Analyst PRESENTATION Global Wind Turbine Technology Trends 26 April 2017 Andy Li lb@consultmake.com
Introduction A few words about MAKE Summary MAKE is one of the global wind industry's premier strategic consulting and research firms, serving the world s leading wind companies from all parts of the value chain from raw material suppliers to IPPs and utilities. MAKE is based in Aarhus (DK) and has offices in Hamburg (D), Chicago, Boston (U.S.) & Shanghai (China). Publish industry leading wind energy research reports, analysis and databases Consult on wind farm investments, market assessment, supply chain dynamics, technology, operations & maintenance, M&A advisory, business & market modelling and offshore wind Due-diligence partner for European and international PE and industrial investors Andy Li Business Analyst Leads the execution of MAKE s China advisory projects Solid background in the Chinese wind industry including product development at Envision Energy Extensive knowledge of wind turbine, wind farm solutions, and big data platform development B.Eng Mechanical Engineering M.Eng Industrial and Financial Engineering Japan offshore wind market overview March 2017 2
Introduction A sample of our industrial clients Japan offshore wind market overview March 2017 3
Introduction A sample of our financial clients Japan offshore wind market overview March 2017 4
Contents Executive summary Global wind turbine technology trends Sources of innovation and breakthrough technology 5
Delivering renewable energy insight TM Executive summary 24 April 2017 6
Executive summary Executive Summary 2016 saw increased focus in growing rotors and towers in the 3MW class Turbine Manufacturer (OEM) acquisitions present the biggest impact on global technology trends Siemens and Gamesa merger and resulting regional product strategy will shift global trends GE acquisition of LM may limit the world s largest blade supplier innovation footprint Integration efforts of GE/Alstom and Acciona/Nordex will influence regional product deployment Blades and MW ratings expected to continue growing in every global region Longer blades enabled by structural design, aerodynamics and material science Larger MW ratings in demand globally, N. America and China rapidly passing 2MW benchmark Logistics limitations continue to emerge as primary barrier to blade growth Many technologies continue evolutionary pace, while others experiencing innovation boom Converters, gearboxes and generators subject to slow evolutionary improvements Quest for intelligent turbine has led to new technology for turbine loads monitoring and controls Source: MAKE 7
Delivering renewable energy insight TM Global wind turbine technology trends 8
Total number of OEMs active per year Global wind turbine technology trends Acquisitions and competition will re-shape technology trends Consolidation impact on OEM position 2015 M/S OEMs 1. Vestas 2. Goldwind 3. GE 4. Siemens 6. United Power 3.06 7. Enercon 2.91 8. Envision 2.63 9. Mingyang 2.45 10. Senvion 2.17 11. Sewind 1.89 12. CSIC 1.77 13. Nordex 2.70 14. XEMC 1.59 15. DEC 1.30 2015 Marketshare Capacity Acquisition impact 7.64 6.91 6.41 8.17 Nordex / Acciona to #7 Note: Based on MAKE 2015 Marketshare positioning Global Turbine OEM 2015 Marketshare Research Note Source: MAKE Siemens / Gamesa #1 Turbine OEM competition developments Total Number of OEMs 80 100% 70 60 50 40 30 20 10 0 2005 07 09 10 Note: Sub-MW turbine OEMs not included Source: MAKE Other OEMs 13 Top 5 OEMs 15 Regional portfolio decisions made by Siemens/Gamesa will have lasting impacts Consolidation is occurring but industry is still more intensely competitive than a decade ago 9
