PresentationDocument. Nordex Capital Markets Day. October Speaker: Morten B. Keller, MAKE Consulting

Transcription

1 PresentationDocument October Nordex Capital Markets Day Speaker: Morten B. Keller, MAKE Consulting

2 Executive Summary Market maturity?...onshore, yes. Offshore development indicates high growth rates Bearish macro and regulatory environment reduces outlook for key wind power markets Toxic cocktail of enduring sluggish economic growth in industrialized markets, tightening money markets and regulatory change impact global demand and increase relative importance of emerging markets and offshore wind power Technology plays a key role in driving CoE down Wind power has made significant leaps in technology space over the past ten years. Innovations primarily focused on increasing turbine performance and decreasing the project CAPEX and OPEX thus driving the CoE down Wind power attracts large Utilities and IPPs Wind power technology maturity has driven large Utilities and IPPs in all key regions to diversify their power generation portfolios. While European firms have pan Euro- American presence, American and Chinese firms are domestic market leaders 2

3 Long term market fundamentals intact Wind power holds competitive advantage Global power and electricity demand Global power demand to grow by 64% by 2035 Increase in fuel price Price of fossil fuels is expected to remain high C02 emission reductions Need to limit increase in global temperature to 2 C above pre-industrial levels Safety and security of energy supply Need to reduce dependency from conventional sources and opt for safe energy Investments To be driven by the need to meet imposed emission reduction requirements and favorable incentive schemes Renewable energy sources Increasingly more attractive as they address several energy supply concerns Wind power Among renewable energy sources, wind power holds a competitive advantage in terms of short lead time, zero fuel and low operation costs 3

4 ...but present macro conditions weigh in short term Bearish macro and regulatory environment reduces five year outlook Poor economic growth, coupled with high electricity generation reserve margins diminish PPA availability and pricing Long term policy outlook unfavorable in an era of government cost cutting and partisan politics Ontario to continue growth with 1.1GW of awarded projects, though permitting delays push development to outer years Long term renewable energy targets and next-phase emissions trading Large offshore pipeline beginning to materialize Emerging Eastern European markets fostering onshore growth Increasing regulatory uncertainty in economically pressured Southern European markets Continued high growth in energy demand, but tight financial markets Centralized and stricter approval procedure for <50MW projects will likely slow down market development New regulations on low voltage ride through and wind power forecasting Policy framework and tariffs setting the stage for Indian growth Brazilian A3 tender awarded wind power 1.9GW of new capacity to be installed through 2014 Mexican wind development concentrated in the Oaxaca region which holds a potential of 7GW, but lack of grid could jeopardize the growth Argentinean growth spurred by new tenders and provinces with tax exemption Political uncertainties in Northern Africa delayed the development of the existing project pipeline Egypt and Morocco are in advanced stage of policy and regulation Wind power development in South Africa likely to be slower than expected Large wind power plants in Tunisia and Ethiopia expected in medium term Recent meetings among the world s largest carbon emitters have spurred doubt about reaching a new binding global deal at this year s UN climate summit in Durban Long term carbon price uncertainty 4

5 still, high growth pockets exist Emerging markets and offshore wind power expected to lead in Y-o-Y growth North America (GW) Europe (GW) Asia Pacific (GW) CAGR: Onshore: 3.2% Offshore: N/A CAGR: Onshore: 8.3% Offshore: 25.8% CAGR: Onshore: 8.8% Offshore: 34.8% South America (GW) Rest of World (GW) Onshore Offshore CAGR: Onshore: 33.8% Offshore: N/A CAGR: Onshore: 21.4% Offshore: N/A while the market volume continues to come from mature European, Asian and American markets Note: All GWs represent grid connected capacity 5

6 2011 9M order intake grows Growth in announced contracts in 1H/2011 Announced turbine contracts, 9M (MW) Number of announced turbine contracts increased for the second consecutive year in 2011 as the Q1 more than doubled in 2011 compared to 2010 Orders in the first nine months of 2011 have almost exclusively focused on onshore activity: Fragmented volumes for small-medium size projects Increased demand for MW turbines Large drop in orders in the 3MW+ segments due to a dearth of orders for offshore turbines Q3 Q2 Q1 20,000 +6% +47% 15,000 10,000 5, Announced contracts by segment, 9M (MW) 20,000 Offshore Onshore 15,000 10,000 Growth in the volume of turbine contracts in the first half of 2011, though Q2, Q3 indicates a slowdown 5, Note: Updated as of October 6th,

7 Turbine OEM competitive dynamics OEMs shift focus to emerging markets U.S. OEMs seeking opportunities in Brazil and EU offshore EU OEMs continue migration to Americas and have renewed interest in India China crowding impacts profitability and Chinese OEMs look to Western and African markets 7

8 Supply chain faces over capacity concern Global capacity surplus among all main components heralds imminent consolidation Americas (GW) Europe (GW) Asia Pacific (GW) Blades Bearings Generators Gearboxes Towers Nacelles Blades Bearings Generators Gearboxes Towers Nacelles Blades Bearings Generators Gearboxes Towers Nacelles Large overcapacity in localized manufacturing Continued imports of castings, generators and gearboxes Brazil is attracting large additional capacity build out Large near term capacity surplus Low capacity utilization, redundancies Offshore supply chain expanding Increased likelihood for market consolidation Large near term capacity surplus Low capacity utilization, redundancies Large inventories High likelihood for market consolidation 8

