Denmark: Lowering Cost of Energy, Key Focus for Technology Development

The global wind energy market is in need of a technology revolution. Publicly traded wind energy firms have drawn the ire of investors around the world as stock prices continued their tumble over the past year, with losses from publicly traded companies between 50 and 70% year-on-year.

Profit margins remain under pressure despite a record year for wind installations in the United States, previously one of the world’s most lucrative wind energy markets, while macroeconomic indicators and excess capacity do not support increased pricing power in the years to come. So far, internal cost-cutting and supply chain optimization have only yielded profit margins in the low single digits, but further margin increases are needed in the next 2-3 years.

In order to right the ship and reinvigorate investor enthusiasm, onshore wind energy must be able to compete head to head with fossil fuelled power generation with limited or no support from government driven incentives. In select situations, this has been achieved, with major turbine OEMs claiming the ability to produce unsubsidized wind energy in the range of US$50-60/MWh. Years of evolutionary advancements in today’s mainstream onshore wind turbines have made this possible, yielding performance increases of 15% in Annual Energy Production (AEP), while turbine pricing has remained under pressure over the past 24 months. Technology and industrialization lie at the heart of this endeavour, and must be embraced to increase wind turbine energy capture and lower the capital cost of next generation wind turbines.

Traditional wind turbine designs have their limitations, and continued evolution of an existing design will eventually lead to diminishing returns. In order to achieve even specific ratings (<200 w/m2) or expand the market of current low wind speed turbines into high class III and class II environments will require innovations. Innovation requires investment – which is sometimes difficult to justify in a difficult market environment – but is essential to cement a path back to profitability.

Blade structures and materials remain at the forefront of innovation as new concepts reach commercialization in the coming years, including new adaptations of segmented blades, advanced root joints, and pultruded spars. New direct drive concepts applying ironless core designs are moving closer to full scale testing and offer the promise of significantly improved torque-to-weight ratios without expensive and heavy rare earth elements. In the geared space, the move towards medium-speed drivetrains in larger MW-rated turbines is finally gaining some traction, while the demand for towers higher than 100 metres is increasing every year. Advanced control capabilities are being developed to tie these new technologies together, most notably in the areas of load reduction via independent pitch control and turbine lifetime monitoring.

The time has come for aggressive action. A conservative approach will lead to marginalization and an inevitable exit from the market, as weak turbine portfolios will translate into weak profits. The same can be said for component suppliers, who must apply limited resources effectively to align themselves with strategic clients who have the greatest opportunity for long term market success. Collaboration is the key, and effective alliances will be successful when innovative component concepts are combined with thoughtful systems engineering.

Wind Turbine Trends 2012 is a 56 page report which provides an overview of the global wind industry’s most critical technology trends, the impact those trends have on wind energy’s Levelized Cost of Electricity (LCOE) and the regional market drivers behind those trends. It focusses on new product development initiatives within the turbine’s strategic components – blades, gearboxes, generators, power converters, towers, and controls. Within each section is a global and regional market share forecast of various technologies over a three-year horizon accompanied by discussions of the key market trends impacting these scenarios. Appendices outline the product and technology presence of the global top 15 turbine manufacturers.

[mappress]

Press release, January 08, 2013