Hi everyone. Today we're going to talk about wind. Twenty twenty was a record year in this sector, with nearly one hundred gigawatts of new capacity coming online globally. But from the looks of it, this record year appears to
be only the start. In our twenty twenty new Energy outlook, which we discussed in our January twenty ninth show titled Modeling the Energy Future, Ants Birds and Doctor Strange, being if projects wind to grow on average five point seven percent per year to twenty fifty, this means about hundred and forty seven gigawats per year, beating last year's record every year and growing from six percent to power supply
today to thirty three percent to twenty fifty. And to put a bit of a point on it, on March twenty ninth, the Biden administration announced a target to install thirty gigawatts offshore wind in the US by twenty thirty, up from about zero today. In short, wind is growing. This weekend the show, we've got two bloom Bergunna f
wind analysts, Isabel Edwards and Leo Wong. They're here to tell us about what happened in twenty twenty to achieve record installations where the growth of the sector is happening and who is winning is supplying all those turbines. Our discussion is based on our report titled twenty twenty Global Turbine Market Shares being i fusers can get this report on benef go in the Bloomberg terminal, BNF dot com
in the BNF mobile app. As a reminder, BENIF does not provide investment or strategy advice, and you can hear the full disclaimer at the end of the show. I'm Mark Taylor and you're listening to switch down the BENF podcast. He is he Mark hay Leo, Hi, Mark, thanks for joining. Today is a year in London. Leo, you're in Beijing. I'm in London and today we're going to talk about global wind. So can you start us off by telling
us what's happening in wind? So there was a huge growth last year in year on year and almost a hundred gigawatts of new capacity was put online. Can you tell us how that happened? Yep, So was a bit of a crazy year for the wind industry. We saw two giga watts added in the onshore wind market, which is increase on last year, and then six point five
gigawatts added in the offshore wind industry. But really, when we look at where that growth happened, it's down to two markets, which are the U S and China, and both had subsidy schemes that were due to change at the end of So in the US, developers at the beginning of the year thought that production tax credit would begin to be phased out at the end of twenties, so they were rushing to get their projects online by
the end of the year. And then in China was the last year we're going to see significant built for projects that qualify for the onshore wind feed in tariff Leo.
Do you do you want to say anything more about that? Yeah, sure, absolutely so looking back in the past ten years, actually China's tremendous growth has largely been filled by the supporter of government subsidies andies really the last year for the onshore wind projects to qualify for the fair in Paris so on that regard, since everyone needs to capture the lucrative subsidies, they essentially just rushed everything and that's how we get to this tremendous amount of capacities built in
twenty just really quick, can we do a quick parenthetical? Can you explain what the production tax credit is and what a feed in tariff is for the uninitiated. The production tax credit is a federal income tax credit that's awarded to project owners based on electricity sales. And so this year ends last year projects can qualify for of the production tax credit, but it is going to be phased out every year until leo, do you want to
explain how does the feed in tarifforic in China? So the fit entire scheme in China allows the developers as owners to sell their power at the fixed rate. And essentially the income comes with two parts. So the first part is essentially paid by the local credy companies, which is usually equal to the local coal power prices, right. And then then the second part, which is intially the gap,
is paid by the central government's budget. So when you add those two components together, that will be the total volume for for the in tires. Okay, So they're racing to get guaranteed income or a tax credit or a
tax break on the production electricity exactly. These are just some of the different ways that projects owners can guarantee revenue from electricity sales on their projects, and in many markets they're getting fased out or the governments are changing the level of seity that they're awarding to projects, and so there is a push among developers worldwide to qualify for the kind of highest level of government support before
that is phased out. Cool okay and Leo, you mentioned that there's like some crazy activity going on in China to try to meet that deadline. Can you describe some of that essentially in China? Added fifty seven point eight was of new win forms, And to just put that into context, that's the number doubling from the twenty nineteen level,
which is another big year for China. And if you're actually comparing that number fifteen seven point eight to the global win installations, that's only two gigglewards the shine off the total wind capacity at it in twent nineteen globally, right, So that just put everything into the perspective. And what happened in is UH joint efforts from the supply side
as well as the demand side. So on the supply side, we're seeing manufacturers working there in the night, and then they were even able to reduce the amount of time to produce a single blade from seventy two hours all the way down to twenty four hours. And then you're seeing the developers sending their employees to stay in the wind turbine makers factories so that they were making sure
their towbins get to be first. On the demand side, what we're saying that those developers were also building like crazy in the central part of China. Some teams were trying to transport the wind installation cranes to a wind farm and it breaks down in the middle of the night, So these construction crews were driving five hundred kilometers away to a service center to get the spare parts and then then get back to the construction site the second day.
