Onshore wind energy has witnessed unprecedented challenges in the past year (2022), with disruptions to global supply chains, and it seems that another difficult year awaits the industry during 2023, especially in Europe.
Western wind turbine companies suffered strong losses in 2022, with costs increasing, while Chinese companies were able to survive, thanks to the local supply chain, according to the information monitored. Energy Research Unit.
Despite continuous efforts to increase wind turbine prices in light of global supply chain challenges; It is expected that the pressure on Western companies will continue this year (2023), according to a recent report issued by the research company Wood Mackenzie.
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The suffering continues in 2023
The supply chain is likely to continue to struggle wind power industry However, the profitability of Western suppliers may rise relatively, after a significant decline in 2022.
The largest original equipment manufacturers of wind turbines in the West suffered billions of dollars in losses over the past year. This led to the closure of factories, the layoffs of employees and the increase in equipment prices.
This came with supply chain disruptions, rising raw material prices, massive increases in specialized logistics costs, and a backlog of unfavorably priced supply contracts.
These problems are expected to continue until at least the end of the first half of 2023, according to the report seen by the Energy Research Unit.
However, Wood Mackenzie expects the onshore western wind industry to turn profitable this year, with US incentives to support the local industry.
According to the report, supply chain constraints and raw material price volatility – the main constraint to OEM profitability – are likely to subside in 2023.
The following graphic shows the global onshore and offshore wind capacity capacity, by region, during 2020 and 2021:
High prices for electricity generated from wind
Onshore wind power electricity prices are trending this year as capex increases; Supply chain challenges have forced OEMs to raise turbine prices.
Higher prices for onshore wind turbines have led to lower new orders, and this could eventually lead to higher prices for PPA electricity from wind projects in the long term.
It is also expected that auctions of wind projects in Europe will increase during the current year, after Spain, Germany and France witnessed a sharp decline in the number of renewable energy auctions throughout 2022.
With more onshore wind project auctions this year, strong demand from companies will drive a deal premium buy electricity.
Chinese companies continue to outperform
Set to acquire comp wind turbines Chinese take additional market share than Western OEMs.
In contrast to the strong losses that hit the western onshore wind power; The economies of scale in the Chinese supply chain and not being highly exposed to high raw material prices and fluctuations in logistics support Chinese companies to achieve more profitability.
Furthermore; Chinese OEMs are outpacing Western technology, according to the report, which was tracked by the Energy Research Unit.
The average turbine size of orders placed in China for 2022 was more than 5.4 MW, which is higher than the average of 4.2 MW for Western OEMs, reversing historical trends.
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