Innovation Paths in Wind Power: Insights from Denmark and Germany

Transcription

1 Innovation Paths in Wind Power: Insights from Denmark and Germany Rasmus Lema and Frauke Urban Paper with Johan Nordensvärd and Wilfried Lütkenhorst Technological pathways to low carbon: Competition and collaboration between Europe and emerging Asia Bonn, 7-8 April 2014

2 Outline 1. The key questions 2. Innovation paths in Denmark and Germany 3. The key determining factors 4. Conclusions and outlook

3 Wind Power Industry in Europe 1. THE KEY QUESTIONS

4 Questions What are the key features, similarities and differences in innovation paths in Denmark and Germany? What explains the similarities and the differences?

5 Core Technology and Deployment Paths Core technology path Deployment path

6 Framework Innovation paths Key determinants sdd s Core Technology path Deployment path Government policies Demand conditions Factor conditions Related firms and networks ddd Firm strategies ddd

7 Interviews Secondary data Case studies Turbine size Turbine quality Data Turbine design Onshore/ offshore installation Project size Deployment services Vestas V112 Enercon E126 Horns Rev II Alpha Ventus Envision 128 Vensys 2.5

8 Wind Power Industry in Europe 2. THE INNOVATION PATHS

9 Analysing innovation paths: Wind Energy Turbine size: Nameplate capacity in MW Turbine quality: Reliability as reflected in actual turbine capacity factors Turbine design: Use of gear versus direct drive models, onshore offshore turbines Onshore/offshore installation: Share of offshore segment compared to the onshore segment Project size: Project capacity in megawatt and number of turbines Deployment services: Operation and maintenance (O&M) services content of new deployment projects

10 Core technology: Turbine Size Average size of turbines installed each year (MW) Global market shares in mainstream and multi MW markets (2012) Share of market segment in percent Multi MW market : 2.5 MW or larger (12,8%) Mainstream market: 1.5 MW to 2.5 MW (83,5%) One MW market: 0,75 MW to 1,5 MW (3,5%) Small WTG market: Below 0,75 MW (0,2%)

11 Life capacity factor Core technology: Quality Interviews point to increased reliability. Claims difficult to verify Technological change indicated by: O&M cost have dropped dramatically according to project owners. Increased capacity factors No reason to expect differences between Denmark and Germany Lifetime capacity factors at Danish offshore wind farms installed between 1990 and % 50% 40% 30% 20% 10% 0% Year of installation

12 Core technology: WTG Design Full range of designs: Wind speeds Temperature Onshore/Offshore Direct drive developed in Germany About 20% market share Gear vs Direct Drive Global market shares Enercon (50%), but also Siemens, GE, Goldwind, XEMC

13 Deployment: Offshore Offshore Distribution Accumulated MW (2012) Rest of Europe 16% China 6% Supplier market shares (2012) WinWind 1% BARD 3% Repower 8% GE 2% Areva 1% Other 1% Germany 6% Denmark 16% UK 56% Vestas 27% Siemens 57% Offshore Capacity (2012) Total Offshore Offshore Denmark MW 921 MW 22% Germany MW 280 MW 1%

14 Deployment: Project size (EU Data) Onshore Offshore

15 Deployment: Turbine suppliers towards full package supply Increasing service component of WTG contracts Increasing warranty period Increasing provision of post-warranty O&M Full lifetime service contracts not just warranty Enercon is unique: Now 90% of contracts

16 Similarities and differences Similarities Up-scaling, quality Utility scale projects Increasing service levels Differences Direct drive (Germany) vs. Gears (Denmark) Offshore first mover (Denmark), Catching up (Germany). Lifetime services for onshore (Germany)

17 Wind Power Industry in Europe 3. THE KEY DETERMINING FACTORS

18 Analysing determinants of innovation paths Government policies: Demand side policies Supply side policies Firm strategies: Vertical and horizontal strategies Focus on domestic/export market Demand conditions: Volume of demand Nature of demand Factor conditions: Geographical endowments Factor costs Related firms and networks: Value chains Industrial clusters

19 How policies influence innovation paths Core technologies: governments in both countries have put policies in place to support technological development with the goal of increasing turbine size, reliability and decreasing costs (e.g. feed-in-tariffs, collaborative research programmes etc) Deployment: mainly demand-side policies that contributed directly to specific deployment paths, e.g. increase in offshore deployment

20 How firm strategies influence innovation paths Core technology: Shaping of national innovation paths by market leaders Vestas & Enercon: Direct Drive vs gear-driven model, vertical value chain focus as components mainly produced inhouse Deployment: Selling of full package deal rather than only selling hardware, entry of utilities in offshore sector, internationalisation and globalisation of wind firms