So that just tells us like whole heart those folks on the grill on a twin to get those winter been spilt. That's amazing. We'll get into this, but like the supply side alone is just really incredible. To build double the capacity that you put in the ground last year, that's quite a jolt to the supply chain, right, Yeah, that's that's something we would never imagine. Okay, so we'll get into that in a second. But there's two more things I want to touch on on the context of
global wind. So one is that it seems really undeterred by COVID nineteen, right, so the world kind of shut down, but it seems not to have affected wind at all. Can you describe why it looks like it hasn't affected wind at all? When you look at the year end installations, there isn't a single region worldwide where installations didn't grow compared to But when we look earlier in the year, there are a number of national lockdowns that delayed farms
from being built. So there were restrictions on the movement of goods so the turbines to actually get to the sites, and then on the movement of people so like workers to go and build the wind farms. But that was relatively short lived because construction projects were some of the first to be prioritized in terms of the people that could go back to work throughout the pandemic. So now we we really don't see that much of an impact
when we look at global installations. So the projects that were in the pipeline got built, but did the pipeline keep growing? You know, our more projects being financed as well through the pandemic, So that's where we start to see the impact of COVID nineteen on the wind sector. We recorded a record here for offshore wind investments with fifty billion invested worldwide and new projects and actually mean MIA.
We saw about about half of that was in EMA, which is actually equal to the same amount that we saw invested in the onshore wind sector and AMIA. But when we look at global offshore wind financing, it was down to you about ninety billion last year, down from
about a hundred and twenty billion in twenty nineteen. And we think that's both just because it was maybe more challenging to get parties together in order to agree on a financing agreement for a project, but also some parties that might have been willing to finance a win farm at the start of the pandemic might have had a lower appetite for the risks posed by some of these projects by the end of the year. How is that looking for one and beyond, so we expect one to
be another large year for for wind. We currently are forecasting about eighty four giga watts of new wind capacity to come online, so not as much as last year, though not as much as last year. It's gonna be difficult to top twenty, but still a big year. So about seventy had gig watson the onshore wind industry and nine gigg wats in the afshowin industry, which is a bit of an increase an offshore based on twenty twenty. There's one more thing I want to touch on context
before we get into the supply chain. President Biden in the US announced, you know, on what tenty ninth of March. I believe that they want to build out thirty gigawatts of offshore wind by in the US, up from I think forty two now in the area between New Jersey and Long Island. That seems huge, is it, or is that you know, just a few wind farms. It's pretty big. So we currently estimate that about twenty three gigawatts of offshore wind capacity will be added in the US by
So that's a further seven giga watts. And right now there is no large scale offshore wind installation in the US. The first one to come online, we think is only going to come online. So all of that thirty gigga watts would have to be built within a six year period, so about four point nine giga watts added each year over six years, which is really kind of logistically challenging. UM some of those new projects will need to secure permits,
which in the US has been challenging to date. And really all of that off shore capacity has to be built in the northeast UM where the waters are shallow
enough to accommodate bottom fixed offshore wind turbines. If we look to the other markets in the US that have set offshore wind targets, they're on the west coasts and have deeper waters, so those installations are more reliant on floating wind technology, which hasn't benefited from the same cost reductions due to large deployment of commercial offshore wind installations
in Europe. And if I'm remembering correctly from your report, there currently is not a US based offshore wind equipment supplier. Is that right, Yes, that's quite right. So we're looking at the global off your wind supply chains, so instantially today Europe and the China and other actually two major regions where actually they're able to produce the off your wind turbines as well as the the other equipmenting need
to build a wind farm. And for you, as yes, we don't have a ready to go wind turbine manufacturing facility yet, But that doesn't necessarily mean that the existing facilities might not have a second chance to expand their facilities, upgrade the producing increments and they get ready for the for the future production. So we think right now the industry have the confidence that the marketing will boom very soon.
