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Wind Turbine Makers Face `Challenge' on Equipment (Update1)
By Angela Macdonald-Smith
Oct. 10 (Bloomberg) -- Wind turbine makers face a ``major challenge'' getting equipment due to surging demand and probably won't be able to cut delivery times for three years, said Suzlon Energy Ltd., India's biggest wind farm construction company.
Lead times to supply wind turbines, which have reached at least 15 months, will take time to reduce as suppliers clear order backlogs and add an ``unprecedented'' amount of new capacity, Andre Horbach, Amsterdam-based chief executive officer at Suzlon, said today in Melbourne. Suzlon has a $3.5 billion order backlog, he said.
Global wind energy capacity jumped 25 percent last year. yielding about $23 billion-worth of sales in new generating equipment and is set to match that growth this year, according to the Global Wind Energy Council. Capacity may more than double from the end of 2006 to the end of the decade, driven by rising demand for less-polluting power, it said.
``For us, clearly the most challenging thing is to get components,'' Horbach said at the Auswind 2007 conference in Melbourne. It's ``unrealistic'' for customers to expect any improvement in delivery times within two or three years, he said.
Continuing rapid growth in wind power capacity meant predictions of an easing in the equipment supply ``crunch'' haven't been realized, said Steve Sawyer, secretary general of the Brussels-based Global Wind Energy Council. Growth this year in new capacity is set to be similar to last year's, rising to between 91 and 93 gigawatts by the year-end, up from 74 at the end of 2006, he said.
China Doubles
Asian growth has exceeded all previous estimates because of unexpectedly fast expansion in China, where capacity more than doubled last year, on top of the 85 percent growth in 2005, Sawyer said. Capacity is set to double again this year, he said.
``The performance of the industry has outstripped our projections, which were seen as wildly optimistic at the time,'' Sawyer said.
The expansion has led to a surge in local manufacturing capacity for wind-power equipment in China, particularly among local suppliers, said Paulo Soares, chief executive of Suzlon's China unit. Goldwind Science and Technology Co., for example, has boosted capacity 20-fold in three years, he said.
Potential Overcapacity
The backlog in China for wind-power equipment that has been ordered and not yet installed has reached about 9.5 gigawatts, Soares said. Sinovel Wind Co. has the largest backlog, of 2.3 gigawatts, followed by Goldwind, Dongfang Electrical Machinery Co., Gamesa Corp. Tecnologica SA and Vestas Wind Systems A/S, he said. More than 20 suppliers have an order backlog of at least 50 megawatts, he said.
The surge in local manufacturing plants for wind-power equipment is set to result in overcapacity within one or two years and will probably result in consolidation among Chinese companies, Soares said. By 2010, turbine manufacturing capacity in China will reach 7.9 gigawatts, up from 1.4 gigawatts last year and a forecast 3.9 gigawatts this year, he said. The rapid growth also places a ``heavy strain'' on the industry because of a lack of qualified people, he said.
Turbine delivery times are ``longer than ideal for the fast ramp-up which our technology promises,'' said Gerard Carew, marketing and strategic development director at the Pacific unit of Denmark's Vestas, the world's biggest wind turbine maker.
The parts shortage is worst for gearboxes, blade bearings and turbine towers, and is also driving up prices, Suzlon's Horbach said. The company is expanding its own production of parts to mitigate the cost increases, he said.
Suzlon is also expanding its shipping fleet to ensure its products can be more affordably transported to customers, Horbach said. The company's vessel fleet is set to jump to 40 from 13 over the next two years, he said.
To contact the reporter on this story: Angela Macdonald-Smith in Melbourne at amacdonaldsm@bloomberg.net
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