Here you can download the study "From Pioneer - Roland Berger

From Pioneer to Mainstream 

Evolution of wind energy markets and implications for 

manufacturers and suppliers 

Hamburg/Wien, März 2010 

WindpowerChallenges2010-1.pptx

Contents Page 

A 

B 

Continuous growth and maturing of the wind energy market 

expected 

Wind turbine manufacturers will need to get large and 

industrially lean – Suppliers will have to follow suit 

© 2010 Roland Berger Strategy Consultants GmbH WindpowerChallenges2010-1.pptx 2 

3 

20

A. Continuous growth and maturing of the market 

expected 

WindpowerChallenges2010-1.pptx 

3

1 

Due to its technological maturity wind will continue to take a 

major part of the growth market in the next decade 

∑ 4,100 GW 

+60% 

∑ 6,500 GW 

GLOBAL MARKET 

2007 

2020 

970 GW 

242 GW 

x~4 

Renewables RenewablesGas 

Large Hydro Coal Nuclear 

Examples 

Global capacity 

[GW] 

Long-term feasible 

potential worldwide 

[GW] 

Revenue potential 

(in 2020) 

Current technology 

maturity 

Wind Solar Marine energy 

2008 2020 2008 2020 2008 2020 

120 600 15 157 0.3 1.2 

2,000-6,000 50,000-80,000 3,000-6,000 

EUR 90-110 bn EUR 50-80 bn EUR 0.5-2.0 bn 

Current cost per MWh EUR 50-80 EUR 

100-270 

Source: E.on; IEA; BTM; California Institute of Technology; World Energy Council, World Energy Assessment; NEF; RBSC 

Solar PV Solar thermal (CSP) 

EUR 

145-200 

EUR 190-270 


4

1 GLOBAL MARKET 

Governments are establishing ambitious investment and 

growth plans for wind energy all over the world 

Worldwide actual and potential wind power capacity 2008-2020 [GW] 

North America 

+131 

38 

169 

Installed Potential 

2009 2020 

Source: EER, EWEA, GWEC 

Europe 

+126 

76 

202 


2009 2020 

2 

RoW 

+14 

16 


2009 2020 

Asia/Pacific 

+148 

41 

189 


2009 2020 

TOP GROWTH MARKETS 

EU countries 

> Proposed target of 20% of renewable energy sources by 2020 – wind 

contributing to 11-14% of electrical energy with 180 GW, including 40 

GW offshore 

> Total investments between 2011-2020 accounting for EUR 120 bn 

USA 

> Proposed target of 20% wind power by 2030 

> Economic stimulus bill including USD bn ~67 for clean energy, 

including extension of production tax credits and offering of investment 

tax credits 

> Investment plans include initiatives for the transmission system which 

constrains the wind energy growth today 

CHINA 

> 3% target of non-hydro renewable electricity production by 2020 – 

120 GW of wind power capacity by 2020 

> "10 GW Size Wind Base" program planning large scale deployment of 

10 GW of wind power in four key regions until 2020 

INDIA 

> Government plans for wind power capacity of 40 GW by 2022 

> Offshore wind, currently untapped in India, has significant potential – 

India has 7,000 miles of coast line 


5

Austrian wind power capacity remained unchanged in 2009 – 

Large ramp-up of capacity expected in the coming five years 

Overview of the Austrian Wind Power Capacity 

Map of Austrian wind parks 1) in 2008 

1,000-1,500 KW >1,500 KW 

Bregenz 

Province 

Lower Austria 

Burgenland 

Styria 

Upper Austria 

Other 

Total 

Innsbruck 

MW 

572.64 

371.23 

65.35 

27.33 

11.25 

1,047.80 

3) 

Salzburg 

Villach 

Krems 

Linz 

Wien 

St. Pölten 

Steyr 

Wiener Neustadt 

Liezen 

Klagenfurt 

# Wind Parks 

117 

32 

16 

10 

15 

190 

Kapfenberg 

Leoben 

Source: Roland Berger; Austrian Wind Power Energy Association; E-Control; Global Wind Energy Council; OeMag 

Graz 

# Wind Turbines 

460 

209 

52 

30 

14 

765 

Development of the total Austrian nameplate wind 

power capacity 2005-2014 [MW] 2) 

2,000 

1,500 

1,000 

1) Excl. wind parks with less than 1,000 KW 2) Only parks with OeMag contracts 3) Incl. Parks without OeMag contracts 

