Wind Turbine Service Market in Europe 2014-2018

2014-2018 Wind Turbine Service Market in Europe

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01. Executive Summary .............................................. 1

02. List of Abbreviations .............................................. 2

03. Scope of the Report .............................................. 3

03.1 Market Overview ................................................................. 3

03.2 Service Offerings ................................................................. 3

04. Market Research Methodology ........................... 5

04.1 Market Research Process ................................................... 5

04.2 Research Methodology ...................................................... 5

05. Introduction ........................................................... 7

06. Market Landscape ................................................ 9

06.1 Market Overview ................................................................. 9

06.2 Global Wind Turbine Service Market ............................... 10

06.2.1 Market Size and Forecast by Revenue................................................ 10

06.3 Market Size and Forecast ................................................. 11

06.3.1 Market Size and Forecast by Revenue................................................ 11

06.4 Five Forces Analysis .......................................................... 12

07. Market Segmentation by Service Provider ....... 14

07.1 Segmentation by Service Provider 2013 ......................... 14

07.2 Segmentation by Service Provider 2018 ......................... 15

07.3 Wind Turbine Service Market in Europe by OEMs .......... 17

07.3.1 Market Size and Forecast ....................................................................... 17

CONTENTS

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07.4 Wind Turbine Service Market in Europe by ISPs ............. 18


07.5 Wind Turbine Service Market in Europe by In-

house Services Firms ......................................................... 19


08. Market Segmentation by Technology ............... 20

08.1 Wind Turbine Service Market in Europe by

Technology 2013 ............................................................... 20


Technology 2018 ............................................................... 21


Onshore Segment ............................................................. 23



Offshore Segment ............................................................. 24


09. Key Leading Countries ....................................... 25

09.1 Germany ............................................................................ 25

09.2 Spain ................................................................................... 25

09.3 The UK ................................................................................. 26

09.4 Country-wise Segmentation for Wind Turbine

Service Market in Europe 2013 ........................................ 27

10. Buying Criteria ..................................................... 28

11. Market Growth Drivers ........................................ 29

12. Drivers and their Impact ..................................... 32




13. Market Challenges ............................................. 33

14. Impact of Drivers and Challenges ..................... 35

15. Market Trends ...................................................... 36

16. Trends and their Impact ..................................... 38

17. Vendor Landscape ............................................. 39

17.1 Competitive Scenario ....................................................... 39

17.1.1 Key News ................................................................................................... 39

17.1.2 Mergers and Acquisitions ....................................................................... 40

17.2 Other Prominent Vendors ................................................. 40

18. Key Vendor Analysis ........................................... 41

18.1 Enercon GmbH .................................................................. 41

18.1.1 Business Overview .................................................................................... 41

18.1.2 Business Segmentation ........................................................................... 41

18.1.3 Key Information ........................................................................................ 42

18.1.4 SWOT Analysis ........................................................................................... 43

18.2 Gamesa Corporación Tecnológica S.A. ........................ 44



18.2.3 Sales by Region ........................................................................................ 45

18.2.4 Key Information ........................................................................................ 45

18.2.5 SWOT Analysis ........................................................................................... 46

18.3 Nordex SE ........................................................................... 47



18.3.3 Key Business Strategies ........................................................................... 47




18.3.4 Key Information ........................................................................................ 48

18.3.5 SWOT Analysis ........................................................................................... 49

18.4 REpower Systems SE .......................................................... 50


18.4.2 Key Information ........................................................................................ 50

18.4.3 SWOT Analysis ........................................................................................... 51

18.5 Siemens AG ....................................................................... 52



18.5.3 Key Information ........................................................................................ 53

18.5.4 SWOT Analysis ........................................................................................... 54

19. Other Reports in this Series ................................. 55




Exhibit 1: Market Research Methodology ....................................... 5

Exhibit 2: Global Wind Turbine Service Market 2013-2018

(US$ billion) ...................................................................... 10

Exhibit 3: Wind Turbine Service Market in Europe 2013-

2018 (US$ billion) .............................................................. 11

Exhibit 4: Wind Turbine Service Market in Europe by

Service Providers 2013 .................................................... 14


Service Providers 2018 .................................................... 15


Service Provider 2013-2018 ........................................... 16

Exhibit 7: Wind Turbine Service Market in Europe by OEMs

2013-2018 (US$ billion) .................................................... 17

Exhibit 8: Wind Turbine Service Market in Europe by ISPs

2013-2018 (US$ billion) .................................................... 18

Exhibit 9: Wind Turbine Service Market in Europe by In-

house Services Firms 2013-2018 (US$ billion) .............. 19

Exhibit 10: Wind Turbine Service Market in Europe

Segmentation by Technology 2013 ............................... 20

Exhibit 11: Wind Turbine Service Market in Europe

Segmentation by Technology 2018 ............................... 21


Technology Segmentation 2013-2018 ......................... 22

EXHIBITS





Onshore Segment 2013-2018 (US$ billion) ..................... 23


Offshore Segment 2013-2018 (US$ billion) ..................... 24

Exhibit 15: Country-wise Segmentation for Wind Turbine

Service Market in Europe 2013 ....................................... 27

Exhibit 16: Wind Energy Installation in the EU 2008-2012

(GW) ................................................................................. 30

Exhibit 17: Offshore Wind Installation Trend in Europe 2008-

2012 (MW) ........................................................................ 37

Exhibit 18: Business Segmentation of Enercon GmbH .................... 41

Exhibit 19: Business Segmentation of Gamesa Corporación

Tecnológica S.A. .............................................................. 44

Exhibit 20: Sales by Region of Gamesa Corporación

Tecnológica S.A. .............................................................. 45

Exhibit 21: Business Segmentation of Nordex SE ............................. 47

Exhibit 22: Key Business Strategies of Nordex SE ............................. 48