And besides, the local content rules just but just to be able to sift the transportation costs will be another strong driver for them to think about sitting up the local facilities. When we look at who has secured orders so far in the US, only about six gigawats of the thirty gig a wats that these government is targeting has signed preferential supplier agreements, So there is a lot of potential for new sales um for offshore wind turbans
among all of the determined players. Most of the orders to date have gone to Semens, Comma and Geo Security in order as well Investors right now is the only company that doesn't have a US preferential supplier agreement for a project the US. Okay, wow, So there's gonna be
a lot to do there. So thirty giga watts in the US of offshore by six globally predicted or projected by bloomguin e F and then our new Energy outlook, our outlooked to predicts somewhere on the order of a hundred giga watts per year, so matching the number roughly every year out a call from the report. Let's leave that there. The point is that wind is growing. We're going to take a short break and when we come back, we're going to talk about who is supplying the wind sector,
who's building the turbines, who's winning, who's losing. So stay with us. So this report we're talking about today is the global wind turbine market shares you know, who is supplying the wind sector with well turbines? Can you tell us a bit more just about who's playing and who is winning in global wind? So it depends on where you look in the world. So outside of China, we're
we're currently looking at about five have major companies. Some of those are best to us, the Danish turbine maker General Electric, which is an American conglomerate, and then seems Lasso, which is the leader in offshore wind. But about five to ten years ago there were many more players in the kind of ex China market. But so we're really seeing strong market consolidation outside of China, and right now the top five companies account for about ninety four percent
of all onshore wind installations outside of China. That's huge, right, That's not a lot of room for others. And if you're looking China, then the story is totally different. Right. So in China is actually today one of the most fragmented wind marketing in the world despite the huge volume. So looking back in the past, when we are looking at the top three companies, their market shares pually around
and the living tremendous space for the other players. And in just in last year, we have more than twenty companies supplying win turbines in China. So that's a huge market. Who is so many players active in it? So today go to wind Envision and the Mania are the three top players in the market, whereas a few others that belonged to a larger state owned enterprises. So I note the global wind turbine supply market has been relatively hard
to track over the years. Player, remember that correctly, how did you actually go about doing this? Can you tell us a bit about your process or methodology for determining the market shares of these players. Bloomber Getting have win teams strives to track every wind farm that was brought online in a given year and a database of projects that currently accounts about forty wind farms and who supplied
the turbines to those projects. So what we look for is in this exercises projects that are in the construction phase, that are entering the commercial operation phase within and we work in collaboration with the wind turbine manufacturers to come up with the final numbers for the report. So doing this work, you know, this is the laborious process. We've been doing this since we've been at We've been tracking renewable energy projects in two four. It's a it's a
labor of love. I guess you could say. The results are really interesting and they allow us to draw insights or conclusions about the market. LEO, as you were doing this last year, what did you find most surprising as you look through the data. What we're looking back for, you know, for the numbers, obviously we're all stunded by the total amount of capacity at twenty but one more
fine interesting detail that already surprised all of us. It's really how the market share of the top three players has come down a bit so asas they pointed out, globally, the wind marketing has been going through some marketing consolidation process and it's cause a true for China as well. And for the past few years the market share of the three leaders have been growing all the way, but this year their market shing has come down by thirteen
percentage points. And what happened behind the curtains really a boom of performance from the small that will ended about makers who are able to double or even triple their installations, you know a year because the smaller players who are able to utilize their id only manufacturing capacity when the other books of the leading players will full, so in
this way the capacity will doubling or even tripling. So really it's just a rising tide raises all boats in this case, right that there's more demand for projects and then the orders get filled up for the big ones and then there's room for the small players. That's really cool. Is that the same outside of China as well? Or do you see you know that top ownership amongst five players? I think you said, is there room for smaller players
outside China? Less and less So when we look at the global picture, G E. Goldwyn and best Us are in the lead with over twelve gig awats at it last year, and then Envision at it over ten gig awats, and then we see all the smaller players to ring behind those top four. So we're really starting to see the gap widen between the the top few players and
then the smaller players. And there's the instance of send Beyond, which filed for insolvency in because it was not able to kind of compete on a turbine crising basis with the larger players and had a high degree of market concentration risk um. And so the larger players, particularly Siemens Comessa, were able to absorb sem Beyond business units. So Siemens Comessa acquired Semyon's i P and its service portfolio which
is the high margin business, and its manufacturing facilities. So now it seems we're getting into a very different type of consolidation, right, players that can't keep up, they get you know, solver parts on the cheap, I guess right, exactly, they get priced out, and then the larger players are
able to absorb their their businesses. Fascinating, So we've touched on this a bit, you know, when we talked about supplying the US offshore market, But can you tell us a bit about the regional aspect of supply, so you know, we know the Goldwin supplies in China, g E in the US. Is the market mostly or entirely regional or is there any cross pollination or cross geography supply going on?
