Already, the US parts-sourcing base is affected by the increasing size of turbines. Ductile iron castings, which comprise many of the largest structural elements of a turbine, are growing beyond the capability of many foundries to produce them. The common large castings are the rotor hub, which unites all three blades, bed plates and other frame structures for nacelles.
For instance, if a 1MW turbine requires a 10-tonne casting, there are probably half a dozen domestic suppliers available. As turbines increase to 3MW, castings requirements may increase to 30-tonnes, for which there may be just two or three suppliers. At 5MW, domestic sources may be reduced to as few as one or two.
Tower manufacturing will also be affected. Larger turbines call for larger rotors, requiring towers of up to 120 metres. New designs may include concrete bases and modular construction to reduce weight and transportation costs. At the same time, crane requirements will increase to accommodate the additional height and nacelle weights, which will reach 300 tonnes for offshore turbines.
Blade length will also grow with turbine size, requiring larger production facilities and additional handling equipment. New plants will need to be built in locations close to expected project sites and potential workforce.
Since the end of 2008, several factors have slowed the rate of orders to supply-chain companies. New turbine orders dried up until the summer of 2009, when the US government's economic stimulus package took effect, bringing a drop in world turbine prices. This, combined with stockpiles from undelivered orders, excess capacity now available offshore and a falling euro, meant a return to the wrong side of the boom-and-bust cycle for US component manufacturers.
Evidence of recovery
But there are signs of recovery. "We're seeing financing coming back, which puts added burden on getting deals done," says Dan McDevitt, vice-president of supply chain for Nordex USA, which is building a turbine factory in Arkansas.
Siemens, which plans to open its assembly plant in Kansas in December, reported in February that its entire worldwide capacity for new turbines was sold out until the end of the year. Meanwhile, many original equipment manufacturers (OEMs) for wind turbines and specialised suppliers from Europe continue to operate in a holding pattern, awaiting a stronger market before ramping up new North American operations.
Until overtaken by China at the end of last year, US manufacturers remained logistically advantaged within the world's leading wind market for around four years, and there's a desire to capitalise on the proximity of suppliers. "I deal with the majority of the large OEMs operating in the US," says John Purcell, vice-president of wind energy for Leeco Steel. "All have told me their preference is to buy locally in each of their markets. They prefer this over an extended international supply chain."
For large components, the savings achieved by buying American currently translates into 10%-20%, plus it avoids waiting weeks for shipment. Most turbine OEMs prefer to assemble turbines and source parts in a chosen market because it protects against currency fluctuations.
There's a real interest in investing, too. Top-notch machining capacity has been added across the Midwest, and European supply-chain veterans are bringing their technology to US facilities.
ThyssenKrupp's Rotek, for instance, invested $80 million last year in an Ohio ring mill as part of an expansion to eliminate an industry bottleneck for slewing rings - the giant diameter rings coupling the top of a turbine tower to the moving nacelle base and the blades to the rotor hub. In February, the US Department of Energy announced the awarding of economic stimulus grants to 29 component manufacturers for additional capital projects totalling $160 million.
Major opportunities ahead
Looking forward, the best areas of opportunity for manufacturing will include large castings, bearings, generators, composites for blades and nacelle housings, and turbine-control systems. On the services side, demand will be robust for operations and maintenance, turnkey contractors that cover engineering, procurement, and construction and logistics companies, as well as for suppliers to these industries.
Many components for wind are industry-specific, and joint ventures with experienced offshore suppliers can provide a jump start for US manufacturers wanting faster results. Another source of competitive advantage will be to offer an entire ready-to-assemble component or system, rather than individual parts. For example, a company could sell castings as a final package that takes the product from raw casting, machining and finish coating, instead of the business being broken up as it often is today.
For US component suppliers, major challenges remain. The nature of wind turbine OEMs is extremely risk-averse and the qualification process to approve even the most capable component suppliers can extend beyond a year. Competition is global and fierce. Over the past decade Europe has developed a robust, cost-effective network of suppliers, many of whom are delighted to export to the US.
Recent investment in Asia has created supply-chain resources with capacity to target the US market. For US domestic manufacturers, the mandate for wind industry success is extraordinary quality and a ruthless commitment to beat down costs through best practices, continuous improvement and new technology.
For more see 'The US needs a national energy policy'
Ed Weston is director of international wind energy supply chain advisory group Great Lakes Wind Network