Market competition to 'spur $36.9 billion R&D spend by 2028'

The need for more efficient technology and lower costs in the subsidy-free era will encourage $36.9 billion of research and development (R&D) investment in the industry over the next ten years, according to a new report.

IntelStor forecasts a series of technology partnerships and license agreements as turbine manufacturers and asset managers look for innovations to help increase competitiveness (pic: Fintel)
IntelStor forecasts a series of technology partnerships and license agreements as turbine manufacturers and asset managers look for innovations to help increase competitiveness (pic: Fintel)

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Approximately 46.2% of the technological innovations analysed for a report by Philip Totaro’s advisory company IntelStor have undergone some form of testing but will still require the bulk of the expected investment.

As turbine manufacturers and asset managers look for innovations to help increase competitiveness, IntelStor forecast a series of technology partnerships and license agreements, according to the Global Wind Energy Innovation Trends report.

Markets shifting toward competitive tendering processes will drive the need for higher annual energy production (AEP), as well as lower Capex, Opex and, overall, levelised cost of energy (LCOE).

Of the $36.9 billion spent towards reaching these goals between 2019 and 2028, private companies will spend $28.2 billion on R&D investment, IntelStor stated.

This will represent an average of about 5.3% of expected revenue, up from an industry-low of about 2.7% in 2013.

Public R&D funding, meanwhile, will make up the $8.7 billion remainder in this period.

Roughly 23.3% of products analysed are either commercially available or in pre-series development stage, and 30.6% are still in the design stage.

Geography

Regionally, western European countries, Japan and China will be at the forefront of R&D investment in the next ten years, IntelStor stated.

Meanwhile, an unfavourable political environment in the US and lack of meaningful government support for technology combating climate change, North America is due to trail more ambitious regions.

India is described as a "potential hotbed of technological development" in the report as low costs, government schemes and increasing manufacturing competence drive optimism in the market.

Gulf Cooperation Council member states (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates) are also poised for an R&D spending boost in the next decade.

Modest rises in R&D spending are expected in Australia, New Zealand, Singapore, the Philippines, Malaysia and Indonesia as wind penetration increases in Asia-Pacific.

IntelStor did not foresee much spending on research and development in eastern Europe, Latin America and Africa during this period.

However, capacity additions and economic recovery in these areas may increase the potential for R&D investment to grow, Totaro added.

The report also finds that new technologies — in blade segmentation to aid turbine installation, for example — will help unlock previously untapped markets around the world.

In the past, wind power development may not have been considered in some markets due to complex terrain or conventional technology not being cost effective there, Totaro explained.

Strategies

Competition with solar PV technology and expected growth in distributed generation are key factors behind wind turbine R&D, IntelStor stated.

These challenges demand lower costs and ‘smarter technology’, as turbine OEMs look to "go beyond just turbine production" and focus on system integration.

Greater digitalisation will also drive some development, as data analytics companies, turbine OEMs, sub-component suppliers, asset owners and independent service providers (ISPs) look to leverage the latest technology to improve their capabilities, IntelStor stated.

Specifically, digital tools could help these companies to optimise the performance and manage the health of their assets, and even offer energy trading or balancing capabilities among their product services.

And as turbine OEMs and sub-component suppliers scour the market for external technology that can improve their own offerings, there is an increased likelihood of technological partnerships and license agreements in the coming years, IntelStor forecast.

Totaro concluded: "Companies must continue to focus on R&D spending to ensure their products remain competitive, and governments need to continue to continue to support the companies who make such investments.

"A strong correlation has long existed in markets who spend the most on R&D, and those with the most wind capacity additions.

"Ultimately, R&D is a precursor to subsequent technology deployment, and therefore the cost reductions associated with achieving economies of scale in that market."

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