Wind Turbine Technology in its tryst with destiny

It is one of my favorite activities to keep track of where the wind sector market is heading to. I put up a special focus on the technological front on a regular basis.

Let me share a few of the recent insights I gathered after weeks of reading and digging a few data.

Before going further, I request you to subscribe to my newsletter for future updates. Let’s begin.

Here is the first insight.

Insight#1 – The tussle of US vs China is on

History also suggests that in World War II, there were two main combats. One was the Axis powers comprising of Germany, Italy and Japan. Another team was the Allies consisting of France, Great Britain, the US, the Soviet Union and China (up to a lesser extent).

It seems history repeats itself.

Once again, the wind technological war has two main parties – the US and China. In this, the US is acting like a demand producer. This got boosted recently after ex-president Mr Biden passed the historic act named Inflation Reduction Act (IRA) 2022. It has multiple provisions in the form of tax credits (production tax credit (PTC), investment tax credit (ITC) and advanced manufacturing production tax credit (AMPC)) boosting the adoption of renewable energy technologies.

I do agree that after Trump’s arrival on the main front, the scenario of renewable technology is standing in a dilemma. But I also believe that renewable has reached a stage from where there is no going back.

Enough about the US.

Because China is the ultimate king.

How? Let me give some perspective. ?

The total new onshore wind installation across the globe stands at 106 GW. Out of this, China commissioned 69 GW of new onshore wind in 2023, whereas the US stands at 6.4 GW only (GWEC 2024). It can be seen that China is going 10x with respect to the US.

“At the country level, China and the US remained the world’s two largest markets for onshore wind additions followed by Brazil, Germany and India.” (GWEC 2024)

You might be wondering why the EU is missing. I have a personal answer to it. In my opinion, undoubtedly the EU is the pioneer of wind technology. It has already reached a stage of maturity and saturation. It is struggling with its own financial and grid connectivity woes.

So, I would better keep them aside in this article. ?

Coming back to the US vs China, I believe the US would be imposing import tariffs in the range of 40-60%. It would hinder the wind turbine exports from China. But there is a silver lining for the south Asian countries like India and Vietnam.

Let’s see why India can be assumed to be standing at a cusp of transformation.

Out of 135 GW annual capacity of nacelle & hub assembly, China occupies 82 GW of annual capacity. Out of the remaining 53 GW of capacity, India holds a 20% share (11.5 GW per annum). With low labor costs and export-centric government support, India is expected to gain only.

In a nutshell, the US vs China tussle may go on. But for a country like India, the need is to realize how it can act as China+1 and tap the market.

As a closing remark, even though the tussle of US vs China is on, India can strategize to reap benefits.

Let’s dig into the next insight. ?

Insight#2 – The wind market is in a race

Suppose you enter a market to purchase a pen. Let’s say, after some due diligence, you have drilled down to two companies to purchase the pen from. The first company offers 32 types of different pens whereas the second company has a massive portfolio of 58 different pens.

Now, what will you do? This would be a big dilemma for you, right?

Let me add one more criterion.

The criterion is that the second company says that if you can wait for a day or two, it will come up with five more varieties of pens. But the first company has no such plans as it is struggling financially and thus wants to focus on enhancing the profitability margin with its legacy (existing) pens only.

Now, what will you do? The dilemma has increased, right?

Now let me give you the shocking news.

The exact same situation of pens is happening in the onshore wind market also with a slight variation. The first company is actually Vestas, which is around 120 years old whereas the second company is Goldwind which is 26 years old only. And one can see the stark difference in the time frame of the two companies vis-a-vis their product portfolio. By the way, the pen varieties number (32 and 58) are actually the number of turbine models each company is offering in the onshore wind market.

This trend is widespread in the market. On one side, older Western manufacturers are trying to standardize their products and reduce wind turbine variants. On the other side, newer Chinese manufacturers are coming up with newer technologies with higher MW capacity and rotor diameter.

I do not know where the race will end. I also do not know what the sustainable path for the future is.

The only thing that I know is that we need to wait and watch how the future unfolds. Let the wind industry deal with its tryst and bring a brighter future.

That’s all for now. I will bring more trends to you in future.

Stay tuned to more wind trends. After all, the wind market is really an interesting one. This is what my experience says after one year of my association. ??

Happy weekend!

(Disclaimer: The expressed opinions are personal. The data credit goes to GWEC and Woodmac.)