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GSR 2015

74 02 MARKET AND INDUSTRY TRENDS regulatory instability and the protracted recession have forced manufacturers to devise new growth scenarios and to consider moving factories overseas.109 In the United States, a number of facilities opened during 2006–2009, when companies were optimistic about future federal policy support. In 2014, however, several top-tier manufacturers closed operations and cut jobs, and the number of US-based wind components factories dropped to 500, down from 550 in 2013.110 Elsewhere, manufacturing capacity is increasing despite global oversupply. In Brazil, major manufacturers are scrambling to meet local content requirements, adding capacity to overcome components shortages.111 For example, Suzlon (India) announced plans to build its first plant in Latin America, in Brazil, and to develop a supply chain there; and, in early 2015, Alstom and Andrade Gutierrez (Brazil) launched a joint venture to build Alstom’s third factory in Brazil.112 Vestas also announced an investment plan in Brazil, and, in early 2015, the company planned to begin producing 80-metre (260-foot) blades for offshore use at its new factory on the Isle of Wight (UK).113 Industry restructuring continued, with some significant acqui- sitions and joint ventures.114 The year’s top disclosed transaction (USD 2.4 billion) was SunEdison’s acquisition of First Wind (both United States), a developer of wind projects.115 Large- scale wind projects also changed hands, with a total of 24.6 GW being acquired, and activity offshore was at about the same level as onshore activity for the first time.116 Vestas and Mitsubishi (Japan) formed a joint venture to focus on Vestas’s 8 MW offshore turbine; the French government approved GE’s proposed takeover of Alstom’s (France) power division; Areva (France) and Gamesa created a joint venture to work in the offshore sector; and Suzlon sold Senvion (formerly Repower) to focus on India and high-growth markets including Brazil, China, Mexico, South Africa, and Turkey.117 Turbine designs continued to evolve, with trends towards larger machines (longer blades, higher hub height to reach stronger winds, greater nameplate capacity), developments to reduce operations and maintenance costs, and shifts in technologies and strategies to improve wind’s economics in a wider range of wind regimes and operating conditions.118 Such advances are improving reliability and efficiency and reducing costs.119 Blades have become an area of strategic innovation, with significant changes under way in design, materials, and manufacturing processes.120 This trend is particularly notable in the offshore sector, where high-tech blades exceed 80 metres in length.121 Expanding rotor area has increased capacity factors and resulted in higher energy yields at lower wind speeds, which is increasingly important as countries run low on space with good winds (as in Europe) or develop projects closer to load areas (as in China).122 Several new turbines were launched in 2014, many designed for low-wind sites.123 The trend towards ever-larger turbines continued in 2014, with the average size delivered to market rising to 2 MW (from 1.9 MW in 2013).124 Average turbine sizes were 2.9 MW in Germany, 2.1 in Brazil and Canada, 2 MW in the United States, 1.8 MW in China, and 1.5 MW in India.125 The average size installed offshore in Europe, about 3.7 MW, was down from 2013 due to the increased share of the Siemens 3.6 MW machine.126 New machines in the 5–8 MW range are being tested for offshore use in Europe and Asia, and the highest-capacity turbine installed offshore as of early 2015 was Vestas’s 8 MW turbine.127 The offshore industry differs technologically and logistically from onshore wind.128 In addition to bigger turbines, the offshore industry is seeing larger projects and is moving farther out, into deeper waters.129 The distance from shore and water depth of completed or partially completed European wind farms in 2014 averaged 32.9 kilometres and 22.4 metres, respectively.130 To access winds in even deeper waters—in the Atlantic and Mediterranean, and just off Japan’s shore—the industry continues to invest in the development of floating turbines.131 While sites are becoming more challenging—resulting in rising costs in recent years—the development of offshore-specific machines, foundations, electrical infrastructure, vessels, and operation and management practices have resulted in better, cheaper, and safer construction techniques.132 Most historical supply chain bottlenecks have been overcome, and remaining challenges include a general shortage of skilled labour, serial production of jacket foundations (for deep waters), high- voltage direct and alternating current transmission systems, and availability (particularly in Japan and Taiwan) of vessels to transport ever-larger and heavier turbines, foundations, and cables.133 The main challenge, however, is reducing costs—a reasoning behind the move towards larger machines.134 Offshore costs generally are about 50–60% higher than onshore and range from about USD 204/MWhi (EUR 168/MWh) in the United Kingdom (including transmission infrastructure) to USD 170/ MWh (EUR 140/MWh) in Germany, with the winning tender for Denmark’s Horns Rev 3 (to be completed in 2020) coming in at USD 125/MWh (EUR 103/MWh).135 In Europe, the industry is targeting producing electricity at USD 122/MWh (EUR 100/ MWh) by 2020.136 Manufacturers MHI-Vestas and Siemens, and developer DONG Energy signed a joint declaration in early 2015 for a united industry goal to drive the cost of offshore wind energy below that level by 2020.137 In the small-scale wind industry, five countries (Canada, China, Germany, the United Kingdom, and the United States) accounted for more than 50% of turbine manufacturers as of 2013; aside from China, developing countries played a minor role.138 The year 2013 was challenging for UK and US manufacturers due to declining domestic demand. Exports of US-made machines increased 70% from 2012 (8 MW) to 2013 (13.6 MW) as manufacturers worked to compensate for the drop in domestic sales.139 Nine US-based manufacturers and one exporter reported sales over USD 1 million in 2013, down from a total of 17 in 2012.140 In early 2014, small-scale turbine maker Quiet Revolution (UK) filed for bankruptcy in London.141 To increase the competitiveness of small-scale wind, several leading US small-scale and distributed wind companies have begun offering long-term leases to build on the success of third- party financing for solar PV.142 p See Table 2 on pages 75–77 for a summary of the main renewable energy technologies and their characteristics and costs.143 i - Note that throughout the GSR, currency conversions are calculated as of 31 December 2014, and are sourced from

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