Exhibit 23: Business Segmentation of Siemens AG .......................... 52




01. Executive Summary

Market Size 2013: US$ 2.70 billion

2018: US$ 4.16 billion

Market Growth Rate 2014: 6.88 percent

2018: 11.67 percent

CAGR 9.02 percent

Key Leading Countries

Germany: 39.50 percent

Spain: 26.50 percent

UK: 12.50 percent

Key Customer Segments Power Utilities

IPPs

Key Market Drivers

Aging Wind Farms

Increasing Installation of Wind Farms in the EU

Preference of Long-term Contracts for Wind Turbine Services

Rising Profit Margin due to High Entry Barriers in the Market

Key Market Challenges

Lack of Skilled Workforce

Financial Risk

Lack of Offshore Support Infrastructure

Uncertainty of Global Economic Conditions

Key Market Trends

Increasing Investment by OEMs

Increase in Technological Advancement

Growing Offshore Wind Farms in Europe

Key Buying Criteria

Warrant Period

Cost

Quality and Time

Flexibility

Key Vendors

Enercon GmbH

Gamesa Corporación Tecnológica S.A.

Nordex SE

REpower System SE

Siemens AG




02. List of Abbreviations

APAC - Asia Pacific

CAGR - Compound Annual Growth Rate

EMEA - Europe, the Middle East, and Africa

EU - European Union

GHG - Greenhouse Gas

GW - Gigawatt

IPPs - Independent Power Producers

ISPs - Independent Service Providers

MW - Megawatt

OEMs - Original Equipment Manufacturer

O&M - Operation and Maintenance




03. Scope of the Report

03.1 Market Overview

This report covers the present scenario and the growth prospects of the Wind Turbine Service

market in Europe for the period 2013-2018. The report mainly covers two technology segments:

onshore and offshore wind energy generation, with a detailed study of the service providers. The

market is highly fragmented with the presence of a large number of small and large vendors.

Therefore, the report does not provide the market share of the vendors; it only lists the major

vendors in the market. In addition, the report discusses the major drivers that influence the

growth of the Wind Turbine Service market in Europe. It also outlines the challenges faced by the

vendors and the market at large, as well as the key trends that are emerging in the market.

03.2 Service Offerings

Some of the services offered by the major vendors in the Wind Turbine Service market in Europe

[Keywords] are listed below:

Company Service Offered

Enercon GmbH Maintenance and Repair

System Support Remote Data Monitoring

Technical Support to Turbines

Operator Training

Technical and Commercial issues

Gamesa Corporación

Tecnológica S.A.

Ageeing Fleet Solutions

O&M Product and Services

Nordex SE Inspection and Maintenance

Inspection of Safety Equipment

Repair Services

Spare Part Deliveries

Modernization

Technical Enhancement

Condition Monitoring Systems

Customer Training

Remote Monitoring and Remote Management

REpower Systems SE Maintenance Service for Wind Power Plants

Spare Parts Storage

Training




Maintenance for Onshore Wind Power Plants

Online Troubleshooting

Siemens AG Service Programs

Diagnostics

Modernization and Upgrades

Offshore Service Management

Wind Turbine Operator Training




04. Market Research Methodology

04.1 Market Research Process

TechNavio has collected key data related to the Wind Turbine Service market in Europe and

analyzed this data using a variety of methods. The market dynamics have been ascertained

following a detailed study of the micro, meso, and macroeconomic indicators of the market.

04.2 Research Methodology

This report is based on in-depth qualitative and quantitative analyses of the Wind Turbine Service

market in Europe. The quantitative analysis involved the application of various projection and

sampling techniques. The qualitative analysis involved primary interviews, surveys, and vendor

briefings. The data gathered as a result of these processes was validated through experts'

opinions.

Exhibit 1: Market Research Methodology

Source: TechNavio Analysis

Wind Turbine Service

Market in Europe

[Keywords]




Based on the research results and technical insights thus gathered, TechNavio analysts have

provided a comprehensive analysis of the varied aspects of the market. The impact of global

economic conditions and other macroeconomic indicators were also considered while

assessing the market.




05. Introduction

Wind is a renewable resource for generating power with zero carbon emissions. Wind energy has

emerged as one of the world's fastest growing renewable energy generation industries. Energy

generated from wind is cost competitive with traditional energy sources. This form of energy

generation is popular in areas that have high scope to generate wind energy. Europe is one of

the major markets for wind power generation and with increasing installation of wind turbines

across Europe, the demand for service and maintenance is also increasing. The service and

maintenance of wind farms is highly capital intensive as it requires a highly-skilled workforce,

technical know-how, and related support infrastructure. Wind turbine servicing includes both

onshore and offshore servicing, and the services offered are: Periodic Inspection and Testing,

Regular Maintenance, Preventive Maintenance, Repair and Replacement of Wind Turbine

Components, and Certification and Quality Testing.

The Wind Turbine Service market in Europe, which has many services on offer, is expected to

grow at a moderate rate during the period 2013-2018. The majority of the growth stems from

countries with high wind energy generation potential and those with wind turbine installations

such as Germany, Spain, the UK, and Italy. Currently, a major part of the market growth is

contributed by the OEMs. The overall market is expected to grow at a CAGR of 9.02 percent

during the forecast period.

The growth of the Wind Turbine Service market in Europe is driven by several factors. One of the

main drivers in this market is the aging wind farms of Europe. Currently, many wind farms in

Europe require services so as to maintain a consistent level of efficiency. This increased

requirement for servicing from the wind farms has propelled the growth of the market during the

forecast period. Another major driver in this market is the increasing installation of wind energy

facilities across Europe.

Despite the presence of several drivers for this growing market, the growth of the Wind Turbine

Service market in Europe faces some serious challenges. One of the major challenges in this

market is the lack of skilled workforce. The lack of skilled workforce in the market has had a

negative impact, resulting in a drastic decline in the revenue of the vendors in the recent past.

Another major challenge is the financial risk that accompanies an investment in this industry.