9 Soft U.S demand hurts exports from Europe and Asia Key highlights Outlook for flow of key components and parts Turbine OEMs have invested in nacelle assembly capacity in the Americas in order to serve the regional demand 2011 regional demand (GW) 2014 regional demand (GW) Localized components Exported components Indicates volume exports 2011 regional nacelle capacity (GW) Americas However, the U.S. market has insufficient supply capacity for a range of key components supplied through European and Asian exports Gearboxes Generators Main bearings Castings Nacelles Gearboxes Generators Main bearings Castings Softening of the U.S. demand is influencing European and Asian supply chain companies Main shafts Rolled rings Blades Towers Main shafts Rolled rings Asia Pacific Europe Capacity surplus in all regions expected to maintain current price pressure Main shafts Rolled rings

10 Transition from Cost/kW to Cost/kWh Technology drives lower Cost of Energy Increase Performance Blades...advanced airfoils, rotor extensions Nacelle...PMG push Towers...100m+ towers Grid...full power converters Lower Cost of Energy...technology levers Decrease CAPEX Weight Reduction Thru raw materials...carbon fiber, permanent magnets, concrete & hybrid towers Thru design...compact nacelles, flatback blades, space frame towers Decrease OPEX Reliability Shift towards lower gear stage or DD Redundancy and modularity in electrical system Serviceability Nacelle space optimization 10

11 Prominent technology shifts Turbine size continues to increase NPI technology focus by OEMs Turbine size increase is primarily driven by land availability Rotor growth development has been driven by both lack of availability of high wind sites and grid proximity of medium and low wind sites. This trend is visible in all major markets EU, U.S, China and India Similarly, development of inland and low wind sites has led to taller towers in excess of 100m heights Multi MW 2.5 MW + Onshore 5-7 MW Offshore Conventional airfoils Smaller swept area Conventional 3-Stage GB Advanced aerodynamics Larger swept area...longer blades 2-Stage GB, direct drive Mainstream MW DFIG PMG Sub MW Segment 80 meter towers 100+ meter towers 1990 Today Future Steel towers Concrete/ hybrid structures 11

12 Focus on medium and low wind segment development Wind class project pipleline development (weighted average ) 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 53% 34% 38% 52% 14% 10% 30% 41% 28% US EU China IEC I IEC II IEC III 12

13 Non-turbine items weigh heavier in offshore CAPEX Typical onshore vs offshore project CAPEX breakdown Insurance 2% Engineering 1% Turbine 70% Civil 11% Electrical 8% Management 1% Install & Logistics 15% Substation 7% Turbine 45% Substation Mgt. 6% 1% Electrical 7% Foundations 22% Other 1% Eng. 1% Insurance 1% Install & Logistics 1% larger project sizes and bigger value chain increase stakes 13

14 5-7MW emerging as preferred offshore turbine size European turbine OEM dominates the offshore segment MY 6.0MW Goldwind 6.0MW MHI 6.0MW On the horizon: United Power 10MW GE 10-15MW Next generation turbines DEC 5.0MW Hyundai 5.5MW Alstom 6.0MW Nordex 6.0MW Doosan 7.0MW Samsung 7.5MW Legend Europe Lower MW rating Gamesa 5.0MW Siemens 6.0MW Vestas 7.0MW Asia Pacific Higher MW rating Siemens 2.3MW Vestas 3.0MW Areva 5.0MW REpower 6.15MW Turbines currently in the market Sinovel 3.0MW Winwind 3.0MW Siemens 3.6MW Sewind 3.6MW XEMC 5.0MW BARD 5.0MW REpower 5.0MW Sinovel 5.0MW But Asian turbine OEMs are scaling up for the Asian offshore market to evolve 14

15 Asset owners are large Utilities & IPPs Global asset owner highlights Top 25 global asset owners, YE 2010 (MW) Technology maturity and the need for diversification of generation portfolio has attracted large Utility, IPP interest in wind power Top 25 owners are represented from all three regions, while Chinese IPPs have grown in rankings in the past two years reflecting the massive growth in the market European Utilities have diversified into the U.S and continue to maintain the largest presence in global ownership of wind power, earning five of the top ten spots Cumulative ownership of top 25 owners as a % of global installs changed from 32% in 2007 to 47% in 2010 Iberdrola Guodian/China Longyuan NextEra Energy EDPR Huaneng Corp. Datang Corp. Acciona Energia E.ON Enel Huadian Corp. CGN Guohua Energy MidAmerican Energy EDF GDF Suez Invenergy RWE CPIC China Light & Power Edison International AES International Power Beijing Energy Vattenfall Cobra Energía 11,602 8,941 8,144 6,675 6,332 5,851 5,473 3, ,557 2,364 2,345 2,316 2,186 1, ,717 1,708 1,703 Cumulative Ownership YE ,416 1, Ownership Additions 1, Ownership Additions 1,314 1, Ownership Additions 1, ,000 4,000 6,000 8,000 10,000 12,000 15

16 European ownership highly fragmented Asset owner engagement, Europe 16

17 U.S. and China dominate the Americas and Asia Pacific Asset owner engagement, Americas Asset owner engagement, Asia Pacific 17

18 Headquarters Bushoejvaenget 129 DK-8270 Hoejbjerg Denmark T P.R. China Office The Exchange Tower 2 Room 2916 Nanjng Road Tianjin T USA Office 225 Franklin Street 26th floor Boston, MA T USA Office 117 N. Jefferson Street Suite 400 Chicago, IL T MAKE Consulting A/S. All rights reserved. Reproduction or distribution of this report in any form without prior written permission is strictly forbidden. Violation of the above restrictions will be subjects to legal action under the Danish Arbitration Act. The information herein is taken from sources considered reliable, but its accuracy and completeness are not warranted, nor are the opinions, analyses and forecasts on which they are based. MAKE Consulting A/S cannot be held liable for any errors in this report, neither can MAKE Consulting A/S be liable for any financial loss or damage caused by the use of the information presented in this report.