Wind Turbine Manufacturing a case for consolidation

Transcription

1 Wind Turbine Manufacturing a case for consolidation Industry overview and key trends Hamburg, November 2011

2 Five game-changing trends will trigger further cost out and re-shape the industry structure Overview of key trends in wind energy 1 Uncertain growth perspective: After years of double digit growth, only moderate growth perspective in the coming years especially in Europe Competition by Chinese players: Not just a major issue in China, but now more and more going global Aggressive pricing and financing solutions Race for grid parity: Grid parity achievable in the next 3-5 years Major efforts by leading players to reduce Cost of Energy and differentiate to competition Global supply chain patterns: Shift of growth to Emerging Markets Changes in supplier structure and operational requirements push further globalization Systematic cost out programs and upcoming next wave of consolidation of European wind industry on all levels 5 Offshore wind taking off: Industrialization and cost reduction are key New business models and partnerships across the whole value chain required Source: Roland Berger 2

3 1 GROWTH PERSPECTIVE Moderate global growth in the future "Size of the pie" will stagnate in Europe Annual additions [Global onshore and offshore wind, GW] Global offshore share Share of key countries Africa-Middle East Latin America 10% 10% 15% 82% % p.a. North America Asia Pacific 83% 82% e +4% p.a. Europe e Regulatory uncertainties (e.g. extension of PTC scheme in the US) and cheap, alternative sources of energy (e.g. shale gas) dampen growth perspectives double digit growth rates as experienced in the past decade will not return Overall growth in the onshore business in Europe is stagnating due to increasing saturation and critical state of public finances (e.g. Spain) perspective for growth has shifted away from home markets of European wind turbine manufacturers to Emerging Markets and China Offshore will be the key area for growth in Europe in the next decade Source: EER; Roland Berger 3

4 1 GROWTH PERSPECTIVE The global market is driven by 12 key countries China and Emerging Markets to fuel the future growth Annual additions [key countries, GW] Key countries per region CAGR CAGR Africa/ME % 10% Latin America North America % 15% % 6% % 0% Asia % 2% % 3% % 13% Europe % -3% Offshore offsetting onshore decline % 6% Offshore shaping % 7% % 5% Offshore development % -1% Rather decline More than 80% of annual installations in the next decade will happen in 12 key countries Spain and Germany as major growth drivers of the past slowly reach saturation China sees major and dynamic growth Full-scale deployment, which will turn the country into the largest global market USA with large growth potential but uncertain political framework India, UK, France with untapped potential Canada, Brazil, Australia and South Africa with strong growth Source: EER; Roland Berger 4

5 2 CHINESE COMPETITION Chinese manufacturers gained ground over the last years Western players effectively pushed out of the Chinese market Overview market shares, [% delivered MW] WORLD MARKET CHINA 100% 85% 11% 1% 3% 6% 14% 13% 28% 6% 18% 69% 17% 18% 3% 4% 7% 4% 3% 9% 8% 7% 9% 57% 3% 10% 11% 9% 7% 18% 13% 6% 6% 17% 12% 49% 23% 7% 11% 10% 2% 6% 7% 7% 12% 5% 10% Others Dongfang Sinovel Goldwind Nordex Suzlon Enercon Gamesa Vestas Siemens GE Energy GE 15% 18% 5% 31% 13% 7% 16% 21% 28% 23% 6% 10% 7% Other Mingyang Dongfang United Power Goldwind Sinovel Gamesa Vestas 2005 Equipment Goods manufacturers 2008 Pioneers 2009 Rest Chinese Source: BTM, EER, MAKE; Companies; Roland Berger 5

6 2 CHINESE COMPETITION Exceptionally low prices in China explain this development and have contributed to an overall global price decline Price competition Steady price decline [Global average Wind Turbine prices EUR m/mw] Significant regional differences [Normalized Wind Turbine ASPs, EUR m/mw] -22% Europe U.S. Global average 0.6 China Source: BernsteinResearch; Roland Berger 6

7 2 CHINESE COMPETITION Facing immense competition and pressure in home market Chinese players are already lured by stable conditions in Europe Push- and Pull-Factors 'PUSH-FACTORS' > Fierce domestic competition leading to strong price pressure 'PULL-FACTORS' > Stable policies > Attractive price level > Fading political support and unwillingness of e.g. China Grid to support further expansion of wind energy (concerns regarding grid stability) > Structural overcapacities > Window of opportunity in course of European debt crisis Source: Roland Berger 7