Despite the presence of impeding factors such as the lack of skilled workforce and financial risk,

the Wind Turbine Service market in Europe shows immense potential to grow moderately during

the forecast period due to some emerging trends that are expected to exert a positive influence

on the market during the forecast period. One such trend is the increasing investment by OEMs.




OEMs are signing contracts with wind farm owners for typically 2-5 year periods to retain the

market share for a specific period of time. Another key trend that the market is expected to

witness is an increase in technological advancement.




06. Market Landscape

06.1 Market Overview

Wind Turbine Service Market in Europe

Technology

Onshore Segment

Offshore

Segment

Service Providers

OEMs

ISPs

In-house Service Firms

Key Countries

Germany

Spain

UK




06.2 Global Wind Turbine Service Market

06.2.1 Market Size and Forecast by Revenue

The Global Wind Turbine Service market was valued at US$5.59 billion in 2013 and is forecast to

reach US$9.21 billion by 2018, growing at a CAGR of 10.51 percent.

Exhibit 2: Global Wind Turbine Service Market 2013-2018 (US$ billion)


The Global Wind Turbine Service market is expected to grow at a steady rate during the forecast

period. Europe is the largest market for wind turbine services due to the high number of wind

power installations in this region. The various service providers in this market are the following:

OEMs, ISPs and In-house service firms. Also, the increasing demand from end-users such as IPPs

and Utilities is likely to drive the market during the forecast period.




06.3 Market Size and Forecast

06.3.1 Market Size and Forecast by Revenue

The Wind Turbine Service market in Europe was valued at US$2.70 billion in 2013 and is forecast to

reach US$4.16 billion by 2018, growing at a CAGR of 9.02 percent.

Exhibit 3: Wind Turbine Service Market in Europe 2013-2018 (US$ billion)


The Wind Turbine Service market in Europe is expected to witness moderate growth during the

forecast period. The moderate growth of the market is reflective of the expected wind energy

installations in Europe. OEMs are the major revenue contributors for the Wind Turbine Service

market in Europe. Apart from OEMs, the other service providers in the market are ISPs and In-

house service firms. The Offshore Wind Energy segment is expected to increase its contribution in

the Wind Turbine Service market in Europe as currently there is a lot of focus on the offshore

installation of wind turbines. In addition, regular monitoring and servicing of these turbines is

more challenging for offshore wind turbines when compared to onshore wind turbines. This in

turn is expected to propel the growth of the market during the forecast period.




06.4 Five Forces Analysis

Threat of Rivalry

(High)

Competition among the existing players is high in

Europe. The competition between OEMs is intense and

companies are competing to increase their market share for wind turbine

services.

Bargaining Power of Suppliers

(Moderate)

The bargaining power of suppliers is moderate as

limited number of suppliers are operating in the

market.

Bargaining Power of Buyers

(Moderate)

The bargaining power of buyers is moderate as there

are only a limited number of third party service providers

other than the OEM's operating in the market.

Threat of New Entrants

(Low)

The probability for new players entering this market is low

because of the strong positions that leading players

are holding. A high entry barrier such as high intial

investment and technological know-how also does not

attract new entrants.

Threat of Substitutes

(Low)

There are no direct substitutes for wind services . For wind farm services, wind farm

owners and utilities have to opt for service providers who

are limited in number.




Key

The impact of the Five Forces Analysis is graded on the basis of the intensity and duration of their

impact on the current market landscape. The magnitude of the impact has been categorized

as described below:

Low - Negligible or no impact on the market landscape

Moderate - Medium-level impact on the market

Moderately High - Significant impact on the growth of the market

High - Very high impact, with radical influence on the growth of the market




07. Market Segmentation by Service Provider

07.1 Segmentation by Service Provider 2013

In 2013, the OEMs dominated the Wind Turbine Service market in Europe with a 62 percent share

of the overall revenue. OEMs dominate this market due to their long-term contract with IPPs and

utilities. OEMs were followed by ISPs with a share of 26 percent, and In-house service firms with a

12 percent market share in 2013.

Exhibit 4: Wind Turbine Service Market in Europe by Service Providers 2013





07.2 Segmentation by Service Provider 2018

By 2018, OEMs are expected to continue to dominate the market with a share of 59.5 percent.

This segment is expected to be followed by ISPs with a 27.5 percent market share. Further, In-

house service firms are expected to have a steady market share, up by 1 percent, from 12

percent in 2013, to 13 percent in 2018.

Exhibit 5: Wind Turbine Service Market in Europe by Service Providers 2018





Exhibit 6: Wind Turbine Service Market in Europe by Service Provider

2013-2018





07.3 Wind Turbine Service Market in Europe by OEMs

07.3.1 Market Size and Forecast

The OEMs for the Wind Turbine Service market in Europe was valued at US$1.67 billion in 2013 and

is expected to reach US$2.48 billion by 2018, growing at a CAGR of 8.13 percent.

Exhibit 7: Wind Turbine Service Market in Europe by OEMs

2013-2018 (US$ billion)


The OEMs are the major service providers for IPPs and utilities in Europe. The reason for OEMs

commanding a large market share is owed to the warranty that they give IPPs and utilities at the

time of purchase of wind farm components. Also, many OEMs are entering into long-term

contracts in the 5-25 year range which will help them secure long-term financing from IPPs and

utilities. It is expected that the emerging technological advancements will improve the return on

investment of OEMs.




07.4 Wind Turbine Service Market in Europe by ISPs


The ISPs for the Wind Turbine Service market in Europe was valued at US$0.70 billion in 2013 and is

expected to reach US$1.14 billion by 2018, growing at a CAGR of 10.25 percent.

Exhibit 8: Wind Turbine Service Market in Europe by ISPs

2013-2018 (US$ billion)


The ISP is one of the fastest growing segments in the Wind Turbine Service market in Europe. It is

expected to have a good market share during the forecast period as the quality and

technology of service provided by ISPs are likely to increase, thus helping them step up their

market share during the forecast period.




