Meet the top 5 wind energy giants fighting for a share of a market that just hit $62 billion and is set to double in the next decade
The US wind industry deployed an eye-popping 9.3 gigawatts of energy in 2019, representing a seven-year high. 2020 is poised to be even bigger, as companies try to get ahead of the wind-down of a government tax credit. Just five companies make all of the wind turbines for the highly-consolidated US market — but two are clear winners. General Electric's business swelled, growing 42% since 2018, allowing the company to overtake Vestas for the top spot. Click here for more BI Prime stories.
Dotting prairies, mountains, and coastlines across the US are nearly 60,000 wind turbines, churning out energy as their gargantuan blades — some more than twice the length of an adult blue whale — rotate in the wind. As the race toward clean energy intensifies, companies are installing these machines in droves. The capacity of wind energy has tripled in the last decade, according to the American Wind Energy Association (AWEA), and it's expected to double in the next one. New numbers for 2019 fit snugly into that trend. Turbine manufacturers deployed about 9.3 gigawatts of new capacity in the US last year, per data from the research firm BloombergNEF (BNEF). That's a seven-year high, topped only by deployments in 2012 and 2009. Next year will see even bigger gains, analysts say. As BNEF data show, the growth of wind energy in the US has been sporadic. That's thanks to what's called the Production Tax Credit (PTC), said Shashi Barla, an analyst with the research firm Wood Mackenzie. Read more: Why one of Europe's largest hedge funds is betting on wind energy instead of solar. The credit is a boon to the wind industry, as it provides companies with an incentive to buy renewable power. But "Congress cycled through the tax credit in one or two-year stints and allowed it to expire multiple times," AWEA says. In the years leading up to those planned expirations, such as 2009 and 2012, wind operators rushed to develop wind projects, causing installations to spike. The credit is now slated to begin winding down at the end of 2020 — one reason why deployment surged in 2019. It's also why it will likely grow even more this year. Click here to subscribe to Power Line, Business Insider's weekly clean-energy newsletter. But there's another force propelling wind forward: the falling cost of turbines. Turbines have become cheap, due, in part, to industry consolidation. Today, just a handful of companies manufacture all of the wind turbines installed in the US. Those giants have economies of scale and resources to invent more efficient, more affordable, technologies, Barla said. Just five companies commissioned all of the US wind capacity in 2019, and two of them control nearly 80% of the market. The US invested an estimated $62 billion in wind-energy projects last year, according to AWEA. Here they are, ranked in order of least to most megawatts of energy deployed last year in the US, using data from BNEF.Goldwind — 14 MW
The Chinese manufacturer Goldwind commissioned just 14 MW of wind last year in the US, according to BNEF. But don't be mistaken: Goldwind is a wind giant. It's the largest manufacturer in China, and the third-largest in the world, commissioning more than 8 GW alone in 2019. The company, headquartered in Beijing, has more than 50 GW of installed capacity globally across more than 32,000 turbines. Though Goldwind has a small foothold in the US market, it doesn't manufacture its turbines locally, Barla says. He doesn't think the company will be a large competitor anytime soon. "They're not a significant player in the market today, and I don't expect them to be a meaningful player in the US market in any case," he said. "I think it's a bit unfair to compare them to the top four." Nordex — 548 MW
Making it into the top four by a large margin is the German manufacturer Nordex. Last year, it commissioned just over half a gigawatt of wind energy. "Nordex has had significant traction in the US market, and they're almost going to triple their installations in 2020," Barla said. Like Goldwind, Nordex doesn't make its wind turbines in the US, though "they're winning orders," Barla says, "so it means they're really, really competitive in terms of pricing." Globally, Nordex is far smaller than Goldwind — it came in eighth last year, installing just shy of 2 GW of wind power, per BNEF. Based in Hamburg, the company has installed more than 27 GW of wind capacity worldwide. Siemens Gamesa — 1,460 MW
In 2017, the German conglomerate Siemens acquired Gamesa, Spain's turbine manufacturer, forming Siemens Gamesa Renewable Energy — which, by any measure, is in the big leagues. Last year, the infrastructure giant installed nearly 1.5 GW of wind energy in the US, where it has won big contracts with companies including the utility giant Dominion Energy. Globally, Siemens commissioned close to 9 GW of wind energy in 2019, putting it in second place. Siemens has made its name in offshore wind, which accounts for about a third of its 2019 installments. Though offshore wind capacity remains just a sliver of the industry, it's expected to grow sevenfold by 2028, globally. What to watch this year: Siemens is expected to break 100 GW in installed capacity. The company is also planning to merge Gamesa with its oil and gas business. Together the two business lines will form a new venture that will be listed separately on the stock exchange. Vestas — 3,029 MW
Vestas is the largest wind turbine maker in the world. In 2019, the Danish manufacturing giant commissioned nearly 10 GW of wind energy, globally — more than all of the wind energy installed across the entire US that year. The company is also a major player in the US, where it installed over 3 GW in 2019, besting all but one company. In 2018, Vestas was the top installer in the country. Barla said Vestas is a leader in larger turbines that can generate more than 3 MWs of power. Today, demand in the US centers around smaller models — but that will soon shift, he said. General Electric — 4,264 MW
Leading the pack is General Electric, once among the most valuable companies in the US. GE's stock is now just a fraction of what it was in the 2000s, but it remains a formidable player in the wind industry. The company commissioned a whopping 4.3 GW of wind energy in the US last year, representing a 42% increase from 2018, when Vestas was in the top spot. Globally, GE ranks 4th with about 7.4 GW. GE makes the world's largest turbine, called the Haliade-X. With blades reaching 107 meters in length, a single turbine could produce enough power to electrify 16,000 homes, the company claims. While 2019 was a good year for deployment, GE's renewable energy business reported massive losses. "Looking across the segments, renewables is the key operational focus for us in 2020," said Larry Culp, the CEO of GE, in its Q4 earnings call. "This journey to improve earnings and cash at renewables will take time," he said.