0 

MW 

819 

965 

982 

995 

1,575 1,695 

1,575 

1,365 

1,155 

995 1,015 

Projected development 

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 

> According to the Austrian Renewable Energy Act the 

targeted increase in wind power effect 2009-2014 is 

700 MW 

> No capacity was installed in 2009 – large build-up 

expected in 2012 and 2013 due to long lead times 


6

With the recent increase of the wind power supplier subsidy, 

the targeted increase in wind power capacity is realistic 

Average Austrian renewable energy supplier subsidies 2003-2009 

Cent/kWh 

18 

16 

14 

12 

10 

8 

6 

4 

0 

11.4 

8.6 

7.6 

4.4 

2003 

3.0 

12.6 

9.2 

7.7 

4.4 

3.5 

2004 

Source: Roland Berger; E-Control; OeMag 

13.3 

10.7 

7.8 

4.6 

4.5 

2005 

13.7 

12.6 

7.8 

5.3 

5.2 

2006 

13.8 

13.3 

7.8 

5.2 

2007 

17.7 

13.6 

7.8 

5.6 

2008 

Biogas 

Biomass 

8.2 

Hydro 

9.7 

2009 

Wind 

Market price 

> Wind power supplier subsidies 

remained stable between 2003- 

2008 

> The new Austrian Renewable 

Energy Act resulted in a 30% 

increase of the wind power 

subsidy from 7.53 Cent/kWh to 

9.7 cent/kWh in 2009 

> The new subsidy is still slightly 

below the European average 

(10.2 cent/ kWh) 

The new subsidy allows for an 

opportunity to reach the 

increased capacity target 


7


In spite of the slowdown expected in 2010, mid term expectations 

for wind energy are buoyant – 12% growth p.a. until 2013 

Worldwide yearly added capacity [GW] 

28 

9% 

29% 

29% 

32% 

2008 

Source: BTM; RBSC 

37 

6% 

26% 

39% 

28% 

2009 

37 

12% 

23% 

27% 

37% 

2010e 

59 

+12% p.a. 52 15% 

44 

13% 

23% 

28% 

37% 

2011e 

14% 

25% 

26% 

36% 

2012e 

25% 

26% 

34% 

2013e 


USA 

Asia 

Europe 

Growth trend still intact 

> Economic stimulus packages strongly 

support renewable energies, especially 

wind 

> Strong growth in 2009 mainly due to 

capacity going online and accounted for 

WTGs already delivered in 2007/2008 

> Slowdown in 2010 due to lower order 

intake and deliveries during 2009 

> Strong growth share in countries less 

dependant on financial markets (China) 

> Ambitious government goals for 

renewable energy share in core markets 

(e.g. USA, Europe, China, India...) 

> Cost penalties for fossil energies in 

Europe (ETS) 

> Offshore plans included 


8


Announced economic stimulus programs will further push wind 

energy 

Announced governmental clean energy stimulus spending until 2013 [USD bn] 

> USD 163 bn between 2009 

and 2013 in clean energy – 

70% of it in 2010-2011 

> By sector the stimulus target: 

– Efficiency 26% 

– Renewable industry 24% 

– Grid 20% 

– R&D 20% 

– Other 15% 

Source: NEF 

66 

47 

28 

22 

163 

USA China Europe Other Total 


9

1 MARKET EUROPE 

"20-20-20" targets bind EU countries to produce 20% of their power 

with renewables – Wind best positioned to fill the supply gap 

Impact of the EU ETS on utilities – EU Climate and Energy Package, December 2008 

Europe "20-20-20" targets 2020 

-20% CO 2 emissions 

… of 1990 levels by 2020 

Source: EU Council; RBSC 

20% renewables 

… share of energy mix by 2020 

-20% energy used 

… of 2020 projected levels 

IMPACT ON UTILITIES 

1) Utilities in East European countries are exempted and will get 70% of their required certificates for free after 2013 until 2020 

2) Emissions Trading Scheme 

> Utilities are responsible for around ¾ of CO 2 

emissions of all branches of industry 

> Utilities will be allowed to emit only as much CO 2 

as they have emissions allowances (certificates) 

> From 2013 on utilities will have to buy 100% of 

their certificates 1) in auctions and may trade 

them afterwards (EU ETS 2) ) 