07.5 Wind Turbine Service Market in Europe by In-house Services Firms


The In-house Service Firms for the Wind Turbine Service market in Europe was valued at US$0.32

billion and is expected to reach US$0.54 billion by 2018, growing at a CAGR of 10.78 percent.

Exhibit 9: Wind Turbine Service Market in Europe by In-house Services Firms

2013-2018 (US$ billion)


Currently, In-house service firms account for a very small share of the Wind Turbine Service

market in Europe due to the lack of expertise required for wind turbine services. Another major

reason is the cost and risk associated with the Wind Turbine Service market. It is expected that

many wind farm operators will begin to prefer in-house wind services thus reducing the

operating cost and increasing the overall returns. This indicates that the share for in-house

service firms will increase at a good rate during the forecast period.




08. Market Segmentation by Technology

08.1 Wind Turbine Service Market in Europe by Technology 2013

In terms of technology, the Onshore segment dominated the Wind Turbine Service market in

Europe in 2013 with a share of 90 percent. The major reason for the domination of the Onshore

Segment is the high onshore wind energy potential in Europe. The Onshore segment was

followed by the Offshore segment with a 10 percent share in 2013.

Exhibit 10: Wind Turbine Service Market in Europe Segmentation by Technology 2013





08.2 Wind Turbine Service Market in Europe by Technology 2018

The Onshore segment is expected to dominate the Wind Turbine Service market in Europe with a

share of 75 percent in 2018. The Onshore segment is expected to be followed by the Offshore

segment with a share of 25 percent in 2018. It is expected that offshore wind installations in

Europe will increase with the rapid advancement in technology, also huge offshore wind

potential will help in increasing the market for wind turbine service in Europe.

Exhibit 11: Wind Turbine Service Market in Europe Segmentation by Technology 2018





Exhibit 12: Wind Turbine Service Market in Europe by Technology Segmentation

2013-2018





08.3 Wind Turbine Service Market in Europe by Onshore Segment


The Onshore segment for the Wind Turbine Service market in Europe was valued at US$2.43

billion in 2013 and is forecast to reach US$3.12 billion by 2018, growing at a CAGR of 5.12

percent.

Exhibit 13: Wind Turbine Service Market in Europe by Onshore Segment 2013-2018

(US$ billion)


The Onshore segment is expected to witness rapid growth during the forecast period. The brisk

growth of the market is mainly attributed to the increasing need for renewable energy that can

help improve the quality of the environment and help reduce the global carbon footprint. Being

a service industry, the market growth is totally dependent on the installation of wind energy

generators. Moreover, market vendors are investing large sums of money in R&D activities to

develop technology for wind turbine service that can reduce the operating cost of the vendors.

This in turn is expected to propel the growth of the market during the forecast period.




08.4 Wind Turbine Service Market in Europe by Offshore Segment


The Offshore segment for the Wind Turbine Service market in Europe was valued at US$0.27

billion in 2013 and is forecast to reach US$1.04 billion by 2018, growing at a CAGR of 30.95

percent.

Exhibit 14: Wind Turbine Service Market in Europe by Offshore Segment 2013-2018

(US$ billion)


The Offshore segment will grow at a rapid rate due to the increased installation of offshore wind

energy during the period 2008-2012. This will in turn help the Wind Turbine Service market to grow

during the forecast period. Also, it is expected that during the forecast period, offshore wind

installations will increase due to the high wind energy potential in Europe in addition to

technological advancements. Another major driver for offshore wind installation is the need to

shift focus from traditional power generation to renewable sources. This increase in the

installation of wind energy generators will result in market growth for wind turbine services for the

Offshore segment.




09. Key Leading Countries

The leading countries in the Wind Turbine Service market in Europe in 2013 are as follows:

09.1 Germany

Germany was a major contributor in the Wind Turbine Service market Europe in 2013,

accounting for 39.50 percent of the market. Germany is expected to continue to be the largest

market during the forecast period and has a number of projects in the planning and

development phase.

09.2 Spain

Spain has seen rapid growth in the past decade in the wind power installation sector. In fact,

theoretically, Spain has good potential for generating wind energy, and it was the second

largest market share holder in the Wind Turbine Service market in Europe in 2013, accounting for

26.50 percent of the total market.

Major Driver

•Increasing wind energy installation in the country

Major Challenge

•Financial risk

Major Trend

•Increasing domestic competition

The UK

12.50 percent

Spain

26.50 percent Germany

39.50 percent




09.3 The UK

The UK is the third largest Offshore Wind Energy market in Europe and it accounted for 12.50

percent of the Wind Turbine Service market in Europe in 2013.

Major Driver

•Huge wind energy potential

Major Challenge

•Lack of proper technology

Major Trend

•Increasing demand for wind energy

Major Driver

•Technological advancement

Major Challenge

•High cost of wind service equipment

Major Trend

•Increasing investment in R&D




09.4 Country-wise Segmentation for Wind Turbine Service Market in Europe 2013

In 2013, Germany dominated the Wind Turbine Service market in Europe with a 39.50 percent

share of the overall market in the region. One of the major reasons for Germany's dominance is

the increasing installation of wind energy farms in the country. Germany was followed by Spain

with a share of 26.50 percent, the UK with 12.50 percent, and Italy with 12 percent. Other

countries accounted for 9.50 percent of the market share in 2013.

