Report: Turbine Component Suppliers to Feel Market Squeeze as Units Grow

A growing disparity between the turbine megawatt growth and units deployed will impact component suppliers as price pressure percolates down the supply chain, according to a new report by Wood Mackenzie Power & Renewables.

The report – Global wind turbine supply chain trends – estimates that global turbine supply chain potential sits at USD 540 billion over the next ten years.

In the next decade, global wind annual installations will grow from 53GW in 2018 to over 75GW in 2027, a 40% increase, according to Wood Mackenzie Power & Renewables senior analyst, Shashi Barla.

However, a total number of turbines deployed in 2027 is expected to be just over 16,000, 20% less compared to over 20,000 turbines deployed in 2018, due to the increase in individual capacity.

This, coupled with the expected increase in the global market share among leading turbine manufacturers, will put additional pressure on component suppliers, according to the report.

“We expect the global market share among the top five-turbine OEMs to rise to more than 73% by 2027, compared to just 54% in 2016. It is therefore imperative that component suppliers secure strategic relationships with these winning OEM to solidify their own future success,” Barla, said.

The research also highlights the logistics challenges on the horizon for blades and towers as component sizes become longer and taller, respectively. Wood Mackenzie Power & Renewables expects the industry to circumvent these obstacles with new transportation methods and on-site/closer-to-site manufacturing. As such, the increase in project average MW size across global markets will favour this trend due to economies of scale.

Turbine OEMs continue to leverage independent suppliers to out-source component manufacturing, while the component design continues to move inwards, according to the report.

“After exploiting the low-cost footprint advantage in China, Western turbine OEMs are now searching for out-sourcing partnerships with Chinese component suppliers as a way to squeeze costs further,” Barla said.

“Offshore growth in Asian markets will facilitate expansion opportunities for independent blade suppliers, as western markets are primarily served by turbine OEMs in-house capacity. As blade length increases on next generation turbines, carbon fiber utilization for structural blade support is expected to increase its share of the market, from 25% in 2018 to around 57% by 2027, due to support light-weighting and other advanced properties.”

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