> By 2020 the total number of available certificates 

will be reduced by 21% 

> A considerable number of coal-fired power plants 

will have to be substituted – wind is the most 

mature renewable source to fill the supply gap 

and to reach the national quotas of renewable 

energy 


10

1 MARKET US 

The current legislative environment in the US is clearly in favor 

of growth of renewable energy market 

Regulatory framework 

AMERICAN RECOVERY AND REINVESTMENT 

> USD 20 bn tax incentives for clean energy 

> USD 8 bn available as loans for renewable energy generation 

and transmission projects 

> USD 2 bn available for clean energy R&D 

> Goal to unleash USD 100 bn in private sector co-investment 

capital 

> RGGI states will distribute a set amount of 

CO 2 allowances through regional auctions, 

188 million tons 

> Utilities will be forced to look at renewable 

solutions as the CO 2 allowances are 

decreased 10 percent by 2018 

CARBON REDUCTION INITIATIVE 

Source: Washington Post, RGGI, PEW, AWEA, RBSC 

Participating States 

Renewable energy 

RENEWABLE PORTFOLIO STANDARD 

> RPS commitments vary by state and range from 10-25% with 

target dates from 2010 to 2025 

State renewable goal 

Mandatory RPS 

> Production tax credit, PTC, was renewed for 3 years in 

October 2008 

> Investment tax credit, ITC, was extended by Congress in 

October 2008 for 8 years 

> Allow PTC or ITC to be replaced with a grant from the US 

Treasury Department 

PRODUCTION AND INVESTMENT CREDITS 


11

1 MARKET CHINA 

The Chinese wind energy market will also continue to grow 

strongly – Significant support of domestic manufacturers 

Estimation of China cumulative installed capacity 2008-2013 [GW] 

12 

2008 

Source: GWEC, RBSC 

+ 107% 

25 

2009 

22% p.a. 

55 

2013e 

COMMENTS 

> Ambitious 120 GW target promoted in the "Wind Base Program" 

planning large scale deployment in selected regions 

> Better resilience than western markets facing the financial crisis – 

Chinese wind industry’s development is mostly directed by the 

state with 80% of the market concentrated in large state-owned 

enterprises 

> Strong promotion of domestic manufacturing – In 2008 local 

players accounted for 75% of China WTG market up from 30% in 

2004 

– Higher taxes for importing wind turbines and key components 

– Specific incentives (cash subsidies pro MW) for the 

manufacturing of turbines for domestic brands (>51% 

Chinese) 

– 70% localization must be achieved in order to participate in 

supply to state-owned wind farm operators 

> However, local manufacturing base is currently suffering from 

overcapacity (over 40%) and significant fragmentation 


12

2 UTILITIES 

Wind energy production has increasingly become a large 

utilities game 

2008 Europe Top 10 wind portfolio additions [MW] 

Source: EER; RBSC 

185 

180 

225 

420 

460 

525 

Utility 

575 

715 

685 

670 

IPP/Investor/Other 

COMMENTS 

> Utilities are increasingly taking over the wind industry and 

positioning themselves as consolidators 

> Aggressive portfolio extensions through building of new 

capacity or acquisitions, e.g. 

– S&S Energy acquisition of Airtricity (327 MW) 

– RWE acquisition of Urvasco (148 MW) 

– FCC (public services company) acquisition of Babcock 

& Brown' wind energy assets in Spain (420 MW) 

– Magnum Capital (PE) acquisition of Babcock & Brown 

wind energy assets in Portugal (515 MW and 156 MW 

in construction) 

> Several large mergers are as well restructuring the market 

– Vattenfall-Nuon 

– RWE-Essent 

– GDF Suez - Electrabel 


13

2 UTILITIES 

Six key factors are driving the utilities to further increase wind 

in their portfolio, broadening their energy mix 

OIL AND GAS RISK 

> Oil and gas prices and supply uncertainty 

increases the need for utilities to reduce their 

exposure 

> Wind broadens the energy mix cost-effectively 

CRISIS "WINDOW OF OPPORTUNITY" 