Exhibit 15: Country-wise Segmentation for Wind Turbine Service Market in Europe

2013





10. Buying Criteria

Parameter Details End-user Segments Significance Attached

Warranty

Period

Refers to the warranty

period provided by the

OEMs to the end-users

Power Utilities

IPPs

Cost

Refers to the overall cost

charged by service

providers to the end-users

Power Utilities

IPPs

Quality and

Time

Refers to the quality and

timeliness of the service

provided by the service

providers to the end-users

Power Utilities

IPPs

Flexibility

Refers to the ability to

upgrade or repair the

component of the wind

farm during a given

environmental condition

Power Utilities

IPPs

Key

The impact of the buying criteria is graded on the basis of the intensity and duration of their

impact on the current market landscape. The magnitude of the impact has been categorized

as described below:




Low High 1 2 3 4 5

Low High 1 2 3 4 5

Low High 1 2 3 4 5

Low High 1 2 3 4 5

Low High 1 2 3 4 5

Low High 1 2 3 4 5

Low High 1 2 3 4 5

Low High 1 2 3 4 5




11. Market Growth Drivers

The growth of the Wind Turbine Service market in Europe is driven by several factors. One of the

main drivers in this market is the aging wind farms in Europe. Currently, many wind farms in

Europe require servicing so as to maintain a consistent level of efficiency. This increased

requirement for services by the wind farms will propel the growth of the market during the

forecast period. Another major driver in this market is the increasing installation of wind energy

facilities across Europe.

Some of the key drivers of the Wind Turbine Service market in Europe are discussed below:

Aging Wind Farms



Rising Profit Margin due to the High Entry Barriers in the Market

Aging Wind Farms

The aging infrastructure of wind farms in Europe is one of the major drivers for the growth of the

Wind Turbine Service market in Europe. As aging wind farms will require service and

maintenance for components such as gearbox, rotor, yaw motor, yaw drives, controller, and

brakes, the market for wind turbine services in Europe is expected to increase. These

components require continuous service so as to avoid component failure during the operational

life cycle of the equipment. Wind farm components require timely services to improve output

and efficiency; timely service will also avoid expensive repair cost resulting in lower operating

costs. Thus, aging wind farms will contribute toward the growth of the Wind Turbine Service

market in Europe.


Hazardous GHG emissions that threaten the Earth’s atmosphere and thereby its climate stability

are increasing at an alarming rate. GHG emissions can be reduced to a great extent with the

usage of alternative sources of energy. Since wind energy is one of the most abundant sources

of alternative/renewable energy, it can be used to generate power. The increasing use and

installation of wind energy farms in Europe will drive the Wind Turbine Service market in Europe.

Every wind farm will require a service of its components during its operational life time to avoid

the failure and replacement of its components. Hence, the increasing installation of wind energy

farms in the EU will drive the growth of Wind Turbine Service market in Europe. The projected

growth of installations of wind energy facilities in the EU in 2008-2012 is shown in the exhibit

below:




Exhibit 16: Wind Energy Installation in the EU 2008-2012 (GW)



Many OEMs across Europe are securing long-term service contracts for wind farms/turbines to

maintain a stable cash flow during volatile market conditions. Also, these long-term contracts will

assure wind farm owners of performance guarantee and predictable maintenance costs. Long-

term contracts will ensure revenue for OEMs and also increase the market for wind turbine

service in Europe. This long-term plan can be applied for warranty contracts or for full service

contracts, the tenure for which can be 5-25 years for both new and existing customers. For

instance, Vestas has secured a five-year service agreement from ENMAX Energy Corporation for

the Kettles Hill Wind Farm which guarantees an energy-based availability and also ensures the

turbines are in good shape. This gives the owner a guarantee of performance of the wind farms

and ensures revenue for OEMs. Therefore, long-term contracts for wind turbine service will drive

the market for the Wind Turbine Service market in Europe.

Rising Profit Margin due to the High Entry Barriers in the Market

Profit margins for existing vendors in this sector are high as there are limited vendors in the market

for wind turbine servicing due to high entry barriers which gives them pricing power. High initial

investment, technological know-how, and skilled labor are some of the reasons for the high entry

barriers in this market. Currently, service provider companies are seeing good profit margins and

this is likely to increase as many wind farms are coming out of their warranty periods, giving

vendors the opportunity to secure long-term contracts and ensure high profitability. Also, these




vendors gain the trust of IPPs and utilities which gives them confidence to take the service

contracts during a particular course of time.




12. Drivers and their Impact

Driver Impact on End-user Category

Utilities IPPs

Aging Wind Farms

Increasing Installation of

Wind Farms in the EU

Preference of Long-term

Contracts for Wind Turbine

Services

Rising Profit Margin due to

High Entry Barriers in the

Market

Driver Impact on Geography

Europe

Aging Wind Farms z

Increasing Installation of

Wind Farms in the EU

Preference of Long-term

Contracts for Wind Turbine

Services

Rising Profit Margin due to

High Entry Barriers in the

Market

Key

The impact of the drivers is graded on the basis of the intensity and duration of their impact on

the current market landscape. The magnitude of the impact has been categorized as

described below:


Medium - Medium-level impact on the market


Low High 1 2 3 4 5

Low High 1 2 3 4 5

Low High 1 2 3 4 5

Low High 1 2 3 4 5

Low High 1 2 3 4 5

Low High 1 2 3 4 5

Low High 1 2 3 4 5

Low High 1 2 3 4 5

Low High 1 2 3 4 5

Low High 1 2 3 4 5

Low High 1 2 3 4 5

Low High 1 2 3 4 5




13. Market Challenges

Despite the presence of several drivers, the growth of the Wind Turbine Service market in Europe

faces some serious challenges. One of the major challenges in this market is the lack of skilled

workforce. The lack of skilled workforce in the market has had a negative impact, resulting in a

drastic decline in the revenue of the vendors in the recent past. Another major challenge is the

financial risk that accompanies an investment in this industry.

Some of the key challenges in the Wind Turbine Service market in Europe are discussed below:


Financial Risk




The lack of skilled workforce is one of the major challenges for the Wind Turbine Service market in

Europe. The service of wind farms/turbines requires highly-skilled labor and expertise; this

expertise is majorly possessed by experienced vendors in the market. Regional and local vendors

find it difficult to provide the required service within the specified time while maintaining

minimum quality standards. This lack of skilled workforce gives an added advantage to

established players; in turn giving them pricing power due to the lack of competitors in the

market. Due to high pricing many small-scale IPPs do not get timely services of their wind farms

as it requires high investment. Hence, the lack of skilled workforce is hampering the growth of

Wind Turbine Service market in Europe.

