fifth of the European nacelle capacity has been used to supply the Americas and Asia Pacific. Export activities have been led by original equipment manufacturers (OEMs) such as Vestas and Siemens, followed by Gamesa, Enercon and Nordex. This has in turn created an additional demand for components, parts and services, along with growth opportunities for European suppliers (see Figure 1). European supply chain overcapacity is centred in Northern Europe. More than 60% of nacelle assembly capacity is located here. Currently less than a third of the capacity is used to serve Northern European demand. This is especially true for North European mainstream onshore WTG capacity. If current capacity is not reduced or managed, it will still exceed local demand (by approximately 50%) after 2015. Meanwhile, supply and demand is expected to be balanced in Southern Europe, with the exception of gearboxes and bearings that will still represent an export opportunity for Northern Europe-based suppliers.
In Northern Europe, two countries, Denmark and Germany, host the bulk of its 15GW nacelle assembly capacity. Denmark was a pioneering country for wind power and was initially the base for many of the early WTG manufacturers, including Vestas, NEG-Micon, Bonus, Nordtank, Nordex and Winworld. However, following a decade of consolidation only Vestas and Siemens still have nacelle assembly facilities. Germany hosts the largest number of WTG manufacturers among the European countries, including six domestic players.
Vestas still maintains the bulk of its 6GW European nacelle assembly capacity situated in Denmark that, apart from assembling nacelles intended for European projects, has been used to support exports to the
© TOUCH BRIEFINGS 2010
Americas and Asia. Likewise, Siemens has the majority of its capacity, around 3GW, located in Denmark.
Nordex, Fuhrlander and Areva centre their nacelle assembly in Germany, while REpower and Enercon have established assembly facilities in Portugal in addition to their facilities in Germany. Enercon has its main nacelles assembly facility in Aurich, Germany, and together with the facility in Portugal, the company has a cumulative capacity of around 4.5GW. Nordex and REpower have a capacity of around 3.5GW and 2.5GW, respectively, and Areva has a capacity of less than 500MW.
WinWinD has a facility in its home market of Finland, where it assembles close to 500MW of nacelles, while GE chose Germany and Spain as bases for its European assembly facilities, representing a cumulative capacity of around 1.5GW. However, closure of the Spanish facility has recently been announced as the capacity of the German facility is sufficient to meet European demand.
Spain has the largest European wind market in terms of MW new wind power capacity installed in 2009. Six WTG manufacturers have facilities for nacelle assembly, four of which are headquartered in Spain.
The upstream wind energy supply chain, although spread across more countries, gravitates towards these same countries in terms of number of suppliers and capacity for most components. This is despite the rapidly growing offshore wind segment, which has led to an influx of new suppliers with footprints around the North Sea – the UK being the
Morten B Keller is the Founder and Chief Executive Officer of MAKE Consulting. He focuses primarily on commercial aspects, strategies, markets and development and financial matters. He has a Master of Business and Economics degree plus 12 years of management experience in the wind energy business, and two years of experience in mergers and acquisitions and financing with major banks.
Figure 1: European Supply Chain Capacity versus European Demand*
WTGs (nacelles) Gearboxes Generators Blades Bearings Castings Towers
0
3 6 9 12 15 18 21 24 27 30 33 Demand 2010e
Demand 2009 Demand 2011e *Capacity measure in gigawatts. e = estimated; WTG = wind turbine generator. Source: MAKE Consulting.
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