Table of Contents

Domestic Content a Strategic Goal for OEMs

U.S. to Fund New Turbine Development

Wind Industry Eyes Growth in U.K.’s Offshore Business

What's in the Wind!
GLWN Calendar of Events

Wind Supply Chain Workshop
December 16, 2009
Pittsburgh, PA

Northwest Wind Industry Alliance Supply Chain Summit
December 18, 2009
Portland, OR

Wind Supply Chain Workshop
January 14, 2010
Wichita, KS

Domestic Content a Strategic Goal for OEMs

Renaissance Center and GM World Headquarters in Detroit, MI

Corporate mandates, logistical advantages, and currency benefits were cited as key reasons for investing in domestic-supplier development by wind turbine OEM executives. The remarks were heard in a panel discussion at last week’s Windpower Supply Chain Workshop conducted by the American Wind Energy Association in Detroit. Over 2,000 people turned out for the three-day event that included Small and Community wind tracks conference sessions.

Representatives from Vestas, Nordex, AAER, Nordic Windpower, and Northern Power Systems each affirmed the strategic importance of establishing a strong North American supply to their business strategies and provided insights into their procurement processes. “How important is domestic content?” asked Dan McDevitt of Nordex. So important, he continued, that his company has established localization goals by year by component and by percent domestic content for their procurement team.

Vestas views local content as strategic as well. Stated Vice President Gene Cuenot, “Our model is also to buy in the currency that we’re selling in. It’s a lot better for us to localize for sustainability and for cost-avoidance of freight and duty. The billions of dollars invested in the U.S. by OEMs in factories for producing nacelles, towers, and blades speaks to that.”

“The price of fuel and decline in the economy have changed the economics,” observed Nordic Windpower’s Kent Prentice. “The logistics involved in importing product is now much more complicated.” He explained that international shipping schedules have been reduced, adding time to the process. Additionally, it’s becoming more cost-prohibitive to fly people to distant facilities for onsite certifications and inspections.

For AAER’s Samuel Boudaux, the business strategy is simple. “Our real goal in 2010 and 2011 is to buy American. We started our supply chain in Europe, it was long to finalize this. For U.S. market, it will be also a long process but we believe our turbine will be totally American made in the next three or four years.”

U.S. to Fund New Turbine Development

One of the most significant barriers to the growth in deployment of midsize turbines in America today is the lack of turbines, according to Trudy Forsyth of the U.S. National Renewable Energy Laboratory (NREL). To fill that technology gap, the U.S. Department of Energy (DOE) and NREL plans to launch a Midsize Wind Turbine Development Project next summer. The goal is for the accelerated creation of new midsize turbine prototypes and follow-on commercialization.

As a first step, NREL conducted an open forum on November 6, 2009 in Detroit following the AWEA Small and Community Wind Conference and Exhibition earlier that week. Attendance was estimated at 175, and those who attended heard details of the federal project and technical discussions from wind turbine developers, designers, and manufacturers. The forum was made up of panels followed by audience Q&A on the following topics: Midsize Wind Developers, Midsize Turbine Interests, Rotor Component Manufacturers/Wind Turbine Consultants, Drive Train/Generator Manufacturers, and Structural/Electrical/O&M.

Following are highlights from the sessions:

• Based on a market assessment done by ICF, the estimated U.S. market for midsize turbines is estimated at 220GW for enhanced turbine technology, well above the supply of product.
• There are several U.S. manufacturers who either are already engaged or are becoming engaged in the midsize market. There are also a number of component manufacturers who have an interest in becoming turbine integrators as well.
• New, non-refurbished turbines are considered to be the best choice in meeting the long-term needs of this market niche. Accounts of incompletely refurbished turbines and resulting chronic maintenance histories were given as evidence.
• According to midsize developers, the most preferred midsize turbine sizes were 250 kW, 600 kW, and 750kW.
• There is a need for U.S. products that can meet short delivery times for spare parts, compared to offshore products.

Wind Industry Eyes Growth in U.K.’s Offshore Business

Offshore turbines at Burbo Flats near Liverpool, U.K.

By John Colm,
President & Executive Director, WIRE-Net

Cleveland-based, WIRE-Net, a nonprofit economic development and support organization for manufacturers launched Great Lakes WIND Network in 2007 to help U.S. manufacturers catch a boat headed into a strong wind market!
 