Financial Risk

The service of wind farms/turbines requires huge investments by the service providers, especially

for offshore wind farms, where different types of infrastructure and services are required. The cost

and return on investment on the service depends on global economic conditions,

environmental issues, and right technological know-how. The service providers are responsible

for all the costs incurred for the service of the wind farm/turbine during the contract life cycle.

Service providers work with a financial risk, as payments are made to them only after the service

is satisfactorily rendered. And they also have to secure financing for the project from financial

institutes such as banks before the project commences, thus increasing the liability for the

service providers.





The lack of offshore support infrastructure is another major challenge in Wind Turbine Service

market in Europe. An offshore wind farm service requires a high level of investment and

infrastructure. The infrastructure requires port infrastructure, vessel availability, and engineering

services. Many local and regional vendors do not possess these facilities as the infrastructure is

highly capital intensive, therefore, many large and established vendors dominate the Offshore

Wind Turbine Services market. Also, offshore wind turbine servicing requires scheduling as port

and vessels are limited and they have to be available during the period when the service is

required.


The uncertainty of the global economic conditions poses a considerable risk to the Wind Turbine

Service market in Europe. Moreover, financial markets have become volatile due to fluctuating

global economic conditions. This could reduce demand for wind farm/turbine services due to

the high investment required during an uncertain economic period. Furthermore, deteriorating

economic conditions are expected to have a negative influence on organizational operations

with respect to supply and value chains. Hence, the uncertainty of global economic conditions

is a major challenge to the growth of the market during the forecast period.




14. Impact of Drivers and Challenges

Key

The impact of the drivers and challenges is graded on the basis of the intensity and duration of

their impact on the current market landscape. The magnitude of the impact has been

categorized as described below:



Moderately High - Significant impact on the growth of the market





15. Market Trends

Despite the presence of serious challenges, the Wind Turbine Service market in Europe shows

immense potential to grow moderately during the forecast period due to some emerging trends

that are expected to exert a positive influence on the market during the forecast period. One

such trend is the increasing investment by OEMs. OEMs are signing contracts for typically 2-5

year periods to retain the market share for a specific period of time. Another key trend that the

market is expected to witness is an increase in technological advancement.

Some of the major trends in the Wind Turbine Service market in Europe are discussed below:





Increasing investment by OEMs is one of the major trends being witnessed in the market. Some

OEMs are attempting to enhance their own existing technology and invest in new technology to

reduce onshore logistics costs. Many large OEMs are entering into partnerships with local ISPs to

maintain a flexible and efficient manpower structure, while reducing costs with regard to

logistics. By investing in technology and local ISPs, the OEMs are attracting the IPPs and utilities to

enter into long-term contracts for service with OEMs. This not only ensures long-term cash flow for

the OEMs but also ensures the long-term project finance, as financiers are increasingly

demanding long-term contracts that reduce the cash volatility risk and guarantee stable returns

to the financiers.


Over the years, there has been a tremendous increase in technological advancements such as

the use of direct drive turbine technology, which has a high cost-saving potential by eliminating

the gearbox, which is the major cost-incurring component when it comes to the service of wind

farms/turbines. Many vendors are moving toward direct drive turbines due to the failure of

gearboxes during past couple of years. The profit margins of the service provider will

consequently increase as the cost incurred on the repair of gearboxes will be eliminated by the

use of direct drive turbines. Direct drive turbines will reduce the risk for service providers as

regular repairs need not be undertaken. Hence, technological advancements are expected to

propel the growth of the Wind Turbine Service market in Europe during the forecast period.





The Offshore Wind Energy sector in Europe has grown at a rapid rate during the period 2008-

2012, at a CAGR of 35.2 percent. The cumulative installed capacity of offshore wind energy in

Europe reached 4,995 MW in 2012 from 1,496 MW in 2008. The growth in the Offshore Wind

Energy sector will drive the market for wind turbine services in Europe as these offshore wind

farms will require continuous service for all their components during the wind farm's life cycle.

Also, the servicing of offshore wind farms requires huge investment by both the service provider

and the IPPs because these wind farms require port infrastructure, vessels, and expert

engineering services. Hence, the growth of the strong Offshore Wind Energy sector in Europe will

increase the market for the Wind Turbine Service market in Europe. The increasing offshore

installation of wind energy farms in Europe in 2008-2012 is shown in the exhibit below:

Exhibit 17: Offshore Wind Installation Trend in Europe 2008-2012 (MW)





16. Trends and their Impact

Key

The impact of the trends is graded on the basis of the intensity and duration of their impact on

the current market landscape. The magnitude of the impact has been categorized as

described below:







17. Vendor Landscape

17.1 Competitive Scenario

The Wind Turbine Service market in Europe has a number of small and large vendors across

Europe. The market is characterized by the presence of well-diversified international, regional,

and local vendors. Local or regional vendors dominate the market in several developing and

underdeveloped countries that have small capacity wind farms; thereby the competition

among the vendors is increased. The Wind Turbine Service market in Europe is expected to

witness rapid growth in the future due to the growing onshore and offshore wind energy

installation across Europe.

17.1.1 Key News

October 2013: REpower Systems SE announced the completion of the installation of its

5,000th turbine

July 2013: The first offshore wind turbine installed in Spain commissioned by Gamesa

July 2013 : Gamesa lands a 10-year contract to service 234 MW for Veronagest in Italy

June 2013: Gamesa sells a 15 MW capacity wind farm in Scotland to infrastructure investor

John Laing

June 2013: Nordex SE build's Ireland's largest installed wind farms

May 2013: Gamesa completes the assembly of the first offshore turbine installed in Spain

April 2013: REpower Systems SE crosses the installation of 1 GW of wind farms in the UK

September 2012: REpower Systems SE delivers the tallest turbine type to Austria

September 2012: Siemens AG showcased its direct drive wind generators at the Husum Wind

Energy 2012 Trade Fair in Germany




17.1.2 Mergers and Acquisitions

February 2011: Siemens acquired Telsa Power and Automation Inc.

