Research
Industry Insights

Market share uncertainty in the renewable energy industry

  • Multi Asset
  • Energy
  • Global

Third Bridge Forum’s Interviews have highlighted concerns for international original equipment manufacturers (OEMs) and their ability to retain shares in the market. With changing Production Tax Credit (PTC) legislation, potential acquisitions and increased price pressure from solar photovoltaic (solar PV) companies, the industry could face major changes in the next few years. A number of our specialists have discussed these issues in April 2019, offering a diverse range of opinions on the outlook of the sector.

Although a former Regional Executive at Nordex SE voiced concerns regarding solar PV energy and its impact on the wind turbine industry, stating that the technology is pressing prices downfor the industry as a whole, the former Head of Sales at Senvion SA took a different stance on the matter. The former Head of Sales explained that the PTC phase-out could have an impact on the overall energy mix, predicting solar PV would increase its shareas the costs of PV continue to decrease, but ultimately wind will be keeping the main sharebecause wind power plants tend to be smaller and more efficient compared with solar PV plants. The specialist continued by stating that PV energy from companies such as SunRun and Vivint Solar are more complementaryto wind power because although PV generation is only possible in the daylight, wind energy could essentially generate energy day and night. 

The former Head of Sales also explored the PTC phase-out’s impact on wind turbine companies such as Siemens Gamesa. The specialist expressed the opinion that ultimately, the PTC expiration would have a positive impact on the wind industry, with smaller wind turbine manufacturers in particular benefiting from the change. The former Head of Sales said that despite the phase-out, turbines would continue to gain efficiencies and decrease the cost of energyproduction, meaning they could become competitive on their own with other forms of generationsuch as solar. He continued by saying that the PTC expiration could level the field for the smaller playersas each project under PTC undergoes third-party assessments to ensure the design is commercially proven, and, if it’s not, it must go through costly iterations until it is. With the phase-out of PTC, the onus would instead be on the customers, independent power producers (IPP) or wind farm operators to assess the turbine technology. 

The former Head of Sales in the US at Senvion SA stated that as well as increased competition from smaller players, OEMs such as Senvion, Vestas or Nordex not only have to compete with other US OEMs and independent service providers (ISPs), but they must also recognise that there will be increased competition from turbine manufacturers operating in China as PTC is phased out. The former Head of Sales explained that although China-based OEMs such as Goldwind and Envision Energy have had limited success so far,” they definitely have an advantage on priceand could be a further challenge to longstanding OEMs if they get the quality right

Despite increased competition in the US market, larger OEMs such as Vestas could improve their overall situation globally by strengthening their position in other countries. The former Director of O&M in India at Vestas Wind Technology suggested that the rumoured acquisition of Suzlon by Vestas could allow the latter company to improve its share in the global market. The specialist explained that the move would allow Vestas to obtain more factories within India, which would help the international OEM localise manufacturing in the country. He continued by stating that this could offer Vestas important cost synergies to help it improve its position, which would help enhance the sustainability of the company in the market. 

The information used in compiling this document has been obtained by Third Bridge from experts participating in Forum Interviews. Third Bridge does not warrant the accuracy of the information and has not independently verified it. It should not be regarded as a trade recommendation or form the basis of any investment decision.

For any enquiries, please contact sales@thirdbridge.com