Wind energy has become the most widely adopted source of renewable energy around the world, with approximately 300,000 wind turbines installed globally, representing an aggregate generation capacity nearing 200 gigawatts. In 2009, wind energy accounted for approximately 2.1% of the total electricity generated worldwide and 55% of electricity generated from renewable sources.
Despite its lead on other renewable energy technologies, the wind industry is far from mature. We estimate that the market for wind turbines will grow at a compound annual growth rate of 19% to reach a market size of over $185 billion by 2015. This growth is expected to be driven by an aggressive expansion of China’s wind industry, the emergence and adoption of offshore wind farms and an increase in project finance availability as credit markets recover from the economic downturn.
Investors spanning a spectrum of asset classes invested an estimated $67 billion in new capital in the wind industry in 2009—an amount greater than all other segments of renewable energy combined. The highly concentrated wind turbine assembly and manufacturing segment is likely to be of interest to public equities investors, while the significantly more fragmented components manufacturing and wind farm development segments may pique the interest of private equity firms. Meanwhile, lenders and asset-focused investors are likely to be drawn to the downstream end of the wind value chain by investing in wind farm operations. Regardless of one’s asset class of interest, the availability of diverse business models in the wind industry, in combination with strong overall end-market growth and favorable macro trends render it an attractive sector for a broad range of investors.
This report aims to help potential investors understand the size and growth characteristics of the various product, value chain, geographic and customer segments of the wind energy market. We provide a number of quantitative and qualitative analyses of regulatory, strategic and financial issues to assist investors in navigating the complex and constantly evolving sphere of supply chain dynamics, competitive forces, regulatory incentives, regional trends and other external factors that may influence investments in wind energy companies.
INDUSTRY REPORT THEMES
Products and Components
The report includes a brief history of wind turbines, a description of how wind turbines work, and a detailed explanation of the core parts and components made by wind turbine companies. We distinguish between small wind turbines primarily meant for individual use, and large-scale turbines used in wind farms; between different end markets (residential, farming, off-grid/remote, and wind farms); and between onshore and offshore markets.
In the report, we create a detailed estimate of the total size of the wind energy market at various points along the value chain. Our sizing analysis shows industry breakout by product type, geographic regions and end market. In addition, we provide estimates of units and capacity installed annually, cumulative capacity and dollar-value market size. The report includes historical and projected growth estimates for each sub-segment of the industry, as well as fragmentation and market share data that helps investors gauge the degree of competition and availability of investment opportunities in different parts of the industry.
The report’s strategy section describes and analyzes the key themes most relevant to investors in the wind energy industry, including but not limited to:
- Trends in the broader renewable energy sector
- The regulatory landscape in the U.S. and abroad
- The effect of the recent credit crisis on the industry
- An explanation of grid parity and factors that affect electricity prices
- Competitive analysis of wind versus other types of energy
- Overview of wind farm site selection process and considerations
- Recent industry growth in China and offshore
- Traditional ‘five-forces‘ and ‘SWOT‘ framework analyses
- An explanation of the most relevant investment risks in the industry
- A list of due diligence questions investors should ask of their potential investment targets
Company & Financial Analysis
In the financial section, we provide a public-market comparison of revenue growth, margins, working capital trends (A/R days, A/P days and inventory days, current ratio, NWC as % of revenue), and capitalization metrics (debt ratios and CapEx as % of revenue) for the past five years, by sub-segment. A valuation analysis includes public comparables, historical price performance and industry transactions by value chain segment. Finally, we provide short profiles of over 90 companies and investment firms that are active in the wind industry, as well as a list of over 65 useful resources for additional research such as relevant industry associations, other industry reports, upcoming conferences and informative websites.