17.2 Other Prominent Vendors

Company Description

GE Energy LLC Wind Product and Services

Suzlon Energy Ltd. Wind Power Solution Providers

The Weir Group plc Wind Product and Services

Vestas Wind Systems A/S Wind Product and Services

Windtechnics Wind Turbine Maintenance and Service




18. Key Vendor Analysis

18.1 Enercon GmbH

18.1.1 Business Overview

Enercon GmbH is a developer and manufacturer of wind turbines, and it is one of the leading

manufacturers of wind turbines in the world. This Germany-based manufacturer was established

in 1984, and it has introduced many new technologies in the market (for instance, gearless wind

turbines). The company has installed more than 17,000 wind turbines in over 30 countries. These

turbines generate a total power output of around 22 GW per year. The company's primary

customers include energy companies in Canada, Australia, India, and several countries in

Europe and South America. It has production facilities in Germany, Sweden, Brazil, India, Turkey,

and Portugal.

18.1.2 Business Segmentation

The business segments of Enercon are depicted in the diagram below:

Exhibit 18: Business Segmentation of Enercon GmbH


Under these business segments, the company offers various solutions such as drive systems, ring

generators, plant control, network integration, wind farm management, logistics for towers, and

foundation construction.

Enercon GmbH

Wind Turbines Service

Management




18.1.3 Key Information

Company Details Description

Service Portfolio Maintenance and Repair

System Support Remote Data Monitoring

Technical Support to Turbines

Operator Training

Technical and Commercial issues

Recent Product Launches December 2012: Built a prototype of the E-92 series, a

wind class IIA system




18.1.4 SWOT Analysis

Strengths

Enercon GmbH is a market leader in

Germany and it has captured more

than 45 percent of the local market.

With its strong technological

capabilities, the company has

introduced advanced wind power

solutions in the market.

Weakness

While most of the company's

competitors have been investing

heavily in the Chinese market, it has

been focusing on European countries.

Experts believe that this may not be a

strategic move as most of the European

wind power plants have been incurring

losses since the economic downturn in

2009.

Opportunity

The company has been expanding its

business and building facilities in the US,

Singapore, and Bangladesh.

Threats

Changes in tariff plans pose a threat to

the company.

The company faces a threat from

various competitors such as Repower,

Nordex SE, Gamesa, and Siemens,

which are also global players growing

at a fast pace within the Wind Turbine

Service market in Europe.




18.2 Gamesa Corporación Tecnológica S.A.


Gamesa Corporación Tecnológica S.A. was founded in 1976 with its headquarters in Vizcaya,

Spain. The company has 19 years of experience and during this time has installed wind

farms/turbines of more than 27,000 MW capacity in 42 countries. It also includes the operational

and maintenance service of facilities with capacities of more than 19,000 MW. The company

has global production centers in Spain and China, while maintaining its local production

capacity in India, the US, and Brazil. The company is also a world leader in the development,

construction, and sale of wind farms, having installed wind turbines/farms with a total capacity

of close to 6,000 MW and having a portfolio of 18,000 MW in Europe, America, and Asia.

In 2012 the company reported annual sales of US$3.9 billion.


The business segmentation of Gamesa Corporación Tecnológica S.A. is described below in the

exhibit:

Exhibit 19: Business Segmentation of Gamesa Corporación Tecnológica S.A.


Gamesa Corporación

Tecnológica S.A.

Wind Turbines Wind Farms Wind Services

Management Gamesa Electric




18.2.3 Sales by Region

The sales by region for Gamesa Corporación Tecnológica S.A. is described below in the exhibit:

Exhibit 20: Sales by Region of Gamesa Corporación Tecnológica S.A.




Service Portfolio Ageeing Fleet Solutions

O&M Product and Services

Key Highlights July 2013: The first offshore wind turbine installed in Spain

commissioned by Gamesa

July 2013: Wins a 10-year contract to service 234 MW for

Veronagest in Italy

June 2013: Sells a 15 MW wind farm in Scotland to

infrastructure investor John Laing

May 2013: Completes the assembly of the first offshore

turbine installed in Spain





Strengths

Gamesa Corporación Tecnológica S.A.

is the global technological leader in the

Wind industry.

The company provides services for a

capacity of more than 19,000 MW in

and around Europe.

The company is also a world leader in

the development, construction and sale

of wind farms, having installed

turbines/farms of capacities close to

6,000 MW and having a portfolio of

18,000 MW in Europe, America, and

Asia.

The company has a strong hold on wind

installation within Spain and other

countries.

Weakness

The company's overall sales declined in

2012 by 6.2 percent when compared to

its 2011 sales.

Opportunities

The company is focused on reducing

debt through a new model to manage

the wind farm development and sales

business.

The company is targeting its O&M

services for business growth in the future.

Threat

The change in local or international

government and tariff policy can affect

the sales of the company and also

reduce the revenue.




18.3 Nordex SE


Nordex SE was founded in 1985 and is headquartered in Hamburg, Germany. Nordex SE is the

developer and manufacturer of wind turbines and is one of the leading mid-size producers of

wind power systems. The company is an integrated supplier of modern wind power systems for

use in different locations. The company has production facilities around the globe specifically

Germany, the US, and China where turbines are being assembled. The company also has a rotor

production facility in Germany.

In 2012 the company employed 2,536 employees and reported annual revenue of US$1.51

billion which was 19 percent higher than that of 2011.


