You are listening to Redefining Energy. Your co hosts from Berlin Gerard Read and
from London Laurent Sege. Today on Redefining Energy, we're going to talk about
the state of the wind industry. Oooo. That's going to be a spicy
one because there's a lot of things happening. Yeah, yeah, there isn't
it absolutely good bad change. It's all happening in wind. It's not a
dud like solar. It's just one way up and there's a lot of bumps
on the road that we need to discuss about. So mhich are short terms,
so hich our long term. But first of what from my partner,
this podcast is powered by Expo, an international leader in providing sustainable energy solutions
for the future in an ordicx AXPO has been a pioneer within trading and origination
services for the last twenty years and we're very happy to have a partnership on
this episode with When Your Op, the Association of Win in Your Op and
Ron. The big question I have to ask myself is have we seen peak
woin Yeah, peakcoin. Yeah, that's an interesting proposal and if you look
at the numbers in twenty twenty twenty twenty one, one hundred geek were installed
in the world, and in two twenty two the market shrank down to seventy
seven gig awards. Do I understand peakquin like it's not going to grow,
say from one hundred gig to three hundred gig, and how do you see
it? Exactly? That's what I mean by it. It's not to say
that we're going to start sort of building wind. It's just there's going to
be no growth in installations from ear to year. And that's the way I'm
thinking about it. Anyway, I think we'll talk more in the conclusion part.
If you look at the big pictures, it's all over the place.
We have struggling O and ms Vesta shares the down twenty five percent of to
date, Siemens energy down thirty percent of to date, with problem with local
population, with slow reconnection, we get supply chain inflation and guys like Osted
get squeeze or the Hostedia to date is minus forty percent, boat shouctions right
downs, rising interest rates, and on and on and on and on and
on. Yeah, well, listen, I think we need to bring an
expert on to talk about this. Yeah, and the expert we have.
We're very happy to have Rose Marie Barnes Rosie and she's an Australian engineer with
a PhD in composite materials, two decades of experience in the winning energy and
now she's quite known because she has a very famous YouTube channel called Engineering with
Rosie. She's a good friend of ours and she knows everything that needs to
be known in wind energy. Let's bring around the show Rosie. Finally,
welcome to the show. Thanks so much for having me on. Good to
see you. Let me just kick off, but we really want to talk
about the wind industry and we've seen a lot of negativity this year. And
listen, you've been in the industry longer than we have. You know better
than anyone what's you're thinking, what's going on on wind and how do you
see the future. Where we're at now is probably the result of a squeeze
that actually happened maybe about five years ago. For most of the history of
the wind industry, we've been gradually increasing the length of wind turbines, blades,
you know, size of wind turbines, heart of towers, and for
decades we just saw every year there would be a slightly longer fiberglass blade than
there was a year before. It basically just looked like, you know,
just scaled up the same blade over and over again for decades, and that's
a really nice way to develop an industry with you know, you learn a
lot, you don't change too much from turbine to turbine. And then we
got to a point where blade lengths started getting longer faster, for one thing.
And secondly, we kind of reached a point where it was pretty hard
to just keep on making blades in the exact same way as they were.
And that happened at the same time that prices really started squeezing down, and
it definitely felt like a squeeze when you're working in a gineering department of winter
By manufacturer. Yeah, so all of that happening at once meant that there's
a lot of pressure to bring out new technologies fast to enable longer blade lengths
and a few other enabling technologies. And then it takes a little while for
too fast development to play out in terms of increased warranty claims. And it's
not so unusual everybody that's worked for a winter By manufacturer for a long time
will tell you that you go through these cycles every manufacturer, you have a
period of innovation, feeling amongst engineers that you're moving too fast, and you
know, there's this conflict always between the business functions and the engineering functions,
or engineers want you to slow down and business guys like, no, we
need to speed up, otherwise we won't make any sales, and then get
some warranty claims. Sometimes they're big and company might not be able to weather
it, but usually come back from it, tighten down on quality, slow
down a little bit, and you eventually you're stronger for it because you've got
this the results of this innovation, and the technology has become reliable. But
what's different this time is that we see all of the manufacturers went through this
at the same time, and so we do see a whole lot of innovation
in wind over the last decade, but we are right now at the point
where we're also seeing a whole lot of defects and some of them are proving
to be really costly. Can I just have a quick follow on question.