> Problems for small and medium wind players 

to access financing 

> Acquisition of locations, equipment and know-how 

at low prices relying on strong cash flow from 

operations 

EU "20-20-20" TARGETS FOR 2020 

> Utilities are forced to auction 100% of required 

CO 2 certificates after 2013 

> Operation with CO 2-intensive energies 

(e.g. coal) will become more expensive 

Source: RBSC 

Utilities' growth 

in wind energy 

market 

> Strong focus on 

reliability and yield 

> Global supply of 

wind turbines 

> Own project 

management and 

O&M organizations 

SHORT LEAD TIME OF WIND 

> Global energy demand grows by 10-20% 

each year 

> Building a standard wind park takes only 

3-5 years, a much shorter lead time than that 

of a conventional plant 

PROMOTE GREEN IMAGE 

> General public increases awareness on 

environmental issues 

> Utilities need to promote a green image 

opposed to the traditional "polluter" one 

POLITICAL INCENTIVES 

> Support by political initiatives making wind 

energy production more attractive 

(e.g. tax incentives, feed-in tariffs) 


14

2 UTILITIES 

The large scale entry of utilities will further increase project 

size leading to framework agreements 

Bigger wind park projects and framework agreements 

TOWARDS BIGGER WIND PARK PROJECTS TOWARDS FRAMEWORK AGREEMENTS 

40 

35 

30 

25 

20 

15 

10 

5 

0 

Average number of turbines 

Number of farms 

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 

90 

80 

70 

> Average wind farm size increased by 20% in the last 

four years – larger projects over 50 MW are expected 

in the next years, specially offshore 

> Wind park size is a key factor for the 

industrialization of wind energy 

Source: RBSC 

60 

50 

40 

30 

20 

10 

0 

FEWER 

BUT 

LARGER 

ORDERS 

> Harder 

competition 

among WTMs 

> Crucial importance 

of partnerships 

and key account 

management 

Competitors have 

entered into major deals 

with utilities 

> Siemens agreement 

with Dong Energy for 

1800MW 

> REpower will 

manufacture wind 

turbines for RWE 

Innogy amounting to 

1900 MW 

> Utilities are allocating large orders and 

establishing framework agreements with 

selected suppliers – partnerships focusing to 

develop joint growth approaches 

> Number of suppliers to the major utilities is 

reduced 


15

2 UTILITIES 

There will be strong demands from the utilities towards 

systematic industrialization of the wind value chain 

WIND 

TURBINE 

GAS 

TURBINE 

1) Wind Turbine Generator 

Source: E.on 

Origination, development & 

procurement 

e.g. 

Contractual risk allocation 

Construction Operations & maintenance 

e.g. 

Process integration 

e.g. 

Monitoring 

> Suppliers provide low 

> Suppliers consider grid > Random monitoring 

guarantee level 

> Asymmetric contracts (e.g. 50% 

paid back if total WTG 1) failure) 

> Suppliers provide full guarantee 

(e.g. 100% paid back if total 

turbine failure) 

requirements out of scope 

> Some key offshore construction 

steps still not tested 

> Suppliers meet all grid 

requirements 

> Proven construction/installation 

technology 

> Reactive maintenance 

> Heavy delays in data 

transmission and intervention 

vs. vs. vs. 

> Full monitoring and control 

> Preventive maintenance 


16

3 OEMs 

The wind turbine manufacturers' market is still heterogeneous 

– final structure has yet to emerge 

Overview WTG OEMs clusters 

PLAYERS 

Ø 2008 MW 

installed 

MARKET- 

SHARE 1) 

BACK- 

GROUND 

1) Installed capacity 2008 MW 

Source: RBSC 

LARGE INDUSTRIALS PIONEERS REGIONALS 

Large and established industrial 

corporations, which have entered the 

WTG market mainly through 

acquisition 

? 

Original WTG technology developers 

which have not been acquired by a 

large industrial 

Unison 

30% 53% 17% 

? 

Regional players developing within 

growth markets 


17

3 OEMs 

Fragmentation of the OEM market has been observed in the 

past years – pioneers have been relative losers 

Overview market shares 2005-08 [% MW delivered] 

100% 

9% 

100% 

64% 1% 

6% 

3% 

2% 

6% 

14% 

49% 

Pioneers 

13% 

18% 

28% 

2005 

Rest 

Source: BTM, EER, Companies, RBSC 

4% 

4% 

16% 

6% 

8% 

9% 

11% 

17% 

18% 

2008 

4% 

3% 

Others 

Sinovel 

Acciona 

Goldwind 

Nordex 

Siemens 

Suzlon 

Enercon 

Gamesa 

GE Energy 

Vestas 

REMARKS 

> Pioneers market share decreased from 64% to 49% 

in 3 years 

> Large industrials as Siemens and GE lost relatively 

low or no market share since 2005 

> Strong market competition with a fragmentation of 

the overall the market 

– Small players increased market share from 9 to 

16% between 2005-2008 

– Strong growth Chinese and American markets 

strengthen local suppliers (e.g. China 

Sinovel/Goldwind and USA Clipper) 