GLWN caught the eye of the United Kingdom’s Trade and Industry (UKTI) group, an initiative of the British Consulate to drive business investment towards the U.K., particularly in the wind industry. Due to GLWN’s supply chain expertise, we were invited to join the U.S. delegation for a week-long trip through England and Wales that provided us with an inside perspective of their booming offshore wind industry.

I joined a group of American industry representatives to visit Liverpool, Newcastle, and Blyth, a small town in southeast Northumberland, on the English coast, and Mostyn, a village in Flintshire, North Wales. These are key staging areas for the next round of offshore wind farms in Britain and Wales, projected to be approximately 25 GW installed capacity.

The first to establish mandated carbon reduction goals, the U.K. is a global leader in launching initiatives to reduce their carbon footprint. This has led to an aggressive wind energy development policy. “De-carbonizing the economy” was a common phrase used throughout the tour.

Zero…Nada…Zip

What has happened to the U.K.’s wind industry in the last several years is remarkable. Prior to 2000, the U.K.’s installed offshore wind was zero…nada…zip. In just nine short years, they have leapfrogged to the top and are now the #1 producer of offshore wind energy in the world—outpacing Denmark, the county that pioneered this technology. Aggressive plans for future growth (33 GW by 2020) are certain to keep the U.K. in the lead, provided they harness the necessary manufacturing and wind farm development muscle, and overcome other challenges. Competition for developer interest, manufacturing and supply chain capacity constraints, exchange rate issues, and planning delays are barriers to meeting their growth projections.

U.K. Manufacturers Missed a Very Large Boat

The U.K.’s experience with wind is instructive. While the Brits are making good progress with onshore installations and with huge goals for offshore, they know that they risk major gaps in their supply chain since nearly all (95% or more) of the turbine components are imported. Contrast that to the U.S. market where current estimates are that we import approximately 51% of our turbine components.

John Colm (L) with Andrew Mill, CEO of the U.K.’s National Renewable Energy Centre, at the Port of Blyth

In each of the three regions we visited (Liverpool, Wales, and Newcastle-Blyth) our hosts admitted that Britain had “missed a big economic boat” and the benefit of new jobs and investment that come with producing wind turbine components domestically.

With the projected installation of up to 5,000 additional 3, 5, and larger megawatt turbines in huge offshore wind farms, the U.K. has a second chance at stimulating economic growth by establishing a British-based wind turbine supply chain. The mere size of these new turbines and their huge components makes U.K.-based assembly plants and sourcing attractive.

Clipper Windpower is working with the British to develop a 7.5 MW “Britannia” turbine, a size that is hard to visualize, but the diameter of the rotor will be just shy of a NFL football field’s length (without the end zones). Clipper has already secured financial support from key U.K. government agencies including a $7.3 million grant to help develop the huge Britannia blades, and snagging an order from the Crown Estates (akin to our Interior Department) for a prototype of the Britannia turbine. Clipper is working closely with the U.K.’s National Renewable Energy Center (NaREC), which we visited, to provide technical support, blade testing and staging facilities, and other services from their home base at the Port of Blyth, on the U.K.’s Northeast coast, near Newcastle.

The U.K. projects its total offshore wind purchase will be close to $150 billion through 2020 with $108 billion for turbines, $17 billion for transmission, and $25 billion for ancillary services, installation, etc. To date, Siemens and Vestas dominate the U.K.’s offshore industry, with 48% and 50% of the market share respectively. Today, other than operations, maintenance, and installation support there is no British wind industry supply chain.

If the U.S. doesn’t get this “manufacturing moment” right, we could miss the same boat the Brits did. Great Lakes WIND Network is here to make sure this is one boat the U.S. doesn’t miss.

The current trend is towards increasing the domestic content manufactured for the North American wind turbine market. Since 2000, when the U.S. was importing about 70% of turbine components, our U.S.-based manufacturers have slowly chipped away at the market, and now produce about 49% of components state side. We do not want to reverse the strides we’ve made.

Joining Great Lakes Wind Network on this trade mission were representatives from the Wind Alliance (TX), Offshore Windpower Systems of Texas, Valence Technology (TX), Principle Power (WA), Grays Harbor Ocean Energy (WA) and TGM Wind (TX). Most of the participants had experience in the offshore industry (wind, tidal, or O & M). On behalf of the British Consulate, The U.K. Trade and Industry team was lead by Joanne Howard and included Eric Bakken, Michael Rosenfeld, and Matt Zoerink.

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