There is this because all the turbine manufacturers are was sourced to basically the same
manufacturers of you know, whether it's blades or whatever it is. Is that
what happened? Why do they all have the same issue. It's not exactly
the same issues, And I don't think it's from more outsourcing. Most manufacturers
will both make their own blade components and have a second source from a supplier
like LM Windpower, who I used to work for. And it's not the
exact same problem that all the manufacturers experience, but it's the same kinds of
problems because they all face the same kinds of challenges and so came up with
similar solutions to them. As you make a blade longer than there's changes that
you need to make to the structure and the materials and the manufacturing process.
Lightning protection systems, that's a big one they had to change to accommodate these
longer lengths that developers were demanding. Yeah, when you have a new technology,
the early years of its rollout is the time when you see problems with
it. You can't really have innovation without that. The ideal weighted it from
an engineering point of view, would be to go so slowly that you would
only have a few turbines out there with this technology by the time you notice
the problems but yeah, I mean the sales process and business constraints mean that
people actually want to move a lot faster than that. Well, I think
you're a bit too kind, because the way I see it is the winddustry
got engulfed in the narrative of the solar industry where ATI going down ten percent
Parana, and I guess the developers who are doing wind and solar were enjoying
a wonderful ride with solar and basically coming back to the wind and say,
guys, you need to puning up, except that moslow applies to semiconnectors and
to solar, but it doesn't apply to wind, which is mechanical Or am
I seeing it wrong? It's probably part of it. Definitely. People maybe
still today, but a lot more my decade ago, everybody was talking about
the l cooe of solar versus wind, because you know, in the early
history of wind, wind was just way cheaper, and then solar started off
more expensive, but you know, its price was just reducing so fast,
and there used to be a lot of talk about, you know, who's
going to win out of wind and solar. But I do think that that's
really that kind of comparison belongs in the past it's the first phase of the
energy transition, and I think it's that relevant now because you're not comparing if
you've got a high level of renewables in your grid, you can't just keep
on adding solar until you get to one hundred percent of your electricity supply.
That way, you need to add wind storage. So in the the mid
part of the energy transition, wind is really competing against solar plus a short
duration battery, and then in the later stages of the energy transition, it's
going to be competing against some of the really hard, difficult technologies like long
duration energy storage or energy imports as well. Because you think about like floating
offshore wind, it's way more expensive than onshore wind. It's way more expensive
than solar. Why would you install it. But if you look at anybody
who's actually considering floating off your wind, they don't have the option to have
a whole lot of solar power to run their electricity grid. Places like Japan
who don't have the option even for a whole lot of onshore wind, they
might have floating off your wind, or they might have geothermal, or they
might have to import liquid hydrogen like they are actually doing, so I think
that that's the comparison that is the right comparison to make with wind. At
some point, Rosie, if we go a bit deeper into the technical problem
that you've depicted, there was a few weeks ago the announcement that Siemens would
pass four billion or something right offone to our buying. So have you been
able to analyze a bit what they have announced and what's the issue here and
do you foresee that other or and them would face the same type of problems.
We've been following this issue in the wind energy podcast that I co host
with a couple of other guys, Uptime Wind Energy Podcast, And when it
started out, they said, you know, I've got a little bit of
an issue. It's going to cost about a billion, and everyone's like,
WHOA a billion, that's a lot. And we've seen it grow and grow
and grow, and I think it's about five billion they're talking about now.
And I've seen up to thirty percent of the blades affected in the recent on
shore sales. Basically, they've identified two different technical problems. One is with
the blades and then yeah, in the bearings as well. They've seen particles
in the beings. That's the explanations that they've given. Maybe I can bring
it back to more generally about like what kinds of defects that we see in
in wind turbines and how they have gotten there from this trend that I was
talking about, blades getting longer and getting longer fast, and kind of also,
we've reached a point where it was pretty hard to just stretch out a
fiberglass blade. Even further, some of the consequences of the changes in blade
designs. As blades have gotten longer, you need to make the fiberglass thicker.