18

3 OEMs 

Leveraging their strong home base Chinese manufacturers are 

preparing to go global 

Market share of China annual installed turbine capacity 

Wind turbine suppliers' market share in China 

2008 [MW %] 

Others 

Nordex 

GE Wind 

8.4% 

Acciona 

2.3% 

Mingyang 

Shanghai 2.8% 2.4% 2.3% 

Electrics 2.9% 

Windey 3.7% 

Gamesa 8.1% 

Source: RBSC 

Vestas 

∑ top 3 market share:57.4% 

Local and JVs 

9.6% 

16.9% 

Dongfang Electric 

22.5% 

Sinovel 

18.1% 

Gold Wind 

Suppliers structure in China 

local 

Foreign 

JV 

Development stage 

Tier 1 

Tier 2 

Tier 3 

Large capacity products 

with licensed technology 

Have prototype and 

preliminary small 

production capacity 

Completed prototype 

design and plan to build 

Foreign companies with mature 

design and process technologies 

Leverage foreign technology 

Companies 

Gold Wind 

Sinovel 

Dongfang electrics 

Zhejiang Windey 

Xiangdian 

Huayi Electrics 

Tianwei baobian 

Yuanjing Energy 

Changzheng Electrics 

GE Nordex 

Gamesa 

Vestas 

Suzlon 

Acciona JV in Nantong 

REpower, Honiton JV 


19

3 OEMs 

The financial crisis and the emergence of new OEM players has 

led to structural overcapacity – shift to a buyers' market 

Expected overcapacity evolution (%; 2009 – 2013) 

70.000 40 

35% 

60.000 

50.000 

40.000 

30.000 

20.000 

10.000 

[MW] 

0 

-1% 

2008 

Aggregated demand 

Source: BTM; Macquarie; RBSC 

2009E 

24% 

22% 

14% 

11% 

2010E 2011E 2012E 2013E 

Aggregated capacity 

Overcapacity 

30% 

20% 

10% 

0% 

-10 

IMPLICATIONS FOR OEMs 

> Short-term: 

– Maximize sales deals in an 

environment of WTG 

manufacturers overcapacity, 

ensuring '10 production and being 

ready for the re-launch 

– Maintain margins and payment 

conditions during current turbulent 

times (as far as possible; potential 

buyer will ask for significant price 

reductions – from 10 to 20%) 

> Mid-term: 

– Prepare the sales organization for 

a "buyers' market" environment 


20

CONCLUSION 

Conclusion: The WTG market is changing from being a 

"pioneering" market into a mainstream industrial market 

PIONEERING MARKET (UNTIL 2008) 

Main market growth in a few Western European markets 

(Germany, Spain, Denmark) – US starting with delay 

MAINSTREAM MARKET (EXPECTED AS OF 2011) 

Growth broadening to all large and non fossil fuel 

exporting markets (Rest of EU, USA and China) 

Technology development occurring in parallel to WTG 

Product development following standard industrial 

manufacture with fast evolving model ranges – bottlenecks 

in component development and supply capacity 

WTGs were mainly purchased by developers or financial 

investors who primed delivery capability over price 

WTG industry was dominated by pioneers like Vestas and 

Gamesa 

Source: RBSC 

"Get large and industrially lean or exit!" 

