Steel for windpower: a burgeoning market

Offshore wind is "on a high" with costs having fallen by around 50% since 2015, the Global Wind Energy Council said in its Wind Energy Outlook 2016: Wind Power to Dominate Power Sector Growth document.

GWEC outlines scenarios where wind, offshore and onshore, could supply 20% of global electricity by 2030, generating 2,110 GW, creating 2.4 million new jobs, reducing CO2 emissions by more than 3.3 billion metric tons/year and attracting annual investment of some EUR200 billion.

Steel demand from the sector could rise substantially from S&P Global Platts estimates of around 10 million mt/year in 2016.

"Now that the Paris Agreement (which became effective November 4) is coming into force, countries need to get serious about what they committed to (in December 2015)," said Steve Sawyer, GWEC Secretary General.

"Meeting the Paris targets means a completely decarbonized electricity supply well before 2050, and windpower will play the major role in getting us there," Sawyer said.

Cumulative windpower capacity is expected to increase to around 817 gigawatt capacity by 2021, from installed capacity of 487 GW in 2017, most of which is onshore, according to GWEC’s 2017-2021 market forecast.

Given there are 1,000 megawatts in each gigawatt and that wind farm operator Orsted (formerly Dong Energy) estimates the usage of steel plates per megawatt of offshore wind turbine capacity installed at around 200 mt (although this may be less for onshore installations) the data could mean there will be demand for tens of millions mt of steel for wind turbines in the five-year period.

And this is not just ordinary carbon steel, but typically high-value high-resistance plate.

Also good news for steelmakers is the trend is towards bigger installations overall. "The general trend is to towards larger machines –- including longer blades, higher hub heights and, in particular, larger rotor sizes," says REN21, the Renewable Energy Policy Network for the 21st Century, a multi-stakeholder organization. "Offshore, the need to reduce costs through scale and standardization has driven up sizes of turbines as well as of projects."

The World Steel Association points out that every part of a wind turbine depends on iron and steel, including the tower, which may use high strength steel plate sections with thickness of 8 mm to 65 mm; the rotor; and the nacelle at the top of the tower, containing electrical steels with specific magnetic properties that make wind energy possible.

Still, windpower's rate of growth also depends on the attractiveness of other energy sources and available financing. Some countries now consider windpower a mature industry no longer requiring government subsidies: direct subsidies have been withdrawn in the UK and Germany - two windy nations with enormous windpower potential -- and are being phased out in China.

"Offshore wind has been going at an incredible trajectory," said Peter Bachmann, director of venture capital company Scottish Equity Partners, during a panel focusing on EU renewable energy at the recent Mines and Money conference in London.

Still, economics are all-important in the growth equation, with low carbon prices inevitably undermining the investment case for renewables in the UK, he said.