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US-China trade war ‘to hit 10MW offshore wind turbine market’

Asian superpower’s dominance of rare-earth mining presents market opening for new-composition permanent magnet generators, says consultancy IntelStor

America's running trade battle with China could impact the bankability of the three largest offshore wind OEMs’ marquee 10MW-plus models, if the Asian superpower starts to leverage its near-monopoly on the rare-earth materials mined for use in permanent magnet generators (PMGs), an industry consultancy has said.

Siemens Gamesa Renewable Energy’s 10MW SG 10.0-193 DD, MHI Vestas’ like-nameplated V164 and GE Renewable Energy’s 12MW Haliade-X, which all employ PMGs, could be left commercially exposed by retaliatory raw-material supply restrictions by Beijing, striking a light for new 12-16MW designs with generators with little or no rare-earth materials, said IntelStor’s CEO Philip Totaro.

“Any wind turbines which can minimise rare-earth material usage will be preferred looking ahead into the future,” said Totaro in IntelStor’s latest market research note.

“This is because of the potential shortages in the availability of rare earth elements … due to Chinese supply constrictions in response to trade disputes with the US. Less availability of raw material implies higher prices, so designs which limit part count will be highly prized.”

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Totaro believes the offshore industry is “looking toward a bright future” helped by growing global demand for competitive clean-energy as well as cost reductions being achieved by the new technologies being developed by the sector, with a 355GW global fleet forecast by 2050, up from the current levels of around 25GW.

And while SGRE, MHI Vestas and GE are expected to prosper in this bull market, given they have been “proven to provide bankable technology in the onshore and offshore wind energy markets [backed by the high] level of investment … required in the non-recurring engineering involved in order to bring these products to market”, he reckons a company that breaks this triopoly would help further hone the economics of offshore wind.

“To only have three mainstream OEMs in the offshore wind market is problematic for project developers and financiers as we chase subsidy-free tenders in global markets,” said Totaro.

“The offshore wind energy market has a distinct need for a fourth or even a fifth mainstream OEM who presents the market with viable technology and maintains price competition among the supply chain, thereby incentivising further cost reductions.”

Among the designs he expects to challenge the big three is Dutch technology developer VerVent’s 16MW concept, which features a 1.5-stage bevel-type gearbox with a counter rotating generator that uses “a limited amount” of rare-earth materials in its permanent magnets.

VerVent, whose founders developed Darwind’s 5MW direct-drive turbine – sold to China’s XEMC in 2008 – calculates its ultra-large offshore concept can achieve a 16MW power rating with “roughly the same composition of magnets” as GE’s Haliade-X 12MW model.

“Their new design is compelling and noteworthy because it minimises technology and commercial risks by utilising a proven set of supply chain partners including Siemens, Renk, Eolotec, Geislinger and Siempelkamp to maximise margins and minimise levelised cost of energy,” Totaro noted.

Though Asian OEMs including Ming Yang, Goldwind, Shanghai Electric, Guodian UP, CSIC, Hitachi and Doosan are “all engaged in the market”, he added, “none appear to have the right type of capital structure, or bankable and competitive technology to engage the global market in a robust way”.

“While most mainstream offshore supply chain companies are striving towards higher power ratings above the 10-12MW range, the market can expect more options available to them in the future,” he added.

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