The offshore wind supply chain is pushing back against the constant pursuit for bigger turbines given the financial difficulties experienced by the major turbine manufacturers and the ripple effects that the race for greater scale could create for other equipment-makers.
The largest turbine offerings from the major European and US suppliers Vestas Wind Systems A/S, Siemens Gamesa Renewable Energy SA and General Electric Co. now reach 15 MW. Yet even before such machines make it into the water, the manufacturers are already said to be touting 18-MW to 20-MW turbines for projects being installed later this decade.
This unrelenting innovation is driven by intense customer demand and a quest for greater economies of scale evidence of which came in a recent offshore wind auction in France, where Electricité de France SA's winning consortium based its bid on massive 23.8-MW turbines that do not yet exist.
While the French project will not be installed until the early 2030s, the consortium's assumptions symbolize the ongoing growth of offshore turbines that some in the supply chain say is becoming unsustainable and needs to be reined in.
"The understanding has grown that [a] slowing down of the new product introduction might be something helpful overall for the industry," Tim Dawidowsky, COO and sustainability officer at Siemens Gamesa, said in an interview on the sidelines of lobby group WindEurope's annual conference in Copenhagen, Denmark, in April.
At a certain size, likely around the 20-MW mark, further capacity upgrades will start to require big investments in the supply chain's manufacturing capacity, executives and analysts told S&P Global Commodity Insights.
"Everything gets exponentially more expensive" as turbines get bigger, Dawidowsky said, pointing to key equipment like offshore foundations as well as installation vessels. "That has led to the fact that we are rethinking the [idea about] whether bigger is really better or whether we have reached the limits."
The quest for scale
The push for ever-larger turbines has long been rooted in an industrywide desire to improve offshore wind's levelized cost of energy.
That effort has largely been successful, with offshore wind showcasing significant cost reductions in the last decade. Projects in Europe have come through on a zero-subsidy basis while new leases on both sides of the Atlantic have garnered record-high price tags.
"All this has been achieved through one simple factor: scale. Offshore wind is all about scale," Andrei Utkin, associate director in clean energy technology at Commodity Insights, said in an interview. "By growing turbines, we reduce the number of foundations and equipment that need to be installed."
Globally, the average size of offshore turbines increased from 3 MW for projects commissioned in 2010 to 6.9 MW in 2022, according to analysts from Commodity Insights. The average for 2023 so far stands at 9.1 MW, rising to 12.7 MW by 2027.
But this rapid rate of innovation whereby bigger turbines are launched roughly every two years has now "reached a pace where it's not sustainable [and is] creating a lot of friction in the supply base," Dawidowsky said during a panel discussion at the WindEurope conference.
The friction is arguably most significant for installation vessels, of which there is already a global shortage. As turbines get bigger, the ships used to install them typically need to follow suit, and there is uncertainty about whether vessels being manufactured today will be capable of installing future iterations of turbines.
"If you change the technology in a span of four, five years, then these installation vessels will become obsolete," Shashi Barla, director and head of research for renewable energy at consultancy Brinckmann, said in an interview on the sidelines of the Copenhagen event. "You can't keep continuously innovating on the new turbines."
Supply chain urged to 'say no'
Bigger turbines also mean bigger and heavier component parts, namely foundations and nacelles. While the supply chain to-date has had to follow in the footsteps of the turbine-makers in scaling up their products, some executives are now pushing back.
"We have to be a little bit bolder to each other and dare to say no now and again," Fred van Beers, CEO of foundation-maker Sif Holding NV, said on a panel in Copenhagen.
Sif recently made a 328 million final investment decision to build the world's largest monopile foundation manufacturing plant in Rotterdam, Netherlands. The factory will have annual capacity to build 200 "XXXL" monopiles each 11 meters in diameter, weighing 2,500 tonnes to be used on turbines that are 15 MW to 20 MW in size.
But for the same level of investment, the company could produce 500 pieces per year for slightly smaller 10-MW to 14-MW turbines, according to van Beers, which could ultimately mean more capacity is installed offshore.
"The balance between speed and scale has to be there," the CEO said.
A recent report by GCube Underwriting Ltd., an underwriter focused on renewables, added weight to the industry's concerns around the pace of innovation.
GCube's report said that 55% of all insurance claims relating to wind turbines come from component failures during construction from 8 MW and larger machines. Such machines are typically suffering component failures in the first two years of operation, compared to an average of five years for turbines of 4 MW to 8 MW in size.
Rather than constant upgrades, manufacturers ought to instead improve "the quality and reliability of a reduced number of products to put themselves back on a sustainable path of development," GCube CEO Fraser McLachlan said in a statement.
A prototype of Vestas' 15-MW V236 turbine began spinning at a testing facility in Denmark in late 2022.Source: Vestas Wind Systems A/S
20 MW and beyond
Despite elements of reluctance from the industry to pursue a path of unfettered innovation, Dawidowsky admitted that turbine-makers are "not totally free" in their decision to step on the brakes.
"If the market requires [larger turbines] for good reasons, we have to be there," the executive told Commodity Insights.
That competitive pressure has contributed to the "difficult situation" that turbine-makers find themselves in, Dawidowsky added. All the major manufacturers are struggling with profitability and seeing new orders dwindle as a result of rising costs.
The turbine-makers have had to be "extremely competitive" and participate in the race for scale in order to win business and keep their market share, according to Utkin.
"Because if you don't [participate], then all of a sudden, if you have 10-MW turbine and someone else has a 15-MW, your 10-MW will never be sold," the analyst said.
Those dynamics may yet continue as rival turbine-makers from China begin to make inroads into Europe and the US. Chinese manufacturers are already touting 18-MW turbines for use in their domestic offshore wind market, and it may not be long before the Western suppliers launch another larger iteration of their own.
Indeed, Western turbine-makers have been seen positioning 20-MW machines for projects being delivered in 2028 or 2029, according to Barla.
"They're already marketing [those] now, which means that it's almost around the corner in the five- or six-year timeframe," Barla said.
A Siemens Gamesa spokesperson said the company does not comment on future products. A GE Offshore Wind spokesperson said the company is focusing on optimizing its 12-MW to 14-MW Haliade-X turbine. Vestas did not respond to emailed requests.
Meanwhile, even though 23-MW or 24-MW turbines like those eyed up by bidders in the recent French auction might be technically possible, the industry reiterates that such machines would require massive investments in scaling up factories and installation equipment.
Dawidowsky said there is "no facility in the world" capable of building and transporting turbine blades big enough for such machines, for example.
"I'm not sure whether that really plays out," the executive said. "I wouldn't believe that everything which is planned or talked about now really comes through."