8 2 CHINESE COMPETITION Chinese players could undercut European prices by 20% to break into the European market Competitive threat from Chinese players Landed price in Europe of ex-china turbine [EUR m/mw] Price delta = -20% Significant threat for European players Ex-China price Local Local tower components Shipping (nacelle only) Local Total organization landed cost & sales force Current European price Source: BernsteinResearch; Roland Berger 8

9 3 RACE FOR GRID PARITY Grid parity in reach But Cost of Energy targets of EUR ct. 4-5 / KWh will require a further cost reduction of 25-40% LCoE in Germany [EUR ct./kwh] Share in generation mix 25 Grid parity Nuclear Lignite 5-7 Hard coal 5-7 Natural gas 25-40% Achieving grid parity will be essential for Western OEMs to sustain own market position and participate in further growth Wind 6-8 PV 0 Hydro LCoE Source: IEA; Roland Berger 9

10 3 RACE FOR GRID PARITY Targeted cost-out measures still hold a significant potential and need to be implemented as a key step towards achieving grid parity Required cost reductions and potential levers for Design-to-Cost Cost of Energy Wind up to 25% > In the past, every 10 years a cost out of 1/3 could be achieved by wind OEMs > Further cost reduction potential in the same order of magnitude is needed in the next 3-5 years EUR k 10-15% > Bundling > Contracts > Make-or-Buy > Best Practice costing > Collaborative approaches 2-4% > R&D and production footprint > Process improvement Cost Out Levers 3-6% > Design standards and requirements > Benchmarking EUR k > Innovations, new technical solutions like Direct Drive and enhanced reliabilities support cost of energy improvements Baseline Supply Chain (supplier cooperation) Value Stream (process improvemt.) Technical (product optimization) Best Practice Cost Source: Roland Berger 10

11 3 RACE FOR GRID PARITY Systematic Product-Cost-out activities are currently being performed by major OEMs Design-to-Cost potential for wind turbines Potential > Blades > Rotor Bearings > Hub > Pitch System Potential > Steel shells > Flanges, bolts > Painting > Internals BLADES AND ROTOR > Larger rotors with better aerodynamics (new materials, e.g. CFRP, stiffness, dynamic design, load control, etc.) > Manufacturing constraints > Endurance to environmental damage (e.g. weather, lighting) TOWER AND FOUNDATION > New foundations design, construction techniques and materials, specially for offshore > New tower concepts with cost optimized structural design > Weight reduction DRIVE TRAIN & GENERATOR Potential > Gearbox > Yaw System > Generator > Main Shaft > Yaw Bearing > Transformer > Main Frame > Control System > Cover/Housing > Power Converter > Mechanical Brake > Screws > Cables > Direct drives or hybrid concepts > Lighter, more compact housings (e.g. integration of drive train and generator, less bearings) > New generator technologies (e.g. super-conducting components) Significant activities across the turbine by major OEMs others will have to follow Low High Source: Roland Berger 11

12 4 CHANGING GLOBAL SUPPLY CHAIN PATTERNS Increasing importance of Emerging Markets has to be reflected OEMs need to combine local and global to remain successful Countries exceeding annual installations of 500 MW (conservative scenario) No. of countries Source: EER, Roland Berger 12

13 4 CHANGING GLOBAL SUPPLY CHAIN PATTERNS The required degree of localization and ability to work in a global setup will be key determinants Structural questions regarding global setup EXAMPLE: BLADES Volume of local business/market > Development of demand in local market > State of local supplier industry (incl. planned capacity expansion, also by competition) > Planned sales/production volumes Low High REGIONALIZE Further buildup of local industries GLOBALIZE LOCALIZE Technology improvement e.g. "connectable blade", manufacturing technology Blades Need for local adaptation > Logistics cost/risk > Local content requirements > Access to key resources/materials > Currency risk Today, Blades structurally should be procured on a regional scale > High need for local adaptation primarily driven by large size which inflates logistics costs > Local sourcing is difficult Apart from Western Europe/ China lack of local supplier industry > Demand fluctuations in local markets can at most be balanced on regional level This business is likely to remain regional Technology improvements likely to be offset with concurrent build-up of local industries Low High Source: Roland Berger 13

