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Evolution, recent trends and future prospects of the global wind sector.

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Wind energy stands out as one of the main renewable energies since the 1990s, in terms of installed capacity and technology development. The global diffusion of this renewable energy has triggered several changes along the sectoral value chain. In this regard, the aim of this paper is to analyse the main features and trends of the global wind sector, regarding key markets and stakeholders, evolution of the global value chain and the R&D budgets allocated to wind energy. The methodology is based on the extensive review of specialised literature and policy documents, and the information gathered from institutional databases. Keywords: wind sector, global value chain, R&D performance, market evolution.
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Introduction
Wind energy has reached global diffusion due to an extensive deploy-
ment of onshore wind since the 1990s. It becomes, together with hy-
draulic power, the main renewable energies in terms of installed ca-
pacity, as well as electricity generation. In fact, wind energy represents
a keystone in policy agendas in order to mitigate global warming or
strengthening national energy security. This worldwide deployment
shows general features and trends, but also regional singularities which
could trigger different development models and market niches. In ad-
dition, wind energy sector undergoes continuous changes over time
due to global and regional pressures within value chains. Studying the
main sectoral characteristics could be advisable as a first analytical step
in order to put the sector into context before policy analysis or sectoral
economic impact assessment. This analysis takes into account general
trends, main agents and markets. In this regard, the adoption of a his-
torical perspective could make easier to analyse the scope and limits of
sectoral policy promotion, as well as the identification of market op-
portunities.
The aim of this paper is to analyse the main features and trends of
the global wind energy sector, regarding key markets and stakeholders,
evolution of the global value chain, as well as the R&D budgets allo-
cated to wind energy. Likewise, the global as well as regional features
along the value chain are analysed by means of a systemic perspective.
The methodology is based on the extensive review of specialised litera-
ture and policy documents, as well as the information gathered from
institutional databases. In this regard, data concerning R&D budgets
from public bodies were collected from the Energy Technology
RD&D database published by the International Energy Agency (IEA),
and the sectoral R&D data at firm level were gathered from the R&D
Industrial Scoreboard published by the European Commission. Fur-
thermore, several sectoral data from the European Wind Energy Asso-
51
ciation (EWEA), Global Wind Energy Council (GWEC) or the Inter-
national Renewable Energy Agency (IRENA) were used.
This paper is structured in four sections, starting with this intro-
duction. Section two shows the background and the global emergence
of wind energy. Likewise, general environment and socioeconomic
outcomes of this renewable energy are contextualised, as well as its
technology development. Section three addresses the global features
regarding the evolution of the onshore installed capacity over time and
its geographical distribution. In addition, this analysis is also focused
on the offshore wind, describing the main global markets. The next
section deals with the main characteristics both of onshore and off-
shore global value chains. The last section is aimed at enlightening the
R&D performance of public and private units in the wind sector. In
this regard, this section shows the most dynamic public agents and
firms, concerning funds allocated as well as R&D investments in terms
of sales, respectively.
1. Sectoral development from a technology, social and
economic perspectives
Wind energy stands out as one of the main renewable energies in the
world in terms of installed capacity and electricity generation, as well as
social acceptance and reputation. In spite of this faster deployment
since the 80s, several local communities had taken advantage of this
resource before general commercial exploitation. Likewise, wind ener-
gy development differs across regions and over time, which results in
different patterns and effects on the global value chain. In addition,
this renewable energy has triggered a wide array of socioeconomic and
environmental effects on local communities, as well as it undergoes
itself a process of technology improvement.
This section is focused on the historical development of wind en-
ergy, describing the main features and agents, as well as the geograph-
52
ical shifts concerning the main markets in terms of electricity genera-
tion. Later, some socioeconomic outcomes triggered by the market
penetration of wind energy are contextualised, as well as the technolo-
gy development undergone by this renewable energy. Many of these
aforementioned effects will be analysed more in-depth in next papers.
1.1. Historical origins
Windmills have been used by mankind since 200 BC for agriculture
purposes as well as for pumping water; mainly in Middle East, Europe
and North America. In spite of these earlier developments, it was not
until the oil crisis of 1973 and the Californian boom when wind energy
arose as a commercial alternative to conventional energy sources
(Kaldellis & Zafirakis, 2011). Between 1981 and 1990, USA govern-
ment implemented several incentives (federal investments and energy
credits, among others) in order to diversify the energy portfolio and
mitigate global warming. During this time, more than 16.000 wind tur-
bines were installed and the USA became the global leader until Euro-
pean deployment in the 90s (Ib.). However, since the Second World
War, Denmark was testing wind turbines, mainly in small-scale pro-
jects, and by the time of the Californian outbreak, it was capable to
meet the demand from the USA market (Christensen, 2010). To some
extent, Danish manufacturers could widen their traditional domestic
market due to their technological developments and credit assistance
(Campos & Klagge, 2013). Likewise, Danish firms, such as Vestas,
Bonus or NEG Micon, stood out as the main global manufacturers.