So composite materials when they cure, they generate heat, and so you
generally like to keep your laminatees nice and thin. But as they have gotten
really big, then they've gotten quite thick in the root region of the blade,
the part that attaches to the hub. That can cause a lot of
problems with stresses and things like that. They also they're very flexible wind turbine
blades. They can bend up to ten percent of their length towards the tower.
And so as the blades get longer, you need to take more care
to make them stiffer. So people have started adding carbon fiber often and that
introduces several problems manufacturing challenges that need to be overcome. So one of those
challenges is just you know, any time that you introduce a new material,
and it's got very different structural properties to fiberglass, so it behaves in a
different way. So you've got decades of history of how fiberglass blades behave and
know exactly you know what to look out for when you're designing a new one.
But we didn't have those decades of history when we introduced carbon fiber.
There were new manufacturing processes needed as well, and every time you change a
manufacturing process, it's a new chance for someone to do it wrong. The
wind turbine blade manufacturing is still really really manual, so you need to design
your manufacturing process so that any way that a human could get it wrong,
you need to have thought about that and made sure that they can't or that
it won't have a big effect. And then the other big thing that adding
that longer blades and the need to add carbon fiber has done is changed a
lot the way that lightning will damage your blade when it strikes, and so
lightning protection systems have had to be totally redesigned. It used to be really
similar to the way that you would put lightning protection on a building. You
just kind of put a big hunk of metal at the end of the blade,
make it really attractive place for the lightning to hit, and then it's
attached by a big thick cable all the way down the turbine into the ground
or into the ocean. But when you add carbon fiber, that's obviously conductive
and so lightning tends to want to strike that as well, So you need
to put all these extra receptors over the blade, maybe add some copper mash
to protect the carbon fiber, and all of these things just new ways to
fail, and we have seen a lot of those failures. Do you forcee
similar problems with other nms or is it's just a Semens problem. I've seen
other ones. TPI, who is a manufacturer, they do build to print
for a lot of different manufacturers, so you don't see any TPI turbines out
there, but a lot of other manufacturers have TPI blades on their turbines.
They've got some issues as well. I haven't seen details about that. But
the interesting thing about these issues is before it got announced, you know,
a lot of the work that I do in Australia is helping win farm owners
who experiencing blade defects on their blades, and you know, I work with
them and with the manufacturer to get to the bottom of why and make sure
that there's a good solution and they can be confident that there's not going to
be more problems. And Siemens Gamesa did not stand out as a company that
had particularly more problems than anybody else. I see it from every manufacturer basically,
so personally, I'll be really surprised if Siemens Gamesa are the last company
to experience a problem like this. In some ways, they're probably lucky that
it's onshore turbines that are experiencing these problems, because when you imagine if you
had the same number of turbines offshore with an issue like that, the cost
to repair or replace components offshore is just so dramatically higher because of you know,
access problems. Segue, I wanted to actually talk about offshore wind and
I want to go back to one thing, which was always Varvint who was
the founder of Nicron. He basically said fifteen years ago, he said,
listen, fish don't fly, and that was his reason for not going into
offshore wind because he didn't believe in it. I'd just love to hear your
view because I've seen this Siemens comca issue and you just said it if there's
a similar issue in offshore wind, I mean, the industry is in real
trouble. So offshore wind is actually one technology that I have changed my mind
on completely since earlier in my career, I thought it was just really expensive
and pointless, and to be honest, I wondered whether it was just a
bit of a scam from the offshore oil and gas industry to take research dollars.
But now I can see that it has a lot of potential value moving
into the future. You have to compare what is the alternative renewable energy source
that would be used if it wasn't offshore wind, and look at the cost
of that. Offshore wind is never competing against solar. The places that are
rolling out offshore wind, it's either because their land constrained that they don't have
space for more solar, or you know, don't have a good solar resource.