It is mostly regional. So about East twenty installations came from the US, and for Goldwin, more than of them came from China, and those two companies placed first and second this year really by relying on growing demand in their home markets. Best LS, which placed third, takes a
very different approach. So the U s it's largest market, only accounts of its twin twenty installations, and instead Best US supplied wind turbines to over thirty markets worldwide, just more than double the number of countries that g East By turbines too, and we are starting to see some of the Chinese players grow their business outside of China, and in turn the Western turbine makers for their business
within China. So vest for just Invest US and gi Eat, China was the second largest market after the US for last year's Win installations. So Leo to your point earlier about you know, the smaller players in China being able to gain a foothold, it's sounding like it's true. Also for players outside of China, there's room for them too, Is that right, Yeah, exactly. So we are looking at
the numbers in tween twenties. So gvestwesoms Commiss, those three companies combined they added around to point full kick awards. It might know it sounds like a lot compared to the total number in China, but still that's doubling from the level in twenty ten. Again, so looking into the future, which the presidentsen Pain's announcements on combinationality, the Chinese, the most of players, developers, and the government agencies were also
looking at additional growth in the next five years. So obviously there's still a bounding room for actual turbans to be built. Let's continue to look to the future. There's a tool on BNF dot com that you guys built that looks at future market shares, which to me, honestly, I think is one of the coolest tools we have that I love that it's not just backward looking, but it's forward looking at who is going to own the future of the market? Chairs can you tell us based
on that? You know, who has the strongest pipeline and what do you see one? You know, I think you've said another eighties six gig watts for this year, but who's looking to own that? So it's looking like it will be a similar story to this year, and that's not very surprising. So among the top five will be
best s Ge, Goldwyn, Envision and Semens Comessa. And right now we have a project level data for about seventy percent of all of the capacity that we expect will come online, so there is some room for the kind of top players to shuffle around. We don't expect too many surprises from so in China this year actually something new will happen. So that's the first year for the
unshaw win to go completely substidi free. And right now we're seeing a price wall going on with so many tebet makers testing again and again the bottom of the topam prices. So right now more and more companies are looking for potentially going to the public, meaning that they need the market to share to tell a good story to their investors. So now the war's still going on and with think as possible that the ranking will still reshuffle little bates at the end of one Okay, cool,
So I guess one final question. We've talked a lot about China, the US, Europe today, but we haven't talked about, you know where else growth might occur, Latin America, Africa. Can you tell us a bit more about what the prospects are in in those markets. Sure, Africa has actually a reagioned that I'm watching pretty closely. So last year we saw that giga wat added across the Middle East and Africa region, most of that being in North Africa and South Africa, but there were a number of countries
that financed some of their first wind farms. So Sambique is one, and there's a wind from being built in Ethiopia and Jibouti. So there is growing interest in and wind across the continents. And South Africa is now planning its next renewable energy auctions, so the government will auction about four point eight gig watts of entra wind capacity over the next three years. So I expect the market and Africa to grow. So it seems to be a theme that wind is growing. Leo is he thanks for
joining us? So we'll be back. I think we should have you one you know next year to check in on the market. Leo is See. Thanks for joining us. Thank you Mark. Great to be on the show. Thanks for Today's episode of Switched On was edited by Rex Warner with Great Stoke Media. Bloomberguin EAF is a service
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