Global Wind Turbine Market to Expect Turbulence
Despite the ongoing growth expected in global wind power installed capacity, wind turbine manufacturers have several major hurdles to overcome if they are to thrive in a challenging and highly competitive market, states an alternative energy expert for research and consulting firm GlobalData.
The wind turbine market suffers from manufacturing overcapacity, falling subsidies, and uncertainty in some wind power sectors. Vestas’ announcement of its 2012 results brought mixed news, with the world’s largest wind turbine manufacturer anticipating weaker sales and revising shipment forecasts downwards as a result.
Jennifer Santos, GlobalData’s Senior Energy Consultant, believes the key to success is frugality:
“Costs must be kept as low as possible. Cost-saving programmes initiated by Vestas last year, including rationalising its manufacturing base and reducing headcount, seem to have paid off and saw the company earning a positive cash flow in the fourth quarter of 2012.
“Similarly, revenues and operating profits before special items reached their highest level in the same quarter of last year. Gamesa expects to continue with its cost-cutting programme this year by closing more than a third of its offices and further reducing its debt.”
The US and China – the dominant forces in the wind turbine production business – currently account for 60% of the global wind power market, but their potential for significant turbine manufacturer revenue generation seems slim.
“Although the Production Tax Credit (PTC) was extended for another year in the US, the lack of a long-term, subsidy-free approach will prevent the US wind power sector from fully taking off in 2013. China, on the other hand, is dominated by numerous local manufacturers who all want to take a piece of the pie,” explains Santos.
Even the booming offshore wind sector has a number of obstacles for market players to overcome including supply chain constraints, grid connection issues and technology problems.
“On a more positive note,” says the consultant, “it looks as though turbine prices have bottomed out – at least for the leading manufacturers. A number of wind turbine manufacturers are developing new products which are arguably higher priced per MW than conventional wind turbines.”
She adds: “If turbine manufacturers can drive down costs further in 2013, then a return to profitability is possible and prices at €1m per MW looks sustainable.”
Photo sourced via Public Domain Photos
Trafigura and Yara International explore clean ammonia usage
Reducing shipping emissions is a vital component of the fight against global climate change, yet Greenhouse Gas emissions from the global maritime sector are increasing - and at odds with the IMO's strategy to cut absolute emissions by at least 50% by 2050.
How more than 70,000 ships can decrease their reliance on carbon-based sources is one of transport's most pressing decarbonisation challenges.
Yara and Trafigura intend to collaborate on initiatives that will establish themselves in the clean ammonia value chain. Under the MoU announced today, Trafigura and Yara intend to work together in the following areas:
- The supply of clean ammonia by Yara to Trafigura Group companies
- Exploration of joint R&D initiatives for clean ammonia application as a marine fuel
- Development of new clean ammonia assets including marine fuel infrastructure and market opportunities
Magnus Krogh Ankarstrand, President of Yara Clean Ammonia, said the agreement is a good example of cross-industry collaboration to develop and promote zero-emission fuel in the form of clean ammonia for the shipping industry. "Building clean ammonia value chains is critical to facilitate the transition to zero emission fuels by enabling the hydrogen economy – not least within trade and distribution where both Yara and Trafigura have leading capabilities. Demand and supply of clean ammonia need to be developed in tandem," he said.
There is a growing consensus that hydrogen-based fuels will ultimately be the shipping fuels of the future, but clear and comprehensive regulation is essential, according to Jose Maria Larocca, Executive Director and Co-Head of Oil Trading for Trafigura.
Ammonia has a number of properties that require "further investigation," according to Wartsila. "It ignites and burns poorly compared to other fuels and is toxic and corrosive, making safe handling and storage important. Burning ammonia could also lead to higher NOx emissions unless controlled either by aftertreatment or by optimising the combustion process," it notes.
Trafigura has co-sponsored the R&D of MAN Energy Solutions’ ammonia-fuelled engine for maritime vessels, has performed in-depth studies of transport fuels with reduced greenhouse gas emissions, and has published a white paper on the need for a global carbon levy for shipping fuels to be introduced by International Maritime Organization.
Oslo-based Yara produces roughly 8.5 million tonnes of ammonia annually and employs a fleet of 11 ammonia carriers, including 5 fully owned ships, and owns 18 marine ammonia terminals with 580 kt of storage capacity – enabling it to produce and deliver ammonia across the globe.
It recently established a new clean ammonia unit to capture growth opportunities in emission-free fuel for shipping and power, carbon-free fertilizer and ammonia for industrial applications.