Lower commodity prices and higher tariffs could pose economic challenges for wind turbine manufacturers at the same time the U.S. federal production tax credit is due to step down, Vestas Americas President Chris Brown said May 22.
"How do we think about how to continue to create value? Think about hedges, think about risk," Brown said during a panel at the American Wind Energy Association's Windpower 2019 conference in Houston. "Wind is on sale. Well, the sale is about to end."
Attention to consumer appetite for risk will be important for manufacturers in the year ahead, according to Brown, whose company is a subsidiary of Vestas Wind Systems A/S, which is active in 75 countries.
"I think what's important is: Do you have reliability? Do you have serviceability?" Brown said. "What does the customer want in terms of their risk profile? How do they see the financial risks of whatever product you're selling? How do they see the delivery schedules?"
Speakers on the panel also examined the impact on the wind power supply chain as advancements lead to increasingly larger units.
Average rotor diameter expanded to 116 meters in 2018, with average hub height at a wind project growing to 88 meters. Both are the latest increases in what has been a steady rise in those numbers over the past two decades.
Slimming down a company's internal supply chain may be an attractive course of action, said moderator Gregory Wolf, CEO of Leeward Renewable Energy Holdings LLC, though Brown was quick to point out caveats. "If you outsource all of it, you're going to get leveraged," Brown said.
The global wind turbine supply chain will total $450 billion over the next decade, with the levelized cost of energy slated to decline, according to data presented by Wolf.
The U.S., Canada, Mexico and Brazil will continue to be the most important players in the Americas going into the next decade, said Jose Antonio Miranda, CEO onshore Americas at Siemens Gamesa Renewable Energy SA.
"I have very good expectations in Brazil, to be honest. I think that we will see a lot of growth," Miranda said.
Outside of the Western hemisphere, Miranda believes that India and Russia will become increasingly prominent players as more wind projects in those countries come online.