The Danish and North American wind sector emergences were
quite different concerning the main drivers (Heymann, 1998). On the
one hand, Danish wind sector was characterised by experimentation
over time among small turbine manufacturers, and a technological
background in the naval sector (Heymann, 1998; Cooke, 2009). In oth-
er words, its emergence and consolidation was a result of several im-
provements and incremental innovations. In addition, policy design as
53
well as implementation were characterised by a bottom-up scheme
with clear and stable guidelines and a general social consensus
(Gregersen and Jonhson, 2008; Christensen, 2010). In contrast to top-
down policies mainly developed by public authorities, bottom-up initi-
atives consists of initiatives undertaken by the private sector aimed at
strengthening interactions and innovation within clusters (Fromhold-
Eisebith and Eisebith, 2005). Moreover, the public sector enhanced
the institutional learning in order to improve the design and implemen-
tation of sectoral promotion policies (Gregersen and Johnson, 2008).
On the other hand, the North American wind sector was developed by
means of top-down policies and technologically based on the aircraft
propellers and monoplane wings (Heymann, 1998; Kaldellis and Zaf-
irakis, 2011). Despite the funds provided by the USA government in
R&D incentives, only the Danish technology, as well as its business
model was worldwide successful (Lewis and Wiser, 2007). During the
90s, when wind energy was consolidating its market position mainly in
the Western European economies, it represented the fastest growing
renewable technology, in terms of new installed capacity (Saidur et al.,
2010). In this way, as Harborne and Hendry (2009) state, wind energy
has improved their market diffusion faster than other technologies,
such as solar power, fuel cells or wave power.
The study of wind geographical distribution makes easier the anal-
ysis of the historical sectoral evolution, as well as the main changes
described above. Concerning spatial distribution, Figure 1 shows the
temporal geographical distribution of the wind electricity net genera-
tion in several years of the period 1983-2012. First of all, the year 1983
is chosen as a starting point because it is the first year with global wind
electricity generation data. Likewise, years 1990 and 2000 represent
remarkable turning points in the global wind market; and the year 2012
is the last year with available data from the U.S. Energy Information
Administration (2015). In this way, Denmark, Sweden and the United
States were the pioneers providing wind electricity to the grid in 1983;
54
therefore, the production was concentrated on Europe (91%) and
North America (9%). Since the Californian boom (1981-1990), the
United States became the leader in terms of generation, reaching
North America 79% of the global production in 1990. However, the
shutdown of the incentives triggered a stagnation concerning new in-
stalled capacity and the global wind market shifted to Europe during
the 90s (Kaldellis and Zafirakis, 2011). By 2000, the bulk of the wind
electricity generation was located in Europe (roughly 71%), following
at a significant distance by North America (19%), Asia and Oceania
(8%). Recent trends in the global wind sector stand out the renewal of
the North American market and the consolidation of Asian markets,
mainly the Chinese and Indian ones. Currently, wind generation is
mainly concentrated on Europe (41%), North America (30%), Asia
and Oceania (27%), being trivial their diffusion in other places, such as
Latin America (1,5%), Middle East (0,04%) or Africa (0,04%).
Currently, wind sector reaches global diffusion around three areas:
Europe, North America and Asia. Next sections analyse recent trends
concerning the main characteristics of the global value chain, such as
market evolution, main manufacturers, as well as R&D, innovation and
technology features.
55
Figure 1. Wind electricity net generation distribution by world region
(1983, 1990, 2000, 2012).
Source: Own elaboration based on U.S. Energy Information Administration (2015).
1.2. Benefits from the deployment of wind energy
Given wind energy is based on a renewable resource, the development
of this technology could make easier the achievement of environmen-
tal and socioeconomic goals. Fostering renewable energies instead of
fossil-based technologies could represent a tool in order to mitigate
global warming, acid rain or air pollution, among other global con-
cerns. These positive externalities are not usually embedded in the
price system which could trigger a lack of economic incentives. As a
result of environmental concerns, there is an international commit-
ment to establish national goals in terms of electricity generation from
renewable sources, as well as implementation of energy efficiency poli-
cies (Saidur et al., 2010). In addition, wind energy could enhance na-
tional energy security through providing a constant supply of energy
and reducing dependence on volatile markets. Traditionally, policy
agendas have addressed these environmental and energy security goals.
However, the development of renewable energies has been triggering
56
economic benefits in terms of employment or GDP (Gross Domestic
Product) contribution, as well as technological ones, such as industrial
diversification or the revival of declined industrial agglomerations.
Concerning economic outcomes, it is generally assumed that wind
energy contributes to a large extent to the growth of the GDP and the
industrial job creation (Varela-Vázquez and Sánchez-Carreira, 2015).