They probably also don't have space for more onshore wind. And then the
other factor is just the generation profile of offshore wind. A lot of cases
you'll see or higher capacity factors for offshore wind, but also generation closer to
the time when people want to use it. So I know in their projects
that they're looking at developing in Australia, their wind speeds are faster in the
afternoons and evenings, so as solar is winding down, people are coming home
and cooking dinner, plugging in their electric cars. Probably that's when prices spike
really high, and so in that sense they should get a lot higher value
for those resources. What we've seen in the past months or so are offshore
wind developers are struggling with the crisis that they are for greed, so they're
wont auction a few years ago, and now they realized that the prices they
signed in which is two law, actually when they figure out that those supply
chain was getting more expensive and interest rates were getting higher. So we saw
Ppa in New England or East of North America. In the UK, we
saw Vaton Fund who just said, okay, you know those prices, which
doesn't make sense to do it. So do you see those supply chain costs
getting fixed or is the price of off show wind just come too low and
we need to readjust to higher prices. I personally think that it has gone
too low and that we should readjust, and I think most engineers working in
the industry would also feel like that. But maybe it's just because it's a
lot more fun working in an industry where you have money to actually do good
engineering and it's not just constantly about cost out moving faster and cheaper. And
then in terms of the increased costs, it's not just interest rates, it's
also the cost of all of the materials winter Bine is made from. It's
not so dissimilar to construction industry, I think is facing similar problems where they've
sold projects and a fixed cost and then the cost of their materials has gone
up so much in the meantime that they can't deliver on those projects anymore.
Depends I guess on the details of the contracts for how they can get out
of that, but in a lot of cases they're able to stop developing the
project without too much of a penalty. There was a bit of a flurry
of activity with those first New York auctions. Everyone was just stunned by what
the prices that people were prepared to pay for the opportunity to develop those projects,
were I personally think that they missed out on some technical risks as well.
When you have so many wind farms in close proximity, then you are
going to see, you know, the upwind wind farms stealing energy from the
downwind ones, so to speak. And so I don't think that issues like
that were fully understood when people bid for them. But I also wonder if
it was a bit of a to try and get market share, So you
know, maybe they didn't really expect those to be super profitable projects, but
they just wanted the opportunity to get in early and have a track record so
that they would win future auctions where I mean, they're just going to have
to go up higher if we want to come close to meeting the targets that
people have proposed. Rosie, I'd love to hear your view on the whole
Chinese turbine manufacturers. I mean, how do you see their progress in the
last years, how do you see their future? Yeah, so that's definitely
loomed large. And when I was working for a European manufacturer, first of
all, I think everyone saw China is a huge opportunity and then later on
saw them as a huge threat. I don't think that any European manufacturers have
really made a good job of getting into the Chinese market, and now we
do see Chinese turbines a lot more installed in places that the European manufacturers would
have expected to just automatically get those sales. A lot of people would eschew
that Chinese turbines are a lower quality than European or American ones, and I
think that there is still that interpretation from financing and insurance. Probably that is
something that is having a real effect on projects, but when you look at
the data, you don't really see it. I know that you know,
all of the big European American manufacturers all have factories in China, and I
know the manufacturer I was working from. Certainly there was no lower quality coming
out of those factories compared to the other ones. And if you look at
the availability of the turbines from Chinese manufacturers, they're definitely as good as the
industry standard. Usually you'd expect to see in a contract ninety eight percent ish
availability. So don't see big differences there. But what we do see a
big difference is cost and it doesn't quite make sense when you look at it.
So when you develop a new technology, and I have led several projects
to develop new subsystems for wind turbine blades, and part of the process is
that you get together with someone from business development and figure out how much it's
going to cost and how many are going to sell, you know, to
see if you've got a good business case for it. You design your system
and you know how much it's going to cost, and then you will learn
that a Chinese competitor is selling that same product for half or a third of
what you've put it together for. And then you've got to go do the
sourcing department and they'll make a should cost model where they take every single component
in your design and come up with what would this cost if we manufactured it
in China and with the lowest possible price for everything, no brand names,
you know, everything is just spark and basement, and you'll still always see
a huge, a huge delta in what the lowest possible price that you could
expect to pay, even if you just take it for the amount of I
don't know, steel and copper that in a design, you see cheaper prices
out of China. So I guess the assumption is that there's some sort of
subsidy there. But I don't know anybody that really has a good insight for
exactly why Chinese turbines can be so much cheaper than anybody else can manage well
Charles view and Charles's always good with these visions, which is not my case.