practices and speeds – supply chains more stable and 

local 

Utilities are increasingly becoming buyers, who apply 

similar price/performance criteria as for conventional 

generation equipment – price squeeze is expected 

Large industrial players (Siemens, GE) and local 

players (Goldwind, Sinovel, etc.) are increasing their 

market share at the expense of the early pioneers – 

overcapacity will trigger consolidation 


21

B. Wind turbine manufactures will need to get large and 

industrially lean – Suppliers must follow suit 


22

OEMs need to develop along four axis – support from suppliers 

required on all of them 

OEM development needs and key requirements to suppliers along the value chain 

OEM 

DEVELOP- 

MENT 

NEEDS 

OEM 

REQUIRE- 

MENTS TO 

SUPPLIERS 

Source: RBSC 

1 LEVERAGE 2 GLOBAL 

3 

TECHNOLOGY PRESENCE 

> Support complex 

technology trade-offs 

focusing on life cycle 

costs 

> Support faster timeto-market 

for new 

WTGs 

> Contribute to 

standardization and 

modularization 

> Build up global 

operations footprint 

> Contribute to the 

establishment of local 

supply chains on a 

global scale 

LEAN 

OPERATIONS 

> Contribute to overall 

profitability and cost 

reduction 

> Support further 

flexibility and 

industrialization of 

operations along the 

value chain 

> Achieve process 

excellence, especially 

for global, regional 

and local logistics 

4 

CAPTURE 

MARKET 

> Support OEM access 

to profitable key 

markets and clients 

> Support OEMs going 

for a a full-service 

value proposition 


23

1 

TECHNOLOGY 

Complex technological challenges ahead – Close collaboration 

with supplier base is required 

Main technical challenges – Towards improved reliability, life-cycle-costs and yield 

BLADES AND ROTOR 

> Introduction of new materials 

(e.g. CFRP) 

> Manufacturing constraints 

> Endurance to environmental 

damage (e.g. weather, 

lighting) 

TOWER AND 

FOUNDATION 

> New foundations design, 

construction techniques and 

materials, specially for 

Offshore 

Source: RBSC 

DRIVE TRAIN AND 

GENERATOR 

> Lighter and more compact 

housings (e.g. integration of drive 

train and generator) 

> Simplification and new design 

solutions for drive trains (e.g. 

reduction of bearings and roller 

parts) 

> Integration of new generator 

technologies (e.g. superconductor 

generators) 

GRID CONNECTION & 

INTEGRATION 

> Adaptation to grid requirements 

(e.g. stability, voltage fluctuations) 

> Industrial customization and 

modularization of wind turbines 

> New integration technologies 

OPPORTUNITIES FOR SUPPLIERS 

> Position as a critical partner 

actively supporting OEMs 

overcoming complexity of 

technical challenges on critical 

components 

> Pursue risk sharing and 

partnering strategies for new 

developments of proprietary 

technology 

> Support reduction of 

manufacturing costs by 

establishing industrialization 

requirements early in the 

development 


24

1 

TECHNOLOGY 

OEMs approach for R&D is diverging – Suppliers will have to 

adapt their portfolio and capabilities to target clients 

Diverging OEMs approaches for R&D 

Source: RBSC 

Towards overall design 

authority 

Towards outsourcing of 

components design 

> Build-to-print design principle > Build-to-spec design principle 

> Own design and proprietary 

technology for WTG core 

components 

> Tend to more innovative solutions 

(e.g. materials, drive train) 

> Mainly use own R&D capabilities 

OEM 

R&D 

Selected OEMs: Selected OEMs: 

> Typically use of standard and ofthe-shelf 

components 

> Tend towards mainstream solutions 

> Rely on suppliers R&D capabilities 


25

2 

GLOBAL PRESENCE 

Large industrial players are systematically expanding their 

footprint 

Example – Siemens global footprint 

Boulder 

(Wind & 

Ft. Madison 

aerodynamics) (blades) 

USA 

(planned for Orlando 

nacelles/hub) 

Supply chain Sales hubs 

Other sales R&D 

Source: Siemens, RBSC 

Bremen 

Keele (UK, Delft (NL), 

Aachen (DE) 

(Mechanics, grid offshore) 

Madrid 

Engesvang 

(blades) 

ØIgod 

(hubs) 

Hamburg 

(Europe HQ) 

Aalborg 

(blades prod. & R&D 

blade design) 

India 

(planned) Singapore 

Taastrup 

(Aerodynamics, structural 

dynamics, electrical systems) 

China 

(planned for 

nacelle/hub/blades) 

Underlying rationale 

First: 

> Establish an industrially lean 

processes in the home base 

Then: 

