Summary of Supply Status

This assessment indicates that although today the technical capacity for key materials exists on a global basis, there are a number of underlying issues which are a cause for concern.

The supply of castings and forgings, when considered on a global basis, suggests overcapacity. Both are, however, characterised by a strong regional imbalance in supply, with forgings in the US being in short supply and fears of tightness in Europe by 2014, despite a significant over capacity in China and South Korea. Severe overcapacity is complemented by fierce competition in both price and quality during a time where both higher raw material prices and labour costs plague European and North American suppliers. Partner selection still remains a key challenge in meeting the strict quality specifications, an issue of growing concern as quality requirements increase with the trend towards increasing turbine size, a key concern for gearbox and bearing suppliers.

For the key materials used in the production of blades it is clear that there is no challenge in meeting demand with evidence for the necessary investment to ensure capacity is sufficient. Similarly, there are no concerns over the woven and stitched fabrics as close coordination between the suppliers and the market ensures that the necessary investment has been put in place to meet demand. The only concern remains in the pre-preg market where only a small subset of companies are providing pre-pregs. Despite recent investments, demand for pre-pregs is expected to be tight for the next few years until new suppliers enter this part of the value chain. Glass fibre is still expected to maintain its position as the material of choice for the general blade industry, although demand for an increase in the stiffness-to-weight ratio in blades catering to the offshore wind segment could mean that carbon fibre will increasingly come into favour. In terms of resins, there is a short-term tightness in the epoxy market due to the market supply of bisphenol A but there are no major long-term constraints expected for either epoxy or unsaturated polyester based solutions. It is still expected that epoxy resins will maintain the lion's share of the market in all regions.

China is home to 97 percent of the world's rare earth elements, a critical material in permanent magnet generators. With China gradually implementing export quotas, it has caused panic in the wind industry. Despite tightness expected for the next two or three years, there are positive movements from both the supply and demand side. Longer term, it is expected that a combination of new reserves, adaptive strategies from OEMs and governments as well as greater resource transparency will ensure that the industry has access to the resource.

There are no reports of any serious constraints in the supply chain for key components and materials at present, despite an increasing concern over the potential supply of rare earth materials. Based on the current supply chain situation that a lot of capacity will be available if European suppliers' newly established facilities come into full operation, and a significant surplus of supply has been identified in China, there will be enough capacity in the supply chain to meet the modest annual growth rate of 15.5 percent up to 2015, the report's authors state. Nonetheless, the recent trend for introducing multi-MW turbines (mostly 5-6 MW) by leading vendors indicates a sourcing challenge for large components and a challenge to get these industrialised quickly enough. This challenge can be eased, however, once the supply chain gains the confidence required to invest heavily.

More immediately, the report concludes, the wind energy boom has come to an end because of the ongoing global financial and economic crisis, with the previous tight situation in the supply chain easing in 2010. Due to the global economic recovery being slower than expected, and a slump in demand from the second quarter of 2011 onwards, not only has a balance been reached between supply and demand and but in most cases a significant surplus has been identified, prompting a flight to quality in a buyer's market.