Things we reach peak win and probably there are certain regions where you will
reach Peaquin I think of short wind that's definitely more on shore. Is very
difficult in relation to just the logistics and the size of the turbines in relation
to the local population. But that's finished on a positive note. And as
you said, what is very interesting in the wind resources is that the antique
correlation with solar, whether it's on a daily basis, because you find that
in Australia you said, but in Texas as well, and also the seasonal
part because it's mostly sunny in summer and mostly in winter. So how do
you see the future of the wind industry in the next three to five years,
knowing that the industry has kind of dig itself in a crisis where all
your nn are using money, are we going to see a consolidation. Are
we going to see a slow down in technological development? How do you see
the next three years? So I definitely don't think that we're saying pike wind,
and I really think that it would be a real tragedy if we did.
I think we need to not just the wind industry way, but you
know, the planet way, need to make sure that doesn't happen. I
mean, if you look at scenarios for one hundred percent renewable electricity grids,
they always have a lot more wind than solar in them. And even if
you increased the price of wind by a lot, you would still see that.
Because I've said a couple of times now, at the point the end
of the energy transition, wind isn't competing against solar panels, winds competing against
eventually real storage and other really expensive kinds of technologies like that. But on
the other hand, the major manufacturers have not been investing in the manufacturing capacity
that you would need to see the twenty thirty targets and beyond, and why
haven't they been investing. To me, it's obvious that they don't believe these
targets, So that we need to decide if we are actually serious about the
energy transition, and if we are, you need to give people a reason
to invest. You don't build a winter by manufacturing factory only to shut it
down in six months because your sales didn't eventuate. So the manufacturers really need
to see certainty if they're going to keep on building out more turbines, and
I think it is just really time for a shift. If governments want to
meet their targets, then they can't only look for the cheapest megawatt hour.
They need to plan out what kinds of technology they're going to need, not
just next year but into the future, and help support the industries that would
be need to supply that. So there will be some consolidation. I won't
be surprised to see some of the major manufacturers cease to exist. But I
think also we've got more of a global appetite now for countries to consider energy
security as well as just the cheapest price we're seeing. You know, a
lot of countries now have plans to make sure that they have their own secure
battery supply chain, and that's going to be the same for the wind industry
and probably eventually solar as well. Otherwise you'll miss out if you haven't secured
those those suppliers for your country's projects. Sure, I can tell you my
opinion. But my opinion is the wind industry has to stop crying and stop
looking for subsidies, and they need to go on innovation and stop going and
thinking that bigger is better, because bigger is not better. I do not
want to have an armshore wind turbine that is one hundred and fifty meters long
in terms of play hit. Nobody does. That's the reality of it.
So that's why you've got p wind in Europe. Now you have it.
That's why we've got restructuring in the industry. So you might say, okay,
offshore wind, but you know you're not going to hit the targets.
And it's not because of the targets. It's because of the fact that it's
difficult to go on that get these turbines out in the north Sea or whatever
it is in a short period of time. That's part of the issue.
Okay, So we end up on a disagreement, which is yeah, funny,
no, no, it's fine. Look, it's it's rare because generally
everybody agrees and we are a very kumbaya style or EPISERD, but somehow it
reflects the state of this industry, in my opinion, needs to reset.
Set agree. I agree on that every set it's the renewable industry needs to
reset. Actually it's not just a windiness. I agree with your ard that
wind turbines don't need to get bigger either. It's not necessarily cheaper to make.
