Due to the Danish supplier’s wide geographic diversification strategy and strong performance in the U.S. market, FTI Intelligence has named Vestas the world’s largest supplier of wind turbines for 2017.
FTI Intelligence has assigned the following original equipment manufacturer (OEM) market rankings for 2017:
1. Vestas* – Remains in lead for second year running
2. Siemens Gamesa* – Gamesa and Siemens were placed in fourth and sixth positions, respectively, in 2016
3. Goldwind** – Remains in third position for second year running
4. GE* – Two down from second position in 2016
5. Enercon* – Remains in fifth position for second year running
*Based on preliminary data analysis
**Based on installation data released by the Chinese Wind Energy Association
The full rankings will be published in the Global Wind Market Update – Demand & Supply 2017, which will be released in March. Preliminary results are subject to change between now and the release date of the actual report, notes FTI Intelligence.
Siemens Gamesa ranked second in 2017, primarily due to the recent merger between Siemens Wind Power and Gamesa, its strong position in the offshore sector and India, and its improved position in the U.S., according to preliminary findings from FTI Intelligence.
Chinese supplier Goldwind remained in third position in 2017, despite a 15% share decrease in its home market, the report says.
GE fell two positions to fourth place, particularly due to the loss in its home market, where Vestas overtook it as the No. 1 supplier for the second year in a row, according to the report.
Enercon retained fifth place by taking advantage of strong domestic market growth in Germany, where nearly 6.5 GW was installed in 2017, making it a record year, says FTI Intelligence.
Among other highlights, FTI Intelligence notes that Nordex Acciona moved up one spot in the top 10 due to its strong position in Germany and better performance in the U.S. In addition, Senvion returned to the top 10 turbine supplier ranking in 2017 by taking advantage of strong home market growth in Germany. The rest of the OEMs in the top 10 are all Chinese-based manufacturers.
“Our preliminary findings show that the top five turbine OEMs accounted for 62 percent of the new installations in 2017, almost 10 percent greater than the previous year. The uplift is a clear indication that the recent M&A activity has helped western turbine suppliers enhance their strategic positioning and consolidate their market share,” says Feng Zhao, a senior director at FTI Consulting and head of FTI Intelligence. “The further drop in the Chinese market is, in general, bad news for Chinese turbine vendors, as they primarily rely on their home market to secure a position in the top 10 turbine supplier ranking.”
Aris Karcanias, a senior managing director at FTI Consulting and co-lead of the global clean energy practice, notes, “In a more measured future period of growth, innovation beyond the turbine itself is required to maintain competitiveness and drive market share. Future winners need an agile commercial toolkit that addresses system needs, market-based risks, an evolving customer set and advanced digital tools to deliver cost-competitive commercial power agreements alongside complete service solutions. The systems integration perspective holds the key to success, as scale alone will not drive value.”
Explaining the importance of the recently enacted U.S. tax bill, Chris LeWand, a senior managing director at FTI Consulting and co-lead of the global clean energy practice, says, “After months of concern, the U.S. tax bill eventually keeps the PTC phase-out schedule, PTC value and IRS’ safe harbor rules unscathed. This provides much-needed certainty for the U.S. wind industry through 2020. It is also absolutely crucial for Vestas and GE, as the two suppliers currently own nearly a 90 percent market share for projects under construction or in advanced development in the U.S.”
As reported by FTI Intelligence, other preliminary findings in the report include as follows:
- Negative growth in global new wind installations continued in 2017. The 5% drop year-on-year (YoY) in new wind installations in 2017 vs. 2016 is primarily due to a slowdown in installations in China. However, Europe installed more than 16 GW last year, representing 16% YoY growth, making it a record year.
- Solar photovoltaic (PV) beat wind as the No. 1 non-hydro renewable energy source for the second year in a row. Global solar PV installations in 2017 reached nearly 100 GW, which is almost double the installations that wind achieved in 2017. Solar PV installations in China alone in 2017 were greater than total global new wind power installations in 2017.
- Revoking the Clean Power Plan and withdrawal from the Paris Climate Agreement by President Donald Trump are steps away from the global transition to clean energy, but other large economies such as the EU, China and India will continue to take steps to tackle climate change and fully honor climate obligations. Members of the European Parliament recently approved a renewable energy target of 35% for 2030 – rather than the 27% the European Commission proposed in 2016.
