The Future of the North European Wind Energy Supply Chain Figure 2: Planned and Current Footprint of European Wind Turbine Generator Original Equipment Manufacturers
Source: MAKE Consulting.
most prominent country. Many of these suppliers have indirectly exported their components in the past as OEMs have shipped products made in Northern Europe overseas.
Winds of Change Blowing Towards Northern Europe The stop-go nature of the US market due to short production tax credit (PTC) horizon has kept European WTG OEMs and component suppliers from investing in the US in the past. The outlook for continued strong market demand in the Americas and Asia is however driving investments in localised manufacturing and supply chains.
The major motivating factors for globalisation of the nacelle assembly footprint include:
• market access; • localisation of cost; •
level of maturity reached by the wind power supply chain in Northern Europe. Despite this, demand for components, parts and services continues to soar in the Americas and Asia Pacific. Leading players and small- to medium-sized suppliers have adopted different strategies to react to the change in demand and supply dynamics that have occurred in the past 12–18 months.
reduced manufacturing and logistics costs;
• shorter lead times; and •
working capital reduction providing OEMs with the ability to compete on equal terms with local suppliers (see Figure 2).
Despite the short-term reduction in demand as a consequence of the world’s financial and economic crisis, European OEMs that in the past used Northern Europe as an export hub have maintained their focus on restructuring their global manufacturing footprint for growth. In doing so, they are also optimising their logistics, operating costs and access to incentives. In the meantime, they are optimising their logistics, operating costs and access to incentives. The change has been significant: six of the top 15 global wind turbine OEMs will have operational US nacelle assembly facilities by the end of 2010 (see Figure 3).
The Impact of Upstream Demand
This has a profound effect on the upstream supply chain for parts, components and services in Northern Europe. Lower demand, increasing competition and reduced order visibility is emphasising the
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Siemens, GE and REpower have all announced their commitment to the offshore segment with capacity expansions in the UK, Norway, Sweden and Germany. Gamesa has recently entered into a memorandum of
MODERN ENERGY REVIEW – VOLUME 2 ISSUE 2
Increasing Exports and Expanding Facilities Some are aiming to use their experience, know-how and track record to increase their exports to the Americas and, to a lesser degree, the Asia Pacific region; others have reinforced their internationalisation by establishing a manufacturing footprint in emerging markets. European suppliers have established new facilities or are anticipating expansion in the US, Canada, Brazil, China, India and Southeast Asia. Some are lured by the promises coming from North Africa. The expansion of the supply chain in both Asia Pacific and the Americas by domestic companies and European suppliers is reducing export opportunities for those North European suppliers whose components are becoming less competitive due to higher manufacturing and transportation costs. This means that suppliers with a purely Northern European focus are starting to adjust to a new reality where they no longer act as export enablers, but rather can chose between being a critical enabler for the offshore segment and globalising their footprints.
Focus on Offshore Facilities
This transformation involves significant capacity reductions for mainstream onshore turbines and components in Northern Europe. Offshore projects will be served with dedicated products from separate product lines from mainstream onshore WTGs. Existing product lines will have to be reconfigured for the offshore segment and new offshore-specific facilities will be built.
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