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The renewable-energy business is expected to keep growing, though more slowly, in contrast to fossil fuel...The renewable-energy business is expected to keep growing, though more slowly, in contrast to fossil fuel companies, which have been hammered by low oil and gas prices.
Wall Street analysts told us exactly what they think will happen to the $360 billion clean-energy industry during a recession
Wall Street analysts are warning that the US is teetering on a recession. Some say it's...Wall Street analysts are warning that the US is teetering on a recession. Some say it's already here. No industry is spared, but analysts and investors Business Insider spoke to said that the clean-energy sector may be dealt a softer blow. "Anyone in the renewable sector is better than most," one investor said. The cost of capital is the primary driver of renewable energy projects. That means low interest rates will spur demand. Utility-scale projects are best-insulated, while residential solar companies may face a greater risk. Visit Business Insider's homepage for more stories. The US is teetering on the edge of a recession, Wall Street analysts are warning — with some saying we're already there. "We are officially declaring that the economy has fallen into a recession," Bank of America economists led by Michelle Meyer wrote in a note to investors on Thursday. "It is a deep plunge." A recession spares no industries, but four Wall Street analysts and investors that Business Insider talked to said the clean-energy sector — which was the target of more than $360 billion of investment last year, according to the research firm BloombergNEF — might be dealt a relatively soft blow. Click here to subscribe to Power Line, Business Insider's weekly clean-energy newsletter. "Anyone in the renewables sector is better than most," Jigar Shah, the president and cofounder of the investment firm Generate Capital said. "People like this asset class better than any other." Low interest rates are especially beneficial for renewable energy projects The price of renewable electricity is largely determined by the upfront cost of construction — what a company charges to build a solar or wind farm, for example. Once those farms are set up, the input is minimal, unlike a natural gas or coal power plant, which require fuel to operate. And that's especially true for solar facilities, says Colin Rusch, an analyst at Oppenheimer & Co., "because there are no moving parts and limited maintenance." With the cost of energy tied to an initial injection of funds, renewable energy projects — like any construction project — stand to benefit from low interest rates that typically accompany a financial crisis. Now, those rates are close to zero. "The cost of capital is the biggest lever in the supply chain for all renewable energy projects," Rusch said. "As we see the cost of capital come down we see increasingly compelling economics for solar projects." Low interest rates make it easier for clean-energy companies to borrow money. And by lowering the upfront cost of power plants, they also lower the cost of the electricity those plants generate. Both forces fuel demand. Other forces will drive down the cost of renewable energy, even within a recession The cost of electricity that comes from fossil fuels, such as natural gas or coal, is determined by commodity prices, which are volatile and unpredictable, says Pavel Molchanov, an analyst at Raymond James. Meanwhile, the price of renewable electricity has fallen consistently over the last decade in step with innovation, according to Sophie Karp, an analyst at KeyBanc. Since 2009, for example, the price of solar panels has fallen by 80%; wind turbine costs have seen similar declines. "There's no reason to believe that the longer-term trend will stop," Karp said. And that's true whether or not the price of oil continues to slip, analysts said. In most parts of the world, oil is not an electricity source, so its cost is not a meaningful benchmark. The last time the price of oil collapsed, starting in 2014, it "didn't affect renewable growth at all," said Angus McCrone, chief editor at BloombergNEF, a clean-energy finance research firm. There's no reason to suspect a different outcome this time around. Utility-scale projects would be better insulated from a recession According to Molchanov, large, utility-scale solar and wind projects are "recession resistant" because they're generally managed by developers that have utility contracts. "That has nothing to do with the economy," he said. "Whether GDP is up or down, it makes no difference for a utility investment decision because utilities are regulated businesses." Analysts at JPMorgan also note that utility-scale solar is typically constructed in remote locations, so the spreading coronavirus will be less likely to hamper those projects. Utility-scale developments also have "long deployment cycles," the bank said in a recent research note, which makes them even more resilient to short-term impacts. Corporations who buy renewable energy may delay projects Big companies