Conference programme

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Tuesday, 17 November 2015
17:00 - 18:30 Supply Chain: Glocalization
Supply chain  
Onshore      Offshore    


Room: Belleville

After an update on the global supply chain the session will take a deeper look into emerging EMEA regions and the tension between global and local approaches.

Learning objectives

  • Delegates will know about current supply chain trends and estimated future developments.
  • Delegates will be able to identify challenges relevant for MEA regions.
  • Delegates will be able to explain constraints based on global vs. local approaches.
  • Delegates will be able to understand the risks of localization based on French market experiences.
Lead Session Chair:
Thorsten Landau, GE, Germany

Co-chair(s):
Kirsten Tracht, Bremen Institute for Mechanical Engineering, Germany
Feng Zhao FTI Consulting , Denmark
Co-authors:
Feng Zhao (1) F
(1) FTI Consulting , Copenhagen , Denmark

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Presenter's biography

Biographies are supplied directly by presenters at EWEA 2015 and are published here unedited

Feng Zhao is a Director and the Head of Wind Energy at FTI Consulting’s Clean Energy Practice. Prior to joining FTI, he was the research director at Navigant`s BTM Consult. He has followed the wind industry in the past ten years and has co-authored the World Market Update and the Supply Chain Assessment reports at BTM between 2007 and 2014 and the Global Wind Supply Chain Update 2015 report at FTI in 2015. Mr. Zhao holds a Master degree in Economics and Administration obtained from Roskilde University in Denmark and is based at FTI`s Copenhagen office.

Abstract

Global Wind Supply Chain Update 2015

Introduction

The wind industry saw a dramatic turnaround in 2010, from a seller’s market into a buyer’s market. The slump of demand in 2013 caused by the economic recession and policy uncertainty and inconsistency in several established wind markets (including Europe, the US, China and India) has resulted in a more streamlined global wind supply chain. According FTI Consulting`s recent Global Wind Supply Chain survey that examines the supply chain situation for 12 key components (350+ suppliers) and three key materials (150+ suppliers), more than a quarter of suppliers have collapsed or stayed out of the wind sector in the past 24 months. In addition, the prolonged market slowdown has forced major turbine OEMs to divest in-house non-core production assets and opt for outsourcing, in order to insulate themselves from market fluctuations while retaining the flexibility of global sourcing. As a result, the hybrid model of vertical integration and outsourcing has gained more popularity in the past two years.

Currently, no specific constraint has been identified in the global supply chain and significant surplus remains for most key components and materials However, the rush to capitalize the higher Feed-in Tariff in China has led to sourcing challenges for turbines to be installed in low wind speed regions. In addition there are still global concerns around critical components like ultra-large tapered roller bearings; while the regional distribution for several key materials such as rare earth elements, castings and forgings remains extremely uneven. This situation is likely to persist over the next two-three years due to market instability, which has prevented suppliers from deploying new capacity in order to balance out availability.

Current market conditions are driving competition in both quality and cost aspects; suppliers are being driven to provide innovative products and value added services to assist turbine OEMs and end-users in bringing down the LCOE (levelized cost of energy) of wind in order to remain competitive with conventional energy sources. Furthermore, overcapacity is driving turbine OEMs to make the product requirements even stricter and to negotiate for extended warranty and payment periods. Thus, we expect consolidation in the global wind supply chain to continue, and Tier 2/Tier 3 suppliers which lack in-house capacity for R&D and established relationships with turbine OEMs to begin to wash out over the next two to three years.


Approach

All of the data used in this presentation was collected in the beginning of 2015 by FTI’s wind energy team. The analysis will be based on the survey results and the development of the global wind supply chain in the past three quarters in 2015.

Main body of abstract


As the latest global wind supply chain update, this presentation will cover:

1. A brief background of the transformation of the global wind supply chain;
2. The survey results about the 120 suppliers recently out of the global wind supply chain (by region and component);
3. Current supply chain situation by 12 key components and 3 key materials;
4. Global wind supply chain sourcing patterns/trends and OEMs supply chain strategies;
5. Supply vs. Demand – Overview of current and expected global supply chain situation by 2018;
6. Offshore balance of plant - current and expected situation by 2018;
7. Challenges and opportunities in the global supply chain for European suppliers.


Conclusion

The wind industry is still in the process of transformation. Clearly understanding the key changes and trends in the global wind supply chain is critical for the success of suppliers and turbine OEMs.


Learning objectives
Based on the latest market intelligence, this presentation is expected to provide the delegates an up to date view of the supply chain situation and near term outlook for the twelve key components, three key materials and offshore wind balance of plant, as well as recent changes in OEMs' sourcing patterns and supply chain strategies. In addition, key takeaways are available for European suppliers looking for opportunities in challenging market conditions.