CanWEA conference day 3

Day 3 of the CanWEA conference was short – it ended at noon.  But there were still some interesting insights.

Joshua Magee of Emerging Energy Research presented an update on the American wind supply chain.  Manufacturing of wind components is expanding rapidly in the US, with industry capacity expanding from 1500 MW in 2004 to 6000 MW by the end of 2007.  There will be capacity to produce 3500 MW of blades.  The US market is expected to install 3000 MW in 2007, so capacity is catching up with demand.  The pinch point continues to be bearings and gear boxes.  With over a 2 year lead time to build new plants, it takes awhile for supply to catch up.

He forecasts that supply will catch up with demand in 2009/10.  But he is not certain that will lead to price declines.  The price of wind turbines, according to his research, has increased by 50% since 2004.  My own belief is that while this may be true, so too has the productivity of wind turbines.  Blade designs, larger turbines, and taller towers have all lead to more output per installed Megawatt.  So while the price of turbines may indeed by up by as much as 50%, the cost of wind energy is up by less than that.

Chris Boivin and Marc LeBlanc presented preliminary findings on the Canadian supply chain.  We make blades and nacelle covers in Quebec, towers in Fort Erie and Saskatchewan, and power electronics in BC.  From a logistics viewpoint, it makes sense to supply towers, blades, and nacelle covers locally, as it dramatically reduces freight costs.  Blades are estimated at 23% of the value of a turbine, towers at 18%, gear box at 16%, and generators at 3%.  Blades are the most labour intensive process.  Canada has a ways to go in capturing its share of the manufacturing jobs in wind.  But it has progressed, and after all, it has only had a significant market for 2 years.

I recall a comment from Fred Gallagher, a former President of the CanWEA.  He made this comment in about 2002.  He said political support for wind will never be strong or sustainable until Canada develops a supply chain, that has many jobs dependent on the industry.  In Germany, 10’s of thousands of wind industry employees marched on the Bundestadt when the government talked about changing its pro wind policies.  The policies did not change.

Establishing a manufacturing base in Canada may be more important than we know.

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