Energize Weekly, January 16, 2019
The wind industry’s practice of end-loading projects to the fourth quarter of each year could lead to serious bottlenecks and jeopardize some of the 23 gigawatts in the pipeline over the next two years, according to a Wood Mackenzie study.
Nearly a quarter of the 23 gigawatts (GW) projected to be developed in the next two years—representing $2.1 billion in revenue—could be at risk, according to a study by energy consultant Wood Mackenzie Power & Renewables.
“The entire value chain is negatively impacted by concentrating demand in the latter part of the year,” Leila Garcia da Fonseca, a managing consultant at Wood Mackenzie, wrote. “It is crucial that all industry players collaborate to avoid the expected transportation bottleneck the market will experience over the next 3 years.”
The fourth quarter has become the focus of construction due to a combination of weather conditions, wind speed restrictions in erecting towers and the “cyclical nature” of the federal Production Tax Credit (PTC), a key element in wind project financing, the study said.
Since 2012, an average 70 percent of installations have been in the fourth quarter. Turbines are usually transported just before construction begins, so the third quarter is peak transport period.
In 2012 more than 19,000 blades were transported within the U.S. for about 13 GW of wind projects. Since then the volume has remained about the same, but the transport requirements have become more complex.
In 2012, the average blade was 44 meters, and there were 46,000 shipments. By 2020, the projected number of shipments were 42,000, but the equipment will be more of a challenge.
Blades on average will be more than 55 meters, and nacelles and towers have also grown larger. The average nameplate-capacity rating is expected to grow by 34 percent by 2020. “The components require special trailers, more experienced drivers, special escorts and an average lower miles/day rate,” the study said.
“Turbine OEMs [original equipment manufacturers] have developed a strong local supply chain in the United States over the last 10 years,” Wood Mackenzie said. They have primarily located in the “wind belt” in the center of the country. “This strategy aids the industry, lowering logistics costs, as the demand in the ‘Plains’ specific area and Texas remains high, while other regions, such as California have seen a sharp reduction in installations in the last decade,” the study said.
The projected distribution of projects in 2020 includes Texas with 21 percent, the Plains states with 31 percent, the West with 18 percent, the Midwest with 16 percent and the Northeast with 5 percent.
There are several ways to alleviate demand volatility through levelization, including forwarding inventory deliveries early to site or using regional laydown facilities, the study said.
For example, manufacturers could work together with rail companies to optimize the use of dedicated rail cars, and first-quarter shipments must be more than doubled to minimize underutilization of transportation equipment.
