The manufacturing and installation of wind turbines are the main cost components in developing wind projects, accounting for 64–84 percent of an onshore wind project’s total installed costs. These activities offer considerable opportunities for value creation.
With a total of 144,420 person-days needed to develop a wind farm of 50 megawatt (MW), labour requirements vary across the value chain. As illustrated in the figure, there is a heavy concentration in operation and maintenance (43 percent of the total), installation and grid connection (30 percent) as well as equipment manufacturing (17 percent).
As the Figure illustrates the quantities of materials needed to develop a 50 MW wind farm with 2 MW turbines. Table 1 shows the distribution of the materials needed along the main components of a wind farm. It covers the labour, materials, equipment and information required for each segment of the value chain. Almost 23,000 tonnes of concrete are needed for the foundations, and nearly 6,000 tonnes of steel and iron go into the turbines and the foundations, constituting the bulk of the material needed. More than 360 tonnes of fiberglass go into the turbines and almost 700 tonnes of polymers are needed for the turbines and cables.
While not very significant in terms of weight (low density), these materials remain essential for the production of components locally.
Activities at the project planning phase include site selection, technical and financial feasibility studies, engineering design and project development. In the first two activities, the resource potential of a site is measured and the environmental and social impacts of the project are assessed. Engineering design covers the technical aspects of the mechanical and electrical systems; the civil engineering work and infrastructure; the construction plan; and the O&M model. Project development consists of administrative tasks, such as obtaining land rights, permits, licenses and approvals from different authorities; managing regulatory issues; negotiating and securing financing and insurance contracts; contracting engineering companies; negotiating the rent or purchase of the land; and managing the procurement processes.
Planning a 50 MW wind farm with 2 MW turbines requires an estimated 2,580 person-days of labour. Project development activities account for about 70 percent of this labour (1,780 person-days), followed by engineering design (12%), site selection (11%) and feasibility analysis (8%). Table 2 presents a breakdown of the total labour force needed in project planning by activity.
As for the skills needed, almost 40 percent of the labour (1,200 person-days) falls in the ‘legal, energy regulation, real estate and taxation experts’ category, indicating the importance of knowledge of the local context. While some of these needs can be fulfilled by foreign experts, they offer considerable opportunities for domestic employment. About 16 percent of the total labour (420 person-days) requires specialised engineers, and environmental and geotechnical experts with knowledge of the wind sector (see Figure 5). These professionals can be hired from abroad on a temporary basis or skills can be developed domestically through education and training policies designed to meet future skills needs in the sector.
Project planning requires equipment to measure wind resources at the site selected, such as anemometers and wind vanes, along with wind energy simulators and programmes to measure wind speeds and direction and predict wind behaviour.
Computers and software to run simulations and produce feasibility analyses are also required. Technical information is necessary to identify soil characteristics and climatic features at the site (such as snow or sand storms) that might affect a project’s structural and operational requirements or place limitations on the wind turbines. Information about policies
and regulations related to support schemes for renewable energy, grid connection and land use is crucial for determining whether to proceed with the development of a wind farm.
In the project development stage, planners decide whether to procure domestically manufactured components (if available) or from foreign suppliers. The cost of technology and enabling conditions created by policies that support manufacturing, such as taxes on imports or local content requirements, affect this decision.
Manufacturing and Procurement
The main components of a wind turbine that decision makers may consider manufacturing domestically are the nacelle (along with its subcomponents), the blades, the tower and the monitoring and control system.
Decisions concerning the local manufacturing of wind components are mainly driven by the expected local/regional demand for wind energy and will depend on: 1) the existence of government policies incentivising local value creation; 2) the availability of raw materials and presence of related domestic industries; and 3) the high costs and logistical challenges related to transporting bulky equipment.
Manufacturing the main components of 50 MW wind farm requires 19,000 person days. The nacelle, along with its subcomponents, is the part that needs the most work (almost half of the total). The blades and tower each require another 24 percent of the total person-day requirements.
Much of the labour and skill requirements to produce the main components is low to medium skill jobs. Indeed, 66 percent of the labour required (12,500 person-days) to manufacture turbines is factory labour, with medium to low skills related to wind energy. This may constitute a valuable proposition for governments to offer incentives for local manufacturing. The production of the technologically advanced subcomponents, such as the gearbox, the generator and the electronics requires highly specialised skills, which may not always be easy to source locally. Figure below shows the distribution of human resources required
to manufacture the main components of a 50 MW wind farm by occupation.
Although building a domestic manufacturing capacity for wind turbines has the potential to create employment and income, this phase is very capital-intensive. Moreover, in some countries where wind energy growth was slower than anticipated, capacity may have exceeded demand. In 2014, for example, global demand for wind turbines was estimated at less than 47 GW while manufacturing capacity exceeded 71 GW (Navigant Research, 2014). Some manufacturers in China, the United States and Europe were running below capacity and struggling for survival, leading them to consider moving factories overseas where wind development was picking up at a faster rate (AAE, 2014). Value creation from domestic manufacturing therefore requires the existence of a long-term market with growing demand for wind energy, which relies on support for locally produced equipment, access to finance and skills, competitiveness in the regional and global market and access to subcomponents (some highly specialised) and raw materials.
Maximising value creation from the development of a domestic wind industry relies on leveraging existing capacities used in other industries, such as aeronautics and construction, that can provide expertise, raw materials and intermediary products such as steel, concrete, aluminium, copper, fiberglass and glass-reinforced plastic. Table 4 shows the quantities of materials needed to manufacture the main components of a 2 MW turbine.
In terms of weight composition of each of the main components, the nacelle, including the gearbox and frame, is mostly made of steel and iron and casting material (around 56% and 35% of total weight respectively). The rotor including the blades is mostly composed of fiberglass, casting material, and steel and iron (almost 40%, 30% and 22% of total weight respectively). As for the tower, it is mostly made of steel and iron.
Manufacturing the main components of wind turbines requires specialised equipment. It also requires welding, lifting and painting machines that are used in other industries, such as
construction or the aeronautics industry.
One of the biggest challenges facing the industry is transporting bulky parts, sometimes over long distances. Issues faced can include traffic congestion, road damage, the need for complex coordination and high costs. A single turbine can have blades 80 meters long weighing 33 tonnes each; it can require up to eight truckloads to transport it by land (one for the nacelle, one for the hub, three for the blades and three for the tower sections). For instance, one 150 MW wind farm in the United States required 689 truckloads, 140 railcars and 8 vessels. Transport costs increase with the size of the turbines and the wind farm as well as with the distance travelled.
To reduce these costs, large turbine manufacturers are shifting parts of their supply chains to markets with high expected demand, such as Latin America. Domestic manufacturers in new markets produce bulky parts such as blades and towers (leveraging local steel and fiberglass industries if existent), following specifications and standards imposed by the main manufacturing company. The manufacturer generally produces the generator, gearbox and bearings, all of which require specialised knowledge.
Credits: Vestas Report 2015
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