New Product Cycle in Offshore Wind Power to Accelerate
The authors are analysts of NH Investment & Securities. They can be reached at minjae.lee@nhqv.com and ys.jung@nhqv.com, respectively. -- Ed.
Looking at large wind power plants, offshore construction boasts several advantages over onshore development, including superior wind speed/direction and fewer restrictions on installation/operation. Recently, all major wind turbine firms have unveiled new super-large offshore wind turbines of 14MW or higher. We believe that the long-term growth potential of components companies which are coping well with the trend towards larger offshore wind power plants remains intact.
Principles of wind power generation and reasons for large-scale development centering offshore
A wind turbine’s power generation is proportional to: 1) the square of the turbine’s blade rotation area; and 2) the cube of the wind speed. Turbine operations can be divided into four phases according to wind speed: the start of blade rotation, gradually accelerating blade rotation, roughly constant blade rotation, and the end of blade rotation. When wind speed remains stable and blade rotation is optimized, wind power generation efficiency is maximized.
At sea, wind speed/direction tends to be more favorable than on land, and there are fewer restrictions on installation/operation—factors which are advantageous for larger wind power plants. In North America, Europe, and Korea, offshore wind power operations boast relative advantages (vs onshore facilities) in terms of wind power density (WPD; a measure of wind energy). For reference, the area required for the UK’s Hornsea1 project (capacity: 1.2GW) conducted by Orsted is 407 km2, a scale that presents clear challenges on land.
New product cycle in offshore wind power to accelerate
In February, Vestas, the world’s number-one wind power player, unveiled a super-large turbine for offshore wind power with a capacity of 15MW. Equivalent to 80GWh pa, the new turbine can generate enough electricity to power 20,000 households. Of note, the blade length is 115.5m, and the expected utilization rate is 60%. After pilot testing in 2023, mass production is planned from 2024.
In Jul 2019, GE unveiled its Haliade turbine with a capacity of 12MW. The turbine is capable of generating 67GWh of electricity pa (enough to power 16,000 households) with an expected utilization rate of 60%. Reaching 220m in diameter and 260m in height, the turbine is more than twice the size of the firm’s existing onshore wind turbine model (4MW; 117m in diameter; 91.5m in height). Elsewhere, Siemens-Gamesa, the world’s number-one offshore wind power company, hopes to begin mass production of its 14MW turbine by 2024.
As focus shifts towards super-large turbines with capacities of 14MW or higher—more than 2x the size of existing onshore turbines—capex increase at turbine and component makers will be key. Offshore wind power installations should grow in earnest from 2024 as new turbines enter mass-production. Although recent interest rate concerns have resulted in share price corrections at renewable energy players, their mid/long-term growth engines look to remain intact. With the new product cycle accelerating, the mid/long-term growth potential of firms producing components for large-sized offshore wind turbines is strengthening.