like Google and Facebook are some of the largest buyers of renewable energy in the world. In 2019, they bought a record 19.6 gigawatts of power, which amounted to 10% of the clean energy added, globally, that year. In a recession scenario, corporations may be inclined to delay purchasing of renewable energy, Jeff Osborne, an analyst at Cowen, said, though he doesn't think that's "lost business." "It's more of a deferral," he said. The cheap price of oil could also shrink clean-energy spending by oil and gas giants, such as BP or Shell, McCrone said. "Oil companies — particularly European ones — have become pretty significant investors in renewables," McCrone said. "So if they're feeling under pressure, then it could be that they become not so keen to invest in renewables quickly." Read more: Private investors poured $10.5 billion into clean energy in 2019. This list shows that oil and gas giants are among the most active private investors. But Molchanov didn't agree with that idea. He says the oil price shock could actually steer these companies' strategies towards renewable energy. "This shock, showing just how violent the oil market can get, will steer some management teams into looking at wind and solar because they're not nearly as volatile or difficult to predict," he said. Residential solar is likely to take a hit The impacts of a pandemic-fueled recession on residential solar are mixed, the analysts said. On one hand, cash-poor consumers are not going to be looking to make big purchases, and rooftop solar arrays cost around $20,000, according to Osborne. "I just don't see many couples saying 'Hey honey, let's drop $20,000 to put up the solar panels on the roof right now, even though we can save money and might have a five-year payback period,'" he said. That said, many companies including Sunrun and Sunnova offer leasing and loan options, which could be attractive deals in a recession. "Cash sales will definitely drop," Mochanov said. "Leasing and loans will be more protected." It's also possible that more customers will pursue rooftop solar for their homes to ensure a more stable supply of energy in the wake of the pandemic. "You couple this with extreme weather events and fires and I think this just increases demand," Brook Porter, a partner at the venture fund G2VP, said. "Just thinking about what happens when the grid goes down and thinking about resiliency, those thoughts drive capital investment." Read more: A global pandemic and fear of power outages could fuel an emerging $50 billion market for rooftop solar companies like Tesla and Sunrun Karp says residential solar companies may also be more secure in a recession, compared to companies that own large-scale arrays that deliver energy to corporations through power purchase agreements (PPAs). If the corporation goes bankrupt, the PPA could be subjected to bankruptcy, she said. But when your panels are distributed across the homes of thousands of customers, "it's a diversified risk." Policies support renewable energy At least 12 states and Puerto Rico have made 100% clean energy commitments. And many more utilities across the country are required to meet what's called a renewable portfolio standard — meaning a percentage of their electricity must come from clean energy sources by a certain date. "The laws about decarbonization and renewable portfolio standards are going to still be enforced," Molchanov said, though he mentioned that most of them are set 20 or 30 years out in the future. There are also tax incentives for installing wind and solar energy called the Production Tax Credit (PTC) that are expiring in the next year or two. If they don't get extended in the government stimulus package, they could spur short-term growth. Utilities that own wind and solar assets have "tens if not hundreds of millions of dollars at stake," Osborne said. "There's a clock that you're up against." Read more: Renewable-energy stocks could be the first to bounce back after the pandemic peaks, JPMorgan says. These are the bank's top 4 picks. A global pandemic and fear of power outages could fuel an emerging $50 billion market for rooftop solar companies like Tesla and Sunrun The leading clean-energy research firm just slashed its outlook in response to the coronavirus pandemic, revealing that solar energy installations could decline for the first time in decades Shuttered factories, tangled supply chains, and cratering demand: 8 experts told us how the coronavirus pandemic and oil price war are hitting clean energy Join the conversation about this story » NOW WATCH: 9 items to avoid buying at Costco
Energy agency says solar power will drive faster than forecast growth in renewablesGlobal supplies of renewable...Energy agency says solar power will drive faster than forecast growth in renewablesGlobal supplies of renewable electricity are growing faster than expected and could expand by 50% in the next five years, powered by a resurgence in solar energy.The International Energy Agency (IEA) found that solar, wind and hydropower projects are rolling out at their fastest rate in four years. Continue reading...