Wind industry policy uncertainty affects global supply chain

Report discusses industry trends and wind blade outlook, including manufacturing move out of Europe and new innovations to reduce cost of energy.

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According to the report “Global Wind Supply Chain Update 2015” from market research firm FTI Consulting (Washington, DC, US), policy uncertainty and inconsistency in top wind markets — including the U.S., Europe and China — have forced more than 120 wind suppliers from the market, resulting in a more streamlined global supply chain.

According to FTI Consulting, current market conditions are driving competition in both quality and cost. Suppliers are being driven to provide innovative products and value added services to assist turbine OEMs and end users in bringing down the levelized cost of energy (LCOE) of wind in order to remain competitive with conventional energy sources.

The report’s outlook for rotor blades explains that though Europe has traditionally been the hub of rotor blade manufacturing, wind energy growth in other parts of the world has shifted blade manufacturing away from Europe to North America, South and East Asia and, most recently, Latin America.

Out of 30 independent blade suppliers worldwide, LM Wind Power (Kolding, Denmark) maintains its lead, meeting 13% of 2013 global demand. Recent closures and divestments of in-house blade manufacturing facilities by large vertically integrated turbine OEMS has resulted in a shift toward outsourcing of rotor blades. Despite this, there are still 20 wind turbine vendors with in-house blade production capabilities, and these met half of the global demand in 2013.

The current total annual blade supply is estimated to exceed 95 GW, which is 4 to 5 times greater than the demand forecast for 2015 and 3 to 5 times greater than forecast demand for 2018. In order to reduce LCOE, leading blade suppliers have recently introduced advanced materials  — such as a hybrid combining the properties of glass and carbon fiber — as well as innovative designs for extending blade length and aftermarket service solutions.

"The wind industry has been in the process of transformation since 2011, and the global wind supply chain is not matured yet," explains Feng Zhao, head of wind energy at FTI's energy practice and the report's key author. The reports projects continued instability for the next two years and issues a warning: "The exit/non-participation of so many suppliers delivers a dangerous signal to governments. To bring wind toward a position where it can compete head-to-head with conventional energy sources, it is imperative to find a balance between maintaining attractive and certain policy and reducing the burden on governments and consumers caused by paying renewable energy subsidy."