Shortages of gearboxes and quality bearings could leave the industry particularly vulnerable until at least 2009. As a result, global installed capacity may fall short of the forecast 75,000 MW by the end of 2006 and 95,000 MW by end 2007, says BTM.
"It is no longer political decisions which are determining for growth but the industry's own ability to build up sufficient production capacity fast enough," says BTM in its analysis of delivery constraints on the industry. While many companies are significantly boosting capacity, notably blade and generator production, the report says "supply constraints are being created by a lack of production capacity further down the supply chain." Gearboxes, large bearings for gearboxes and the turbine drive train and forged components for the main shaft, gear wheels, and other parts are the critical areas, says BTM.
By 2010, when annual demand for wind capacity is forecast to be just under 25,000 MW, the industry is expected to be able to meet demand, say BTM, though the market is growing even faster than predicted just a year ago. Until at least the end of 2008, component shortages will limit the industry's ability to meet demand, with 2007 being the most difficult year. Even with the fast growth of wind industry manufacturing capacity in Asia, "The fastest growing markets of China and India will still have to depend for some time on European sources."
Of the nine bearing suppliers to the wind industry, just three can supply the whole range needed for a wind turbine. Sweden's SKF and Germany's FAG (Schaeffler), both of which are in the process of increasing production capacity, dominate the market. "The demand for bearings would be significantly reduced, however, if they didn't fail prematurely," says BTM, noting that 80-85% of all problems leading to interruptions in supply, repairs and dismantling of wind turbines are caused by bearing problems. "Unfortunately, the various bearing manufacturers have been reluctant to participate in analysis of the root cause," says BTM.
Bearing delivery times are also proving problematic, with an average delay of up to 52 weeks and sometimes up to 16-18 months for large bearings where no framework supply agreements are in place. For turbine manufacturers, securing a source of bearings is the key task in cutting supply bottlenecks.
With 90% of wind turbines equipped with gearboxes (Germany's Enercon employs a direct drive gearless concept), the gearbox bottleneck is a major problem. About 14 companies are now supplying gearboxes to the wind industry, according to BTM, half of them relatively new to the industry and all of them fully booked for the coming year. Winergy (owned by wind turbine maker Siemens) is the market leader, supplying nearly all the top turbine manufacturers and sitting on 35% of the market in 2005, followed by Hansen (owned by Indian wind turbine supplier Suzlon) with 25% of the 2005 market. Both companies are scaling up production, but it will be at least a year for that to have any effect in the market place, says BTM.
The industry, says BTM, has not been an attractive option for gearbox companies to invest in building up specialised production lines. The risk and investment is considered too high and the margins too low, with a gearbox representing just 15% of a turbine's cost. "If the recent increase in turbine prices is reflected in gearbox prices, this may change their attitude and tempt new manufacturers to enter the wind industry," says BTM.
Even those turbine manufacturers which have taken steps to secure supply lines by bringing component assembly in-house and implementing production expansion plans face problems in the short term. "The full benefit in terms of balancing out increased demand will not take place before 2009-2010," says BTM.
Meantime, the companies that manage the shortages best will be the most successful. Strategies range from GE's outsourcing of all component supply, to the decision by companies like Vestas and Siemens to source key components in house, to Enercon's total self-reliance for all its parts. BTM anticipates that both Gamesa and Suzlon are also heading for in-house production of all components, while Nordex and Repower are looking to move from total reliance on suppliers, to producing key components in-house. The changes of direction are reflected in the shifting market positions of the top ten wind turbine suppliers, says BTM (graph).