LCOE (Euro/MWh) Global wind turbine technology trends 3MW class gaining ground in global markets LCOE optimization for MW rating MW Limited Little difference until tipheight limit reached Optimal Turbine Limited High BOP and O&M and turbine limits prefer larger MW Optimal 1.5 2.0 2.5 3.0 3.5 4.0 Note: High Specific Rating (W/m2) = 240. Low=200 Windspeed @ 80m = 8.0m/s Tipheight limitation in MW limited markets = 152m BOP % of CAPEX MW Limited=23%, Turbine Limited =30% High W/m2 Low High W/m2 Low Global MW rating segmentation projections 1% 2% 2% 54 GW 20% 56% 20% 2016e Sub 1MW 1.00-1.99MW 2.00-2.99MW 3.00-3.49MW 61 GW 50% 29% 2021e Note: 2016 and 2021 forecasted global annual installs shown Source: MAKE 8% 6% 7% 3.5-4.99MW 5 MW + High cost of Balance of Plant (BOP) and performance gains makes 3MW more attractive Lower than 2MW class due to drop substantially outside of select Asian markets 10
Unique turbine products offered, 2016 Global wind turbine technology trends Modular product strategies have led to portfolio expansion Mass customization in wind energy Tower tops Shaft/Bearing Hubs Nacelles and structures Gearbox Generator Converter ~ = = ~ Blade options Cross-platform common components Adjusted for MW variants OEM portfolio sizes and diversity Product mass customization 45 40 35 30 25 Siemens Global portfolio # of markets installed, 2015 Siemens+ Gamesa GE Tower base options Controls/SCADA O&M packages Noise/Weather Customized for site specific wind conditions Mass customized to client needs 20 15 10 2 Source; MAKE Gamesa 3 4 5 Goldwind 2015 Installed GW Vestas 6 7 8 9 Modular product strategies have enabled strategic component re-use across products Allows for streamlined mass customization to meet global needs and wind conditions 11
Contribution to wind plant cost Contribution to turbine cost Global wind turbine technology trends Blades, tower and gearbox are majority of turbine cost Cost distribution in typical turbine technologies 80% 60% 40% 20% 0% 2MW 3MW 6MW offshore Bedplate Generator Bearing & Shaft Converter Balance of Nacelle Hub & Pitch Gearbox Tower Blades 77% 65% 52% Turbine Foundation Electrical collection Other BOP Note: Representative of mainstream high speed geared drivetrain technologies and wind plant characteristics in each market segment. 2MW class is representative of US, 3MW class representative of Northern Europe, Offshore representative of Northern Europe offshore Source: MAKE Increased cost of Balance of Plant is driving preference for larger turbines in EU and offshore Cost-out focus will remain on blades and towers in order to reduce LCOE 12
Rotor Diameter, m Rotor Diameter, m Global wind turbine technology trends New products announced in 2016 shifted competitive benchmarks Capacity constrained leaders, 2016 Turbine constrained leaders, 2016 140 130 120 110 IEC I Best in Class IEC II IEC III 150 145 140 135 130 IEC I Best in Class IEC II IEC III 100 125 90 80 70 120 115 110 105 60 1.20 1.40 1.60 1.80 2.00 2.20 2.40 2.60 100 2.4 2.6 2.8 3.0 3.2 3.4 3.6 3.8 4.0 4.2 4.4 MW rating Note: If turbine is an S-class, IEC defined by certified Vavg Source: MAKE MW rating After years of rotor growth in 2MW class, many OEMs shift focus to 3MW giants New products announced by Siemens and Senvion shift 3MW class landscape 13
2016e Installs Global wind turbine technology trends <2MW turbines to disappear globally as 3MW class grows Global MW rating and segmentation, 2016e and 2021e AMER APAC EMEA Offshore AMER APAC EMEA Offshore 23% 53% 29% 65% 47% 2% 7% 48% 4% 51% 16% 22% 71% 62% 15% 11% 58% 2021e Installs 50% 40% 44% Total GW: 24% 5% 1% 14.0 25.9 12.7 1.8 4% 14.2 11% 1% 28.4 14% 1% 13.3 16% 5.2 Sub 1MW 1.00-1.99MW Note: Segmentation performed by total GW installed Source: MAKE 2.00-2.99MW 3.00-3.49MW 3.5-4.99MW 5.00-5.99MW 6.00-7.99MW 8.0MW or Greater Asia Pacific remains the last stronghold for the 1.5MW class, despite 2MW gains Europe and the Americas to see substantial growth in 3MW class installations 14
Average MW rating Average blade length, meters Global wind turbine technology trends Average turbine sizes to grow in all regions Average MW rating growth per region 7 AMER onshore 6 APAC onshore EMEA onshore 5 Global Offshore 4 Average Rotor diameter growth per region AMER Onshore 60 55 50 EMEA Onshore APAC Onshore Beam insert trailer limit Standard trailer Limit 3 45 2 40 2 blades per trailer 1 2010 2012 2014 16e 18e 20e 22e 24e 35 2011 2013 2015 17e 19e 21e Source: MAKE Economies of scale of larger turbines improve with volume and BOP cost escalation Longer blades are continually stressing logistics limits in all regions 15