The business segmentation of Nordex SE is described below in the exhibit:

Exhibit 21: Business Segmentation of Nordex SE


18.3.3 Key Business Strategies

The key business strategies of Nordex SE are described below in the exhibit:

Nordex SE

Wind Turbines Project Services

Wind Services

Management




Exhibit 22: Key Business Strategies of Nordex SE




Service Portfolio Inspection and Maintenance

Inspection of Safety Equipment

Repair Services

Spare Part Deliveries

Modernization

Technical Enhancement

Condition Monitoring Systems

Customer Training

Remote Monitoring and Remote Management

Recent Product Launches 2013: The company launched Delta Generation

N117/300 and N100/3300 turbines

Key Highlights June 2013: The Company built Ireland's largest installed

wind farm

Nordex SE

Sales Strategy Operational Excellence

Reduced Cost of

Materials

Product Development





Strengths

Nordex SE is one of the world's leading

mid-size producers of wind power

systems.

The company has a very strong

international orientation as more than

80 percent of its sales are generated

through exports.

The company is one of the leading

service providers for wind

farms/turbines.

Weakness

The company installed wind energy

facilities of a total of 919 MW capacity

in 2012, which was 5.26 percent less

than the work it carried out in 2011.

Opportunities

The company can focus more on its

domestic market to increase its market

share and strengthen its business

operations.

The company is now focusing on

developing onshore wind power systems

to produce clean electricity at a

competitive price in the market.

Threat

Its competitors in Europe such as

Repower, Siemens AG, Gamesa, and

Enercon pose a threat to the company.




18.4 REpower Systems SE


REpower Systems SE has been a wholly-owned subsidiary of the Suzlon Group since 2009. The

company employed around 2,700 people in 2011. It has operations spread across various

countries such as Australia, Belgium, Canada, China, Denmark, France, Germany, Italy, Portugal,

Poland, Spain, Sweden, the UK, and the US.

REpower contributes to the competitive production of electricity from wind energy. The

company’s business activities include developing, licensing, producing, marketing, and servicing

wind turbines. The capacity of the wind turbines manufactured by REpower range from 1.8 to

6.15 MW, and the diameter of the wind turbines manufactured by REpower range from 82 to126

meters. Apart from these specifications, the company also provides customized wind turbines for

its customers, for areas such as wind farm engineering, service providing, maintenance facilities,

and transportation and installation of wind turbines and wind turbine foundations. REpower has

manufactured and installed approximately 3,600 wind turbines across the world. REpower offers

onshore as well as offshore wind turbines.

The company offers two types of offshore wind turbines: 5 MW turbines that fit an offshore wind

farm, which is specially designed to withstand the force and current of the high seas; and a 6

MW turbine that has a long service life at low operating costs.



Service Portfolio Maintenance Service for Wind Power Plants

Spare Parts Storage

Training

Maintenance for Onshore Wind Power Plants

Online Troubleshooting

Key Highlights October 2013: Announced the completion of the

installation of its 5,000th turbine

April 2013: The company crossed the installation of 1 GW

of wind farms in the UK

September 2012: Delivered the tallest turbine type to

Austria





Strengths

REpower Systems SE is a subsidiary of the

Suzlon Group which is one of the

leading international manufacturers of

onshore and offshore wind turbines. This

gives the company brand recognition

across the market.

The company focuses on providing

good quality assured products. For

instance, the company guarantees a

technical performance of 95-97

percent.

Weakness

The company is mostly prominent in the

European market and lacks global

operational experience.

Opportunity

It has already developed wind farms in

the EMEA region, thus establishing a

strong market in the region. This is

advantageous for the company, as the

EMEA region has always been the

strongest and the leading region in the

production of wind energy.

Threats

Expanding business to untapped

countries such as the US, China, and

Japan will expose the company to

currency fluctuation risks.

The company may face intense

competition in the European Wind

Service market from other globally

established players.




18.5 Siemens AG


Siemens AG concentrates its operations in the Energy and Healthcare industries. In these

industries, the company focuses on electrical engineering and electronics. It was founded in

1872 and has 160 years of experience. In the Energy segment, there are various sub-segments

such as Renewable Energy, Fossil Fuel Power Generation, Oil and Gas, Power Transmission, and

Power Distribution. The company is listed on the Frankfurt Stock Exchange. It was listed for the first

time on the New York Stock Exchange on March 12, 2001. The company generated total

revenue of US$107 billion in FY2012.


The various business segmentation of Siemens AG is described below in the exhibit:

Exhibit 23: Business Segmentation of Siemens AG


Siemens AG

Industry Sector

Industry Automation,

Drive Technologies,

Building Technologies,

Industry Solutions, Mobility

Energy Sector

Fossil Power Generation, Renewable

Energy, Oil & Gas, Power

Transmission and Distribution

Healthcare Sector

Diagnostics

Equity Investments

Financial Services






Service Portfolio Service Programs

Diagnostics

Modernization and Upgrades

Offshore Service Management

Operator Training

Key Highlights September 2012: Showcased its direct drive wind

generators at the Husum Wind Energy 2012 Trade Fair in

Germany

Key Acquisitions February 2011: Acquired Telsa Power and Automation

Inc.





Strengths

Siemens AG has strong R&D capabilities.

In 2011, it had around 27,800 employees

in its R&D division across 160 centers and

it invested US$5.08 billion in R&D.

The company has ventured into a

number of environmental initiatives.

It supplies turbines to more than 40

percent of the wind farms around the

globe.

Weaknesses

The company’s offshore wind turbine

bearings have been found to be

corroding. The turbines in four offshore

wind farms experienced product failure

when the hub bearings protection

developed a snag.

It is engaged in cost-cutting initiatives

and strategic reorientation, especially in

the IT and Solutions business segments.

This may affect its operational

profitability.

Opportunities

The key account program of the

company was recognized as the Key

Account Management Program of the

Year by the Strategic Account

Management Association in the US.

It acquired Telsa Power and Automation

in February 2011, helping it expand its

product portfolio and its global

footprint.

It is planning to add many smart

products to its portfolio to create a

strong sales channel.

Threat

It faces a threat from general economic

uncertainties such as the level of

unemployment in some European

countries and the budget consolidation

measures of North America. This could

affect its business going forward.




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Wind Turbine Service Market in Europe 2014-2018

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