(Renewable Energy World)
Each year, Navigant Research compiles and assesses the previous year’s wind installation activity, revealing a wide range of trends and insights on the wind energy market. This assessment provides visibility into changes in the annual rankings and market shares of all the major global wind turbine original equipment manufacturers (OEMs).
This cycle was especially noteworthy because 2017 was the first year that significant merger and acquisition (M&A) activity was fully reflected in the annual capacity installation data. This includes the annual capacity installation results of a major 2016 merger within the top global vendors — with Siemens’ and Gamesa’s wind divisions now a combined company. This merger followed a wave of M&A activity that began in 2015 with General Electric’s (GE) renewables and wind division’s acquisition of Alstom’s wind turbine assets and shortly thereafter Germany-based Nordex’s acquisition of Spain-based Acciona’s wind turbine division.
What was expected from a ranking and market share perspective in the 2017 data largely came to pass. The newly formed Siemens Gamesa overtook the position of the top annual installer of wind plant capacity with 8.7 GW, over Vestas with 8.6 GW.
The following figure provides an overview of the changes in rank between 2016 and 2017 among the top global vendors.
Siemens Gamesa and MHI Vestas in a League of Their Own
However, there is more nuance to this story. Siemens Gamesa includes its significant offshore wind capacity in its yearly capacity total, which amounted to 2,073 MW in 2017. Vestas’ offshore wind activities are part of MHI Vestas, an offshore-specific joint venture between Vestas and Mitsubishi. Because it is a separate business and legal entity from Vestas, Navigant Research did not add its offshore capacity to Vestas’ total for the year. Only 140 MW separated Siemens Gamesa from Vestas. If MHI Vestas’ offshore installations of 421 MW were counted in addition to Vestas’ onshore total — or even 50% of that (representing Vestas’ 50% ownership in MHI Vestas) — then Vestas would still reign first in total annual capacity for the year.
More relevant than splitting these minor annual differences is to acknowledge that these two companies are now peers. As global heavyweights in the sector, both are capable of installing an impressive amount of wind capacity at significantly higher levels and geographic diversity than most of their next competitors. Both have vast market distribution around the world, with industry-leading onshore and offshore wind turbines.
Key Market Takeaways among Top 10 Turbine OEMs in 2017
Other notable takeaways from Navigant Research’s World Wind Energy Market Update 2018 report include the following:
- GE’s wind division dropped two places, from second in 2016 to fourth in 2017. This was partly due to the Siemens Gamesa merger rising to first, but also to GE’s annual total. This total did not include GE’s substantial repowering activity in the U.S. in 2017, which amounted to 1,745 MW. Navigant Research did not include this activity in GE’s annual total because it mostly does not add new net wind plant capacity, despite being activity and business of a significant nature. Repowering, or more specifically partial repowering, involves major component replacements in older operational wind plants, such as blade drivetrain components (gearboxes, generators, etc.) and blades. In 2017, the partial repowering work was done primarily to upgrade 1.5-MW turbines that were originally installed between 2002 and 2008. Other wind turbine OEMs had little repowering activity in 2017 because they installed much less capacity 10 to 15 years ago in the U.S., which is the age range of the wind turbines that are the best candidates for partial repowering. Additionally, provisions in the current production tax credit (PTC) phaseout allow these partially repowered wind turbines to start a new 10-year allocation of tax credits. This injects new revenue into the aging turbines that had lost their per-kilowatt-hour tax credits after eclipsing their original 10-year PTC allocation phase.
- Germany’s Enercon retained fifth place for annual capacity additions in 2017. However, it is under increasing business pressure — arguably more than any other company — because of its reliance on its domestic German market, which is expecting lower annual wind installation volumes due to a switch to competitive power contract auctions. As a result, Enercon has implemented changes to make its wind turbines more cost-competitive. It has reduced materials and the number of its wind turbine models and, for the first time in recent history, has shifted some of its blade sourcing to the large independent blade manufacturer TPI Composites.
- Nordex, at seventh place, also retained the same global ranking in 2017 as 2016. Nordex joined the global top 10 ranks in 2016 for the first time in many years thanks to its acquisition of Acciona Windpower in 2015. This was the second year measuring the combined activity of Nordex and its Acciona assets, and the combination has proven to be strong and diversified globally, which was the primary goal of the merger.
- Germany’s Senvion jumped four places in 2017 to ninth place. Senvion’s 2017 capacity was increased partly by two offshore wind projects going online: the 110.7-MW Nordergrunde and 332.1-MW Nordsee 1 projects, both using Senvion’s 6.2M-126 turbine and both located in Germany. Senvion’s 2016 acquisition of minor turbine manufacturer Kenersys in India is already helping Senvion diversify business to the growing India market.
- Suzlon had been absent from Navigant Research’s top 10 annual ranking since its split from Repower (now Senvion) when the two were formerly known as the Suzlon Group (combining Suzlon and Repower). It ranked tenth in 2017, representing Suzlon’s return to the top-10 ranking thanks to the strength of its domestic India wind market and Suzlon’s strong home market advantage there.
Chinese OEMs: A Tale of Two Global Wind Markets
The Chinese companies also have an outsized effect on Navigant Research’s global annual top 10 ranking and market share due to the large volume of wind capacity installed in China. Globally, China’s Goldwind again held third place and continues to be China’s largest wind turbine manufacturer.
Despite Goldwind’s long-stated ambitions to be an international vendor, the company still installs a relatively small fraction of turbines outside of China. The trend in recent years toward the Chinese market favoring its domestic OEMs continues, with Chinese companies representing 95% of the total 19.5 GW installed in China in 2017.
Conversely, wind developers in international markets shying away from Chinese OEMs continues to be a trend. Some Chinese OEMs have success in international markets, like Goldwind and Envision. However, that has largely been enabled by the OEMs playing a development role, leaning on competitive project financing from Chinese state-owned banks that are interested in helping fund Chinese wind turbine exports.
Envision jumped one place to sixth in the annual rankings. Ming Yang — which installed only in China in 2017 — also moved up one rank to eighth. Envision will be one to watch in the energy storage space. It announced in mid-August that it plans to acquire a controlling stake in carmaker Nissan’s Automotive Energy Supply Corporation’s lithium ion battery company, which provides the batteries for Nissan’s popular LEAF electric vehicles. The OEM intends to use battery technology with wind turbines in select locations to smooth out generation and increase revenue potential.
For more information, see Navigant Research’s World Wind Energy Market Update 2018 report.
Jesse Broehl is senior research analyst with Navigant Research.