> Transfer (duplicate) industrial 

set up to international locations 

Expectations towards suppliers 

> Follow international moves of 

OEMs 

> Implement and continuously 

improve lean manufacturing 

locally while benefiting from the 

volumes generated by the OEM 


26

2 

GLOBAL PRESENCE 

R&D capabilities and footprint are also being globalized – 

Vestas R&D works 24 hours a day around the globe 

Example – Vestas global R&D footprint 

Texas Research Center 

> Houston, Texas, USA 

> 80 employees 

> Show presence and 

access to knowledge in 

center of US wind energy 

> Announced in June 2008, 

fully operational in 2010 

Source: Vestas; RBSC 

Boston Technology Hub 

> Boston, Mass., USA 

> No. of employees to be 

announced 

> Focus on generators, 

converters and control 

technologies 

> Acquisition of ePower LLC 

(former MIT) in December 2008 

Technology R&D HQ 

> Århus, Denmark 

> 500 employees 

> Worldwide research hub 

India R&D Centre 

> Chennai, India 

> Currently 100 employees, planned 

for 500 in 2013 

> Strengthen Vestas R&D on a 

global scale 

> Get access to elite knowledge in 

India and show presence in key 

market 

> Opened in September 2008 

Asia R&D Centre 

> Singapore 

> 150 employees (2009), 

planned for 300 in 2012 

> Regional R&D hub 

> New component and subsystem 

development, 

innovation in product 

development 

> Opened in November 

2008 

Challenges of global R&D 

> Efficient alignment of 

roles and responsibilities, 

including: 

– Competences of 

locations 

– Interfaces between 

sites 

> Consistent target setting 

and tracking of 

engineering activities 

> Danger of loss of 

intellectual property in 

international engineering 

locations 

> Cultural and 

communication obstacles 


27

3 

Strong pressure on reducing the cost of wind turbines will 

subsist 

Typical life cycle costs of a 2-MW onshore wind turbine [%] 

"Wind turbines prices have dropped by 18% for 

contracts signed in late 2008 and 2009" [NEF] 

57% 

Turbine 

(ex works) 

LEAN OPERATIONS 

7% 

Grid 

connection 

5% 

Founddation 

Source: NEF, EWEA, DEWI, Eon, RWE, RBSC 

7% 


up-front 

costs 

76% 

Total 

capex 

24% 100% 

O&M Total 

REMARKS 

> Current over capacities in the market 

are putting strong pressure on turbine 

prices 

> Wind turbine acquisition costs is the 

main lever for operators to reduce 

overall wind energy costs 


28

3 


OEMs have engaged in systematic "lean operations" 

