There may be fewer players in the European wind sector in a few years, but it won’t be because the continent’s industry has shrunk.
With order volumes on the rise and the industry’s cumulative backlog reaching new highs, investment firm Jefferies & Co. said in its most recent wind industry outlook for Europe. Vestas and Siemens lead the pack in the sector.
Both on and offshore wind saw tremendous growth in European markets recent years which is making it harder for turbine manufacturers to keep up with demand, the research note –written by equity analyst Gerard Reid–says. The sector will likely see accelerated consolidation in the coming months and years as the manufacturers join up to deal with backlogs.
Financial earnings results may not reflect the tremendous success of the industry because, according to the report, wind turbine manufacturers are selling turbines at lower rates in exchange for future payments if the turbines exceed performance guarantee rates.
Windy Waters
European governments’ feed-in-tariffs are driving much of the recent growth, which has been particularly notable in the offshore wind industry.
In 2010 alone, 308 new offshore projects were built adding a total of 883 MW, a 51% increase year over year. By the end of 2010, Europe had a total of 1,136 turbines in 45 wind farms in nine European countries that added a total of 1,136 generating capacity to the grid. An additional 1,500 MW of offshore wind is under construction for 2011.
Siemens has “secured the lion’s share of projects in advanced stages of development,” according to the study and is “capitalizing on its position in the offshore market.” In 2010, the global firm installed 380 MW of offshore turbines, while Vestas installed 645 MW, but in the first half of 2011 Siemens installed 1.3 GW and has been selected to install 3.7GW more while Vestas has been contracted for only 300 MW.
Turbines On Land
Though behind in offshore development, Vestas has shown strong growth this year overall, announcing 1.5 GW of new orders in Q2 2011 as compared with 630 MW in Q1 2011.
“Looking to 2012, we calculate that Vestas has over 3 GWs of orders, equating to 40% of our forecasts,” the Jefferies report says.
For its part, Spanish wind company Gamesa finished 2010 with orders for an additional 1,414 MW to be built in 2011, 48% of its 2011 sales guidance (2,800 to 3,100 MWs). This number marks a recovery for Gamesa which experienced losses in 2009 and entered 2010 with only 1,132 MW of orders. That year, the company fell short of its target sales and developed only 2,405 MW total in the European market.
“We believe Gamesa’s strategy to couple wind farm develop with turbine sales in emerging
markets to be a good approach,” the report says.
Having recently invested heavily in the US, Gamesa is hoping for a recovery from its 2009 fall in orders.
Suzlon, currently in the process of merging with Repower, has been repositioning its strategy in line with the Indian-focused Repower –over half of Suzlon’s current 2.2 GW of orders are for India.
Suzlon also recently released a new wind turbine that will produce more electricity in regions that are less windy. Read the full story: Minimal Wind, Maximum Power.
Chinese wind turbine manufacturer Goldwind has seen steady growth from 2007 through 2010. The company sold 5.5 GW of turbines in 2010, compared to 4 GW in 2009.
Goldwind has been particularly successful at consolidating an international team to compete in the global market. In Goldwind Gets The Switch, Breaking Energy’s Peter Gardett explains how the company is using components manufactured by Finnish permanent magnetic generator firm The Switch.
European Winds
According to European Wind Energy Association (EWEA), electricity production from wind power will increase from 182 Terawatt hours (TWh) or 5.5% of the total EU demand in 2010, to 581 TWh or 15.7% of the total demand by 2020.
“Wind energy will more than triple its power output by 2020 with 194 billion Euros invested in European onshore and offshore wind farms in this decade”, said Justin Wilkes, Policy Director of EWEA. “This success is mainly driven by a strong EU regulatory framework to 2020, which we need also after 2020.”
There are currently 12,925 wind turbines installed in European Union, according to EWEA. A dynamic meter on the group’s website keeps a real-time count of KWH produced from wind in the EU. As of August 2, 2011, the meter was at 381 billion total KwH from wind since January 2009.
Feed-in-tariffs and growing carbon emissions caps are encouraging continued development of the renewable generating source, which has seen steady growth in the last few years. In 2010, 9.3 GW were installed in the EU alone, according to EWEA, and in 2009, wind accounted for 39% of all new capacity installed, compared to gas (25%) and solar photovoltaics (17%).
In the United States, by comparison, around 1,100 MW were installed in Q1 2011, which is double the amount that was installed in Q1 2010. At 2010 year’s end, the US had 40,181 MW of wind power capacity installed, around 20% of world’s wind capacity, according to the American Wind Energy Asocation (AWEA).
Photo Caption: A wind park near Bitterfeld, Germany on October 6, 2010. At the time, the German government set ambitious goals for renewable energy sources in an energy policy plan that called for heavy investment in wind, solar and biogas electricity production.