Delivering renewable energy insight TM Sources of innovation and breakthrough technology 16
R&D spend (% of total revenue) Number of applications published Sources of innovation and breakthrough technology OEM s reduce R&D spending to focus on product evolution R&D as percent of revenue trends 7 6 5 4 3 2 1 0 Gamesa Nordex -2.5% 2011 2012 2013 2014 2015 Note: R&D expense as identified on income statements Source: MAKE, Company financials Vestas 2011 Avg: 4.5% of Sales 2015 Avg: 2.0% of Sales Patent application filing trends 600 500 400 300 200 100 Enercon 0 503 2013 MHI GE 2014-17% CAGR Siemens 419 407 2015 Vestas 291 2016 Note: Only patent applications in the European Patent (EP) database Vestas includes MHI Vestas patent applications GE includes Alstom, Blade Dynamics and LM Source: MAKE Product introductions accelerating, despite slowdown in IP filings and R&D spending R&D spend expected to stabilize following years of solid profit gains 17
Energy production per wind bin (GWh) Sources of innovation and breakthrough technology Radically different technology still being pursued by large companies Vestas Quad rotor energy comparisons 8 7 6 5 4 3 2 1 0 Single Rotor Rotor 4 3 4 H2=198 Rotor 3 H=135 Rotor 2 1 2 H1=82m Rotor 1 Capacity Factor 1 Rotor 55.9% 4 rotor 55.5% 1 3 5 7 9 11 13 15 17 19 21 23 25 Aerial wind turbine state of the art Company Investors Technology Status Makani Google Airborne generators Altaeros MHI Airborne ducted turbine Kite Power Systems Ampyx Power Shell, E.On Schlumberger Crowd funding (EUR 2 Million) Kites powering ground generator Tethered planes ground generator SkySails Venture capital Kites powering ground generator Kitegen Venture capital Kites powering ground generator Note: Vavg @ 80m=9.0 m/s. Shear = 0.15. Max Cp = 45.5% Assuming 2% losses due to inter-array aerodynamics in Quad rotor Source: MAKE Hypothetical Laboratory prototypes Sub-scale prototype Full scale prototypes Commercial offering Although the industry has largely consolidated on a few turbine architectures, some longterm technology investment persists for radically different wind turbine architectures 18
Sources of innovation and breakthrough technology Nabrawind looks to solve 2 critical technology scaling issues Blade joint options being researched Taller tower options available Not feasible Not desirable Optimal Strength / bolt sizing Bonded T-Bolt Double fitting Tension fitting nabrajoint Optimal Tower material cost Tubular steel Segment steel Precast concrete Lattice/ Spaceframe Nabralift Mass and cost Logistics cost and time Field assembly Assembly and erection Maintenance needs Modal coupling Reliability/ inspectability Specialized large crane Source: MAKE, Nabrawind Segmented blades and cost effective taller towers are critical to onshore turbine growth Nabrawind focusing on developing both technologies to solve scaling constraints 19
Contact Andy Li lb@consultmake.com consultmake.com 2017 MAKE Consulting A/S. All rights reserved. Reproduction or distribution of this report in any form without prior written permission is strictly forbidden. Violation of the above restrictions will be subjects to legal action under the Danish Arbitration Act. The information herein is taken from sources considered reliable, but its accuracy and completeness are not warranted, nor are the opinions, analyses and forecasts on which they are based. MAKE Consulting A/S cannot be held liable for any errors in this report, neither can MAKE Consulting A/S be liable for any financial loss or damage caused by the use of the information presented in this report. Denmark Sønder Allé 9 DK-8000 Aarhus T +45 7026 6628 U.S. 117 N. Jefferson Street Suite 400 Chicago, IL 60661 T +1 312 441 9590 U.S. 33 Bradford St Concord MA 02110 T +1 978 448 3186 China Level 26, Shanghai Times Sq. Office Tower, Shanghai 200021 T +86 21 5286 0152 Germany Neuer Wall 10 20354 Hamburg T +49 40 822 15 3111 20