21 How demand conditions influence innovation paths Core technology: Denmark: Low demand in absolute figures, but request for high technological quality; exportoriented firms Germany: Driven by high domestic demand & demand conditions (e.g. low wind speed areas) Deployment: Onshore/offshore distribution shaped by geographic demand conditions, political demand for larger project sizes

22 How factor conditions influence innovation paths Core technology: Geographic conditions influence onshore/offshore distribution, high vertical integration with little outsourcing, high labour costs within high quality technologies Deployment: Germany: lack of land led to larger onshore turbines; deep waters & relatively under-developed grid infrastructure led to more expensive & slower offshore developments Denmark: higher coastline per capita, highly developed maritime operations, well developed grids for offshore wind farms

23 How related firms & networks influence innovation paths Core technology: Importance of university-led R&D and regional innovation clusters, particularly in Germany Deployment: Importance of utilities entering offshore market, under-developed grids meant delay in offshore market in Germany

24 Similarities Shared trajectory element Upscaling Turbine size Increasing Reliability Increasing Project size Key reasons (determinants) Output-focused demand side policies (Feed-in-Tariff (FIT) structures) Turbine size requirements in government tenders End of FITs for smaller turbines installed in the past incentives for replacement for larger turbines Firm investments in R&D for larger turbines Collaborative R&D in firm networks and with supporting institutions Output-focused demand side policies (FIT structures) Government funded R&D programmes Government involvement in setting quality standards Firm investments in testing facilities and design improvements Market changes with increasing role of demanding buyers Use of local and in-house components / value chain collaboration Strong involvement of non-firm value chain actors (R&D institutes) Government policies driving up project size (particularly through offshore support), but also designating space for smaller onshore turbines Re-powering policies Entry of utilities into wind energy market large multinational utilities (in Germany in particular) New models of finance (Denmark in particular)

25 Differences Distinct Key reasons (determinants) trajectory elements Turbine Historical reliance on incremental improvements to gear model (Denmark) architecture R&D focused on direct drive within supporting institutions (Germany) (gear versus Lead firm strategies/investments betting on different technologies (e.g. Vestas vs. Enercon) direct drive) Architectures influenced by geographical conditions (e.g. low wind speed) Tender material emphasising dominant design (Denmark) Offshore Offshore policies adopted earlier in Denmark than in Germany segment Natural conditions more favourable in Denmark than in Germany New business models for financing large scale projects (Denmark) Different role of utilities in Denmark (public) and Germany (private) leading to different degrees of investment in infrastructure Reliance on domestic firms in Denmark (Dong Energy) with some reliance on foreign utilities for offshore projects in Germany (Vattenfall) Historically strong support industry from related maritime industries for offshore logistics (Denmark) Services O&M services specific to turbine technology, full lifetime service contracts (Enercon) Expanding services market firm strategy to secure revenue stream (both countries) Capturing labour saving technological advances (both countries)

26 Wind Power Industry in Europe 4. CONCLUSIONS

27 Conclusion Observed similarities of innovation paths: Upscaling of turbines and projects, increases in quality of turbines, utility-scale deployment Observed differences of innovation paths: Direct Drive (DE) vs turbines with gears (DK), first mover in offshore (DK) vs catching up in offshore (DE), focus on full lifetime services (DE) Importance of national governments, national lead markets, national innovation systems and national factor conditions Distinct company-specific element Distinct international element globalised firms

28 Thank you for your attention Questions?

29 Demand-side policy measures: national wind policies Denmark Wind Energy guarantee Promotion of Renewable Energy Act - based on the 2008 Energy Policy Agreement Wind energy to make up 50% of final electricity consumption by 2020 Danish Feed in Tariff: o Onshore wind energy: Price premiums of 3.35 cent/kwh for first full load hours cent/kwh for balancing costs o Offshore wind energy: fixed payment which varies between different tenders. At Horns Rev II to it is 6.95 cent/kwh for first full load hours. Germany Renewable Energy Law EEG (version 2012) Renewable energy to make up 35% of final electricity consumption by 2020, mainly from wind and solar (in 2011 almost 20% were achieved). German Feed-in-tariff: o Onshore wind energy: 8.93 ct/kwh for the first 5 years ct/kwh bonus = 9.41 ct/kwh for first 5 years, then 4.87 ct/kwh o Offshore wind energy: 15 ct/kwh for the first 12 years, then 3.5 ct/kwh or alternatively 19 ct/kwh for the first 8 years.

30 Wind energy output Germany Denmark Wind energy output GWh