'We've not seen the last of independent blade manufacturing'
Senvion's swoop for Euros doesn't spell the end of the third-party blade specialist, says Andrew Bellamy
The multi-billion dollar acquisitions of blade designer Blade Dynamics and more recently blade-maker LM Windpower by GE, and now Senvion's all-cash takeover of Euros, brings into sharp relief the growing demand for high-quality rotor blades and the pressure on the supply chain for these components.
Many OEMs use a split procurement strategy for blades, with in-house manufacturing complimented by third party manufacturers – typically operating as a complete standalone blade supplier or in a “build-to-print” capacity.
The rapid development of the wind power industry – and its equally rapid scale-up of its turbines – has thrown up a number of challenges. Chief among these is manufacturing capacity: blade factories which were deemed enormous 10 years ago are now only capable of producing a small percentage of newer, larger blade types.
Proximity to water is another, with many larger blades needing either marine transport to the country of installation, or plants producing blades intended only for transport and installation offshore.
Add to these an abiding instability in the political and financial landscape that is causing a reduced appetite for investment in new fabrication facilities.
The net result is a pinch on the options for blade supply – hence the trend in acquisition.
There have also been some valuable lessons learned from blades which did not meet the grade in terms of quality, and the significant costs attached to blade failures in-field. This has brought a focus to the OEMs to stabilise supplier technology standards by ensuring sufficient in-house capability.
But is this the end of independent blade manufacture? Not at all.
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TPI Composites, for one, has made a name for itself as a major player in the blade supply “build-to-print” market with its production output increasing 25% this year over 2015, with financial stats to match – and there are many other companies in similar manufacturing positions with full order books.
The industry needs blades of the highest quality, and procurement teams need viable options to hit financial targets, but also to meet delivery targets, fulfil local content requirements and ensure production capacity against risk.
We expect to see some new names emerging in the blade supply industry, and some older names from distant shores becoming more prominent on the global stage with new propositions.
Adding blade capacity can be one of the largest investments for any turbine OEM, so keeping the options of third party sourcing open makes incredibly sound strategy, especially for developing or variable markets and during times of rapid product development.
"For the major OEMs, blades are a double-edged sword"
For the major OEMs, blades are a double-edged sword. On one side, it's where a lot of trust and reliance is placed on meeting the performance and quality required for the customers, and there is a comfort on this being in-house.
On the other, it is an extremely cash-hungry business establishing blade production capacity, and unless it is carefully managed it can drain finances extremely quickly, especially if demand drops – or even dips – for a certain product.
For new entrants in the blade supply market, the biggest hurdles are being able to manage large investments on typically short-term orderbooks. This has certainly suppressed the growth of many blade manufacturing entrepreneurs and startups – but not all.
Andrew Bellamy is co-founder and director at consultancy 8.2 Aarufield