Thursday, August 1, 2013

Consumption of Wind Energy Composites forecast to grow 12.8% pa between 2013 and 2018

An enormous opportunity for raw materials used in the fabrication of fiber-reinforced plastics (FRP) products exists in the Indian Wind Energy Industry, as per Composite Insights. The demand for composite materials in Indian Wind Energy Industry continued its growth momentum till 2011. However, in 2012, the industry was affected by the withdrawal of two key incentives by the government: accelerated depreciation and generation-based incentive. In 2012, India was the fourth largest wind market in the world, with around 1700 MW new capacity addition. With a generation-based incentive of 50 paise per unit being introduced in the Union Budget, India’s wind power capacity is poised to grow between 2013 and 2018. It is estimated by Composite Insights that more than 22 gigawatt of wind power capacity will be installed during this six year period. The primary drivers continue to global warming concerns, increasing security of supply and high oil prices. Indian Government increased its focus on clean and domestic energy production, both of which wind offers. India has drafted a model renewable energy law to increase the target for electricity generation by renewable energy to 20% by 2020 of the total power generation in the country and has a planned target of 15,000 MW of wind power to be installed between 2012 and 2017. During the past six years period (2007-2012), around 11,931 MW of new wind capacity was installed. Around 22,053 MW of new wind capacity is forecast to be installed, representing a 85% growth.
Composite materials are the materials of choice for developing wind turbine blades and other components. It is estimated that around US$805 million worth of composite materials were used during the past six year period (2007-2012). Followed by growth in new capacity addition, during the next six years period (2013-2018), the consumption of composite materials is expect to grow 96% to US$1576 (Rs 8,350 Crores). Fiberglass is the major reinforcement used in Indian Wind Energy Industry. Epoxy and Polyester Resins are the two leading resin matrices used. Epoxy Resin proved as resin of choice and has gained a major segment share. LM and Shriram are the two blade manufacturers that use polyester resin for developing wind turbine blades in India. PVC Foam, SAN Foam, Balsa Wood, PU Foam are the leading core materials used to develop sandwich structures. Following domestic and export demand growth for wind turbine blades, nacelle covers and nose cones, the demand for composite materials in the Indian Wind Energy industry is expect to grow 12.8% per year between 2013 and 2018, in terms of volume shipments.
The world’s growing appetite for wind energy has transformed wind turbine blades into one of the hottest composite applications around. The huge demand for wind power generating equipments - particularly in the U.S and China as top tier and India, Germany, Spain, Italy, UK and France as second tier - has raised a bumper crop of new plants for manufacturing these composite parts. Emerging markets such as Brazil and Turkey forecast to contribute to the future growth. Again the year 2012 brought new records for wind energy new capacity installation around the globe. In spite of the global economic crisis, investment in new wind turbines exceeded by far all previous years. Global wind energy market is expect to continue its slow growth momentum, with the world’s wind power installed capacity reaching to 572 GW by end of 2017.
Wind turbine blade industry includes companies that develop blades for captive use and companies that sell to wind turbine suppliers. Between 2007 and 2012, the share of independent suppliers has dramatically increased, as there were many small wind turbine suppliers entered the market.
Fiberglass is the major reinforcement used in Wind Energy Industry. Carbon fiber is mainly used in larger wind blades, which expect to gain momentum in future. Epoxy and Polyester Resins are two leading resin matrices used. Epoxy Resin proved as resin of choice and has gained a major segment share.
India retained its position in top five world wind energy markets in 2012. India remained third largest market for new turbines in 2012 with capacity addition of 2441 mw, revealed World Wind Energy Report 2012. World's wind turbine capacity addition grew at 19% to 44,609 mw, which is lowest in more than a decade. As per a Global Wind Energy Council report on India, wind power is a mature and scalable clean energy technology where India holds a domestic advantage. India has an annual manufacturing capacity for over 9.5 GW of wind turbines. The country is seeing about 3 GW in annual installations under the 12th Plan target. This modest pace of utilization of the country’s wind power manufacturing and resource potential so far is attributable to several factors, including lack of an appropriate regulatory framework to facilitate purchase of renewable energy from outside the ost state, inadequate grid connectivity, high wheeling and open access charges in some states, and delays in acquiring land and obtaining statutory clearances. The broader global economic slowdown has reduced expectations for the fiscal year 2012-13 from the wind sector, which is still coping with the reduction of the Accelerated Depreciation benefit from 80% to 35% in the first year of a wind turbine’s operation. Besides these there are other potential barriers to achieving higher growth rates in the short to medium term. Over the last decade the federal government has offered three key incentives namely the Accelerated Depreciation (AD), the Generation based Incentive (GbI) since 2009 and the renewable energy Certificates (reC) mechanism since 2010. A fundamental reason for the growth of wind sector had been the availability of the AD benefit. With the quantum of this benefit reduced under the current Plan (from 1st April 2012), the other federal scheme called the GbI has now become a vital incentive for the wind sector. Though likely to be revived in near future, at present the GbI is also in abeyance. Inadequate grid infrastructure is another key issue that needs to be addressed urgently. Across most of the states with significant wind potential, the grid does not have sufficient spare capacity to be able to evacuate ever-increasing amounts of wind power. As a result, the state distribution utilities are reluctant to accept more wind power generation and usually tend to prefer thermal power generation. Thus, there is an urgent need to augment general grid capacity. Also the regional southern grid needs to be connected with the rest of the country on a real-time basis. This requires better forecasting of power demand across the nation, and a modernization of the grid. In most states, availability of land for wind farms is a contentious issue. Even if private lands are available, conversion of land use status from agricultural to nonagricultural is a time consuming process. Further if the land is close to a protected area or forestlands then obtaining clearance from forest authorities for using the forestland for wind power generation is time consuming. Another barrier to the growth of the wind sector is inordinately high borrowing costs. In India, a significant majority of wind power projects are conceived with a 70:30 debt-equity ratio as a project financing method. The high interest rates (at present > 13%) make for some very expensive debt under tough macroeconomic conditions. Further it would be beneficial for the small and medium enterprises to have access to concessional financing to bear the risks related to production capacity augmentation, especially for component manufacturers. Lastly India’s wind sector has tremendous job creation potential as the domestic industry grows. There is likely to be higher demand for trained manpower and accordingly, the technical training and academic curriculum across the States may need to be modified.

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