Wind Power

Introduction

Wind Power has been used for over five thousand years.  Initially it was used to propel ships, cool buildings.  Since the 7th century, Windmills have been used to drive mechanical systems, such as milling grains.[i]

However the wind power that is of interest to people in the renewable energy space is wind power that is used for generation of electricity.  There is a significant amount of publicly available information on the mechanisms of generation and grid management.  The focus of this section is to provide a general overview, and to detail the business opportunity.

Even though wind energy is not reliable, and can only generate electricity when there is sufficient wind to drive turbines, it is one of the fastest growing renewable energy sources.  Some data from the 2008 report from the World Wind Energy Association:

• 1.5% of global electricity consumption is provided by wind power in 2008
• USA is the leader in the number of installations, ahead of Germany
• Wind sector had a turnover in 2008 of 40 Billion Euros
• Since 2005 global wind installations doubled; market for new wind turbines showed a 42% increased to 27,261 MW

Investment Opportunities

The areas for opportunity for investors in this sector are as follows:

• Investment in the installation
• Investment in Manufacturers
• Investment in Emerging Companies with technologies that will enhance efficiencies of Wind Energy

Investment in Installations

These investments are longer term, conservative and utility grade investments.  Because wind resources, and hence the wind farms, are usually located in remote locations, one of the expenses is tying the electricity to a national grid.  Often it is government subsidies and feed in tariffs that have helped drive growth in these installations.

Capex for offshore windfarms is in excess of $1.5 MM Euros.[ii] Capex for onshore windfarms is going to be considerably less.  These Capex costs per MW are less than that of solar (PV and thermal).

Investments in Manufacturers

This is an established market.  With some of the largest companies, including GE manufacturing turbines, generators or blade components.  A ranking of some of the 10 largest turbine manufacturers include:

1. Vestas (Denmark) 35,000 MW
2. Enercon (German) 19,000 MW
3. Gamesa (Spain) 16,000 MW
4. GE Energy (Germany/United States) 15,000 MW
5. Siemens (Denmark/Germany) 8,800 MW
6. Suzlon (India) 6,000 MW
7. Nordex (Germany) 5,400 MW
8. Acciona (Spain) 4,3000 MW
9. REpower  (Germany) 3,000 MM
10. Goldwind (China) 2,889 MW[iii]

Investors can invest in sub-providers, which don’t manufacture or assemble a complete turbine, but sub-components such as blades (LM Glasfiber), and Gearboxes (Moventas).

Emerging Companies with Innovative Technology

Companies with innovative, lighter weight materials, improved gearboxes, and more efficient generators are those companies that Sustainable Kapital will be seeking out in its research reports.

[ii] http://www.all-energy.co.uk/UserFiles/File/26Hastings.pdf.  Presentation by Rob Hastings, Vice President of Shell.  Accessed February 23, 2009

[iii] http://en.wikipedia.org/wiki/List_of_wind_turbine_manufacturers#Top_10_wind_turbine_manufacturers_by_megawatts_installed_worldwide_in_2009 Accessed February 23, 2010