programmes and expect suppliers to contribute 

Example Siemens – "Lean as driver of transformation" IMPLICATIONS FOR SUPPLIERS 

Bench- 

mark 

Clean 

Source: Siemens, RBSC 

Kaikaku 

Stepwise changes 

> Double productivity 

> 90% red throughput 

> 90% red inventory 

> 50% red injuries 

> 50% faster to market 

Flow 

Value stream 

Pull 

Kaizen 

Continuous Improvement 

> Double productivity 

> 50% red throughput 

> 50% red inventory 

Perfection 

1-2 years 3 years 

> Suppliers will be required to contribute 

to increase capacity flexibility and cost 

performance of OEMs 

> Lean initiatives already launched in the 

OEM manufacturing activities will be 

extended to the overall value chain 

> Launch of joint improvement projects 

especially for logistics 

> Adaptation of supplier footprint to OEM 

needs will be a key factor to a lean 

overall industrial set-up 


29

3 

A robust industrialization of operations is key to face pressure 

on profit margins 

Key levers for a robust industrialization 

Product 

Development 

OPERATIONS 

> Design to life-cycle-costs 

> Design to Manufacture & 

Assembly 

> Modularization & 

complexity management 

> Integrated development 

teams 

> Standardization of components 

and manufacturing 

processes 

> Quality and testing 

programs 

> Requirements based 

development 

Focus product development 

on life-cycle-costs 

Source: RBSC 

Factories 

Flow & Layout 

> Planning and scheduling 

> Internal industrial footprint 

and layouts 

> Storage and intralogistics 

> Balancing flow & production 

line design – Pull flow 

> Batch size and bottleneck 

management 

> Leadtime reduction 

> Rework management 

> Production and flow 

monitoring 

Implement excellent 

industrial processes 

Organization Equipment Supply Chain & 

Logistics 

> Management of 

performance indicators 

> Organization structure 

> Team management 

> Continuous improvement 

management 

> 5S implementation 

> Quality of manufacturing 

support services 

> Wage policy 

> Training and skills 

management 

Work for people 

effectiveness 

> Flexibility of machines and 

tools 

> Efficiency of test benches 

> Machine & equipment 

output monitoring 

> Equipment reliability and 

maintenance 

> Work for higher OEEs 

> Tools spares management 

> Equipment capacity 

increase & new equipment 

introduction 

Optimize overall equipment 

availability & output 

> Procurement planning & 

scheduling 

> Procurement management 

> Supply chain administration 

> Operational monitoring of 

supplier performance 

> Supplier structure 

> Lean logistics solutions and 

coordination on a global, 

regional and local level 

> Stocks management 

Establish a robust and 

efficient supply chain 

and logistic excellence 


30

3 


Bottlenecks on lower-tier levels need to be pro-actively 

managed 

Context and challenges of bottlenecks on lower tier levels of the supply chain 

CONTEXT CHALLENGE FOR SUPPLIERS 

Symptoms Causes 

> Increasingly quality 

problems of components 

(quantity over quality) 

> "Blame game" between 

different parties involved 

Source: RBSC 

Bottlenecks 

in 

lower 

tiers of 

the 

supply 

chain 

> Dynamically growing 

industry with CAGR > 20% 

> Lack of predictability of 

sales plan 

> Lack of commitment 

> Lack of communication 

regarding requirements 

and volumes (reactive 

rather than pro-active) 

Main challenge for OEM 

Supply chain ramp-up (quantity and quality) in times of 

difficult prediction of own market share 

OEM Tier-1 Tier-2 

> How pro-actively identify bottlenecks at Tier-2 level? 

> How to mitigate them? 

> How to avoid sandwich positioning (OEM directly controlling 

Tier-2)? 

Build a comprehensive supply chain capacity model to 

identify hidden bottlenecks early on 


31

4 

MARKET 

Sales will become the key priority for OEMs – Indirect support 

will be a key factor of success for suppliers 

Source: RBSC 

OEM 

SUPPLIER 

Direct sales 

Indirect sales 

support 

CLIENT 

(e.g. Utility, IPP) 

INDIRECT SALES SUPPORT THROUGH… 

> Establishing industrial setup in target markets 

helping to contribute the OEM with local 

content requirements with a reliable partner 

> Lobbying 

> Reputation of components reliability and 

performance 

> Joint operational performance optimization 

e.g.: 

– Cost reduction 

– New products time to market 

– Service 

– Logistics 


32

4 

MARKET 

BACKUP 

New after sales value propositions and contractual offers need 

to be developed between OEMs and suppliers 

Transition from selling to full service model 

Value for the client 

Inspection 

services 

contract 

Maintenance 

contract 

Continuous status 

controls 

Periodical 

status controls Typical major 

OEMs today 

Source: RBSC 

Maintenance & 

repair 

contract 

Maintenance, repair 

and substitution of 

wear parts 

Full-service 

contract 

Maintenance, 

repair & 

substitution 

of wear parts, 

provision of spare 

parts 

Operator 

model 

Investment 

and operation 

of machinery 

and plants 

Services value chain 

OPPORTUNITIES FOR 

SUPPLIERS 

> Access and 

capture new 

business 

opportunities 

> Reduce service 

infrastructure costs 

by partnering with 

OEMs on joint 

setups 


33

CONCLUSION 

Conclusion – OEMs requirements to suppliers are changing as 

the market goes mainstream on a global scale 

PIONEERING MARKET (UNTIL 2008) 

Supplier R&D and production footprint essentially 

European based 

MAINSTREAM MARKET (EXPECTED AS OF 2011) 

Global footprint to serve OEMs international network of 

local production clusters 

Technology development of critical WTG components 

Development of critical components for new and larger 

driven together by specialized suppliers and the OEMs WTGs driven by the OEMs (incl. ownership of IP). 

Low end and smaller turbines make use of industrially 

standardized components 

High profit margins along the WTG manufacturing value 

chain fueled by the ever increasing demands and capacity 

bottlenecks 

Fragmentation of the OEM market due to the continuous 

flow of new entrants – Experienced suppliers for critical 

components in demand 

Source: RBSC 

Capacity fluctuation and pressure on profit margins 

push for flexibility, an efficient industrialization and cost 

performance from supplier to OEM 

Market will consolidate as it matures – Supplier 

positioning with successful OEMs will be key not to be 

left out of the big game 

"Actively support OEMs achieving a sustainable global growth or exit!" 


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