14 4 CHANGING GLOBAL SUPPLY CHAIN PATTERNS Example Castings Re-alignment of supply chains can also be forced by fundamental shift of production capacities to Asia Top 10 suppliers' market share in castings for wind turbines Vestas Casting (DK) 7% Eisengießerei Torgelow (DE) 7% Others 45% 3% Patel Alloy (India) 9% 5% Jiangyin Jixin (China) Huarui Heavy Industry Steel Casting (China) 5% Ningbo Yeong-Shang (China) 4% 4% Wuxi Qiaolin (China) 3% Ningbo Riyue (China) 8% Zhejiang Jiali (China) Seforge (India) Eight of the 10 largest casting suppliers already today coming from Asia Geographic shift will be inevitable to secure capacities Indian players Chinese players European players Others Source: BTM; Roland Berger 14

15 Source: Siemens; Roland Berger 15 4 CHANGING GLOBAL SUPPLY CHAIN PATTERNS Siemens balances global and local supply in a "Hub & Spoke"- configuration to achieve cost efficiency, quality and secure supply Example Siemens supply chain approach GLOBAL > Economies of scale from pooling volumes > Clusters of Excellence (competence, technology, quality) 15 COST EFFICIENCY QUALITY SECURE SUPPLY Cluster of Excellence for global/regional supply Local sourcing Elements of value chain, e.g. production of blades, nacelles, etc. LOCAL > Large items (size/weight) > Flexibility > Local content regulations > Natural hedge

16 5 OFFSHORE TAKE-OFF Growth of Offshore Wind will accelerate with Europe as key driver Annual installations expected to double every 4-6 years Worldwide yearly installed offshore wind power [GW] North America +87% +260% e Asia Pacific Europe e North America Asia/Pacific Europe Players now have to prove their "Offshore Wind capabilities" by delivering projects along agreed timeframes, cost targets and with promised quality and performance Those who can't will face difficulties to participate in development due to lack of trackrecord and will be confronted with unfavorable conditions (e.g. project financing constraints) This could trigger unconventional action E.g. Nordex taking 39% share in Arcadis Ost 1 Source: EER, EWEA, Roland Berger 16

17 5 OFFSHORE TAKE-OFF Apart from player-specific situation, the offshore wind industry in general has to address four key challenges to achieve break-through DEVELOPMENT FINANCING LOGISTICS/ CONSTRUCTION OPERATIONS & MAINTENANCE > Consider technical, legal, environmental and financial aspects in integrated EPC approach > Secure bankability of wind offshore projects > Secure ship capacities > Reduce construction cost > Adress Health, Safety and Environment challenges > Develop capabilities and secure capacities for offshore services Source: Roland Berger 17

18 Source: OEMs; Roland Berger 18 5 OFFSHORE TAKE-OFF Major Chinese players also have to be expected in the offshore arena as they are catching up in terms of technology WTG technology for offshore wind 1) MATURITY 3) INNOVATION 2) Next generation Advanced Design Prototyping <15 WTGs <100 WTGs >100 WTGs Goldwind 6MW Goldwind 5 MW Vestas V164 7MW Gamesa 7MW Nordex N150 6MW Bard 6.5 MW Gamesa 5 MW Darwind 5MW Siemens SWT Sinovel SL6000 Alstom 6MW Siemens SWT GE REpower 6M Areva M5000 REpower 5M Bard 5.0 Mainstream Winwind WWD Goldwind 3MW Vestas V GE 3.6sl Sinovel SL3000 Siemens SWT 3.6 Vestas V Siemens SWT 2.3 1) Based on publicly available information 2) Scoring based on rated power, drivetrain technology, rotor diameter, tower height and top head mass 3) No. WTG in operation

19 5 OFFSHORE TAKE-OFF Partnerships along the value chain emerge as a key factor for success New cooperation models expected Partnering logic in Offshore Wind Joint learning curve to avoid "serial error" Learn from experience Market Coverage Development Financing Technology & Engineering Manufacturing Logistics & Delivery Construction Operations & Maintenance Understand constraints Partnerships allow > to combine experience and competences of different players with complementing strengths along value chain (OEMs, project developers/epcs, Banks/Financiers, utilities and service providers) > to reduce own investments and/or risk > to achieve faster progress through establishment of 'functioning tag-teams' Source: Roland Berger 19

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