- Offshore wind bounced back in 2017 with a record year achieved in both Europe and China. Offshore wind installations in Europe more than doubled in 2017 primarily due to the contribution from the U.K. and Germany. China surpassed the 1 GW installation milestone in 2017 with more than 5 GW under construction at present. Crossing the strait, the Taiwanese government plans to contract a record 5.5 GW of offshore wind by Q3 2018.
- Auctions are becoming the norm. The year 2017 saw auctions occur in more than 15 markets, with more than 20 GW of onshore wind and nearly 5 GW of offshore wind awarded contracts in the past 12 months. However, the transition has caused some near-term market volatility, as seen in India and Germany.
- The levelized cost of wind energy continues to drop, putting wind in a better position to compete against fossil-fuel sources. Mexico’s latest auction set a new world record for onshore wind, with an average awarded price of $18.68/MWh. Major progress was also made in the offshore wind sector in the past 12 months. In Germany, 1.38 GW of offshore wind out of its first competitive auction totaling 1.49 GW won the tender with a zero subsidy. In the U.K., 3.2 GW of offshore wind capacity won the second Contracts for Difference (CfD) auction, with strike prices going as low as 57.50 British pounds/MWh, half the price awarded at the first CfD in 2015.
- Seven out of the world’s top 10 turbine OEMs have joined the 4 MW onshore turbine class race. Following Enercon, which is the first turbine supplier to launch its 4 MW turbine platform, another six large turbine manufacturers last year introduced their 4 MW platforms in the onshore wind market: Vestas, Nordex Acciona, GE, Siemens Gamesa, Goldwind and Envision.
- Conventional high-speed geared wind turbines dominate the onshore wind sector. Following Siemens Gamesa’s “One Segment/One Technology” strategy announced in November, the company decided to drop its direct-drive (DD) solution for its onshore turbine. The decision to replace the DD onshore turbine with a three-stage geared system is likely to increase the market share of conventional high-speed geared system, as Siemens’ onshore wind DD turbine accounted for 28% of its total installation in 2016.
- Market consolidation remained strong. The year 2017 saw a number of small and medium turbine vendors either being acquired (China Creative Wind Power) or being forced to file insolvency (FWT Energy and Seawind), enter into receivership (Vergnet), or withdraw from wind industry (Daewoo and JSW), primarily due to fierce competition in the increasingly mature wind industry. In addition, to gain a new strategic positioning, Siemens Gamesa Renewable Energy (SGRE) decided to discontinue Adwen turbines, Enercon took over Lagerwey (technology and emerging market opportunity) and Vestas bought Utopus Insights (data analytics).
- Digitalization continued to gain popularity. Aiming to have digital solutions to develop into new revenue streams, turbine vendors and industrial conglomerates continued to build their digital offerings in 2017. Envision announced an open-platform alliance with Microsoft, Accenture and ARM, and Goldwind signed a memorandum of understanding with DNV GL to develop a new asset management platform to support international wind projects.
- With an increasing focus on how to integrate more renewable energy into the grid while maintaining stability, hybrid projects (wind + solar) and fully integrated energy solutions (wind + solar + storage) accelerated deployment during 2017. The world’s leading turbine OEMs, such as Vestas, Siemens Gamesa, GE and Goldwind, are launching utility-scale global hybrid and fully integrated projects in 2018.
- Corporate power purchase agreements (PPAs) remain a driving force for renewable off-take agreements. The commercial and industrial (C&I) segment comprised 40% of total wind power capacity contacted for the year in the U.S. Cumulative corporate renewable PPA capacity contracted in the U.S. also passed the 10 GW milestone at the end of 2017.
- Partial repowering activity is accelerating in the U.S. Driven by the PTC requalification rule covered by the 2016 Internal Revenue Service’s PTC clarification, the wind industry saw a combined 2,136 MW of partial repowerings in the U.S. in 2017. This trend is likely to continue in the near term.
The Global Wind Market Update – Demand & Supply 2017 report is authored by members of a cross-practice team from FTI Consulting and its subsidiary, Compass Lexecon. The full report will be available free of charge on FTI Intelligence’s website in March.