A lot of people think that, you know, the laws of scaling
mean that bigger is cheaper for wind turbines, and that's not true. Some
factors that make a wind turbine cheaper as it gets bigger, and some factors
that make it cheaper as it stays smaller. So I don't think that we
need to keep on pushing to bigger and bigger turbines, and I don't think
we should. I think we have a good point now where we can just
focus on rolling out rapidly, and the surviving NMS needs to make money because
you can't build an industry based on the manufacturers or losing money. It's not
studid. So the NM needs to focus on making money, which means longer
series, which means fine, we're not going to change those design for three
years. We need to stabilize the design of longer series and have a real
conversation with the developer. Answer, guys, this is the model and we're
not going to touch it for three years. That's the way to reduce the
costs while increasing the margins. I agree with that. Okay, so if
we will agree, we can't tell Rosie. Thank you so much for coming
on the show. That's a great pleasure. We love your YouTube channel,
and we put over this is a real links so the wind industry see it
as a future. Of course it does. Bye, Thanks so much for
having me. But Rosie is a bit more bullish on the wind industry than
you are. But bizarrely, I think I'm with you on this one.
She is, but she is because she's part of the industry. That's what
I would say. And sometimes it's when you're in the industry itself, you're
you don't really see what's going on. Because I take something from what she
said, which is I thought it was brilliant to hear her explaining really what
was going on with the blades and the fact that you know, it's a
move from glass fiber to mixing in carbon fiber and there's just probably pushing things
a little bit too quick to market. But I'll tell you what I took
out of it. This is an industry wide problem. So the blade issue
is not just a Semen's gomesso. And I think it's across the industry that's
concerning. And I think if it goes offshore, wow, that's a disaster.
So so let's hope it doesn't. But I do fear that the technical
issues and the unshore blades are probably much worse. We think. That's what
I take of it. And that's not even talking about the market. That's
really talking from a technical level. That thereshes with some of the terribines out
there. It's really critical because until two or three years ago, any developers
okay Wind, you know, okay, you know fine, I can sleep
at night. Everything's going to be fine. And now if you start having
some technical doubts inside the finance community, that's gonna slow the investment process.
They're going to ask for additional check, additional test, more due diligence,
and you're just gonna make the whole thing more costly. That's true, that's
a good way of partner. I don't know if it's going to be peak
wind, you know, we've been calling peak coal or peak gas or peak
oil, and more times than not we've been proven wrong. But what I
want to say is the valuation of the wind industry was the volution of a
gross industry, and I think they need to be set and concentrate on being
a value industry, meaning the Semens, the Vestas, the ge They need
to make money. Everybody needs to make money, not talk about the future,
make money every quarter. I agree with you totally on that, and
in fact, if you look at the industry over the last twenty years,
it's been boom and bust, boom and bust, boom and bust. There's
no doubt that has to be sorted out. And I think there is another
pressure here that is the Chinese. And it's not that the Chinese are going
to necessarily go into Europe or the US. What they're going to do.
They're going to go to all the other markets where Vestas and Semens, Camess
and whatever we're selling, and they're going to be outbid. That's part of
it. And I think the other thing that I want to say is the
best wind sights have been taken in the Western world. So what you're going
to do you're going to reap power and you repower a bigger urb and repowering
is harder. That's why I'm cautious about the market. It's not to say
pig win sounds to be really really negative. It's not. It's we're going
to continue growing wind every year. So in other words, of a port
of electricity that comes from wind, it's going to grow every year. We're
gonna have more killer what's coming from wind. But it's not the rate of
growth stopped, which means it's with you know, we're in a tough,
tough situation for the industry. That normally means you have restructuring and consolidation all
that. I think that's what's gonna happen. Yeah, the big reset,
the big reset. Well well said, that's said. Okay. We like
to thank Rosie for coming on the show. She's great and everybody should tune
in on our YouTube channel. And she also participate to a wind podcast which
is interesting called a Time. We thank our partners for the show, Win
Your Hop, Love when You're Up Rate Association and of course Expo good Friends,
excellent Swiss Utility and Trading business and trading business, great traders, good
Lauren Well. I look forward to chatting two weeks time. Absolutely, thank
you for listening to Redefining Energy. Don't forget to rate the show and subscribe
on Apple Podcast, Spotify, or the platform of your choice.