Likewise, empirical evidences underline that wind energy is not inten-
sive on employment in comparison with its contribution to the GDP
(Ib.). Given the spatial distribution of wind installations, some of the
employment is geographically disseminated, i.e. on-site (Burguillo and
Del Río, 2008); and another part of them depends on mass production
processes; i.e. manufacturing of components (Wüstemeyer et al., 2015).
For this reason, wind energy could be used as a tool of territorial cohe-
sion (Burguillo and Del Río, 2008).
Wind energy could also represent an alternative to declining indus-
trial regions, due to its spillovers effects on the industrial sector. In this
regard, when wind sector is cognitively close to the existing sectors
(Boschma, 2005), such as the naval sector, synergy forces could arise
between them, triggering Jacobian clusters (Cooke, 2009). Auxiliary
industry from the former sector makes easier the creation of critical
mass and interactions for the wind sector in the earlier stages. From a
supplier-side perspective, the existence of a previous cognitively closed
sector could mitigate the emergence of bottlenecks, mainly, in earlier
development stages. Hence, wind sector could represent an industrial
alternative to regional specialisations on traditional declined sectors,
when only smooth changes on regional specialisations are required,
instead of building a new sector from scratch.
Concerning technology perspective, wind turbines evolved techno-
logically, to a large extent, from their commercial emergence in the
second half of the 20th century. In general, wind turbines underwent a
gradual upscale process (Blanco, 2009; Kaldellis and Zafirakis, 2011),
57
in which, the tower height as well as the diameter of rotor and blades
were increasing during the last decades. Likewise, this upscale process
forces component manufacturers to upgrade and increase the size of
their facilities. The main aim of upscaling wind turbines is to improve
land exploitation, reduce operation and maintenance costs, as well as
increase economies of scale (Kaldellis and Zafirakis, 2011). In spite of
the stagnation of the unit capacity in onshore wind around 2-3 MW,
there is a medium-term goal regarding offshore wind, consisting of
reaching 10 MW of nominal power by increasing the size of wind tur-
bines (Ib.). Overall, the main aims of these technological improve-
ments are the achievement of economies of scale by means of learning
by doing processes.
2. International evolution and sectoral trends
Wind energy has stood out as one of the main renewable energy
sources, since early 2000s together with hydropower. This is due to a
significant deployment, mainly in Europe, and later in Asia and North
America. In this regard, available data at the International Renewable
Energy Agency (IRENA) database shows the recent evolution of the
main renewable technologies. As Figure 2 shows, hydropower and
wind energy represent the lion’s share, with almost 85% of the total
renewable cumulative installed capacity. Hydropower reached 781.735
MW in 2000 and 1.117.002 MW in 2014, which represents an increase
of 43%. Likewise, wind energy capacity growths from 17.333 MW in
2000 to 369.608 MW in 2014, which represents an annual constant
increase of 24,4% in a period of 14 years. Currently, this technology
represents more than 20% of the total renewable capacity, only sur-
passed by hydropower with a total share of 64%. Lagging behind wind
energy, solar energy (photovoltaic plus concentrated solar power) and
bioenergy reach a share of 10% and 5% of the total renewable capaci-
ty, respectively.
58
Figure 2. Global renewable installed capacity evolution by technology
(2000-2014).
Source: Own elaboration based on IRENA (2015).
Concerning wind energy evolution, Figure 3 shows this trend with data
provided by the Global Wind Energy Council (GWEC) between 1996
and 2013. The new annual installed capacity is above 20.000 MW per
year from 2007, reaching the peak in 2012 with more than new 45.000
MW. In spite of the relative stagnation in the traditional European and
North American markets due to an economic slowdown and the lack
of incentives, the new installed capacity was substantially higher in
2013 than in 2008, the first year of the economic crisis. This faster dif-
fusion of the technology around the world, reaching almost 320.000
MW at the end of 2013, has represented an essential tool in order to
build up regional technological capabilities, as well as markets for sup-
pliers of wind turbines and components.
59
Figure 3. Global cumulative installed wind capacity (1996-2013).
Source: GWEC (2014).
Nowadays, growing markets are mainly located in Asia, due to the de-
ployment of the Chinese and the Indian markets with annual growth
rates of 21,4% and 9,4% in 2013, respectively (GWEC, 2014). North
American markets have also reached high growth rates, owing to the
traditional leadership of the USA (13.1 GW installed in 2012) and the
current boost from Canada with an annual growth rate of 25,7% in
2013 (Ib.). Figure 4 depicts the current geographical distribution of
wind energy. China and USA ranks first and second, respectively,
which illustrate the aforementioned trend. This situation has a crucial
impact on the emergence of new regional hubs and wind turbine man-
ufacturers, due to the large size of the Chinese, USA and Indian mar-
kets. Given the proximity-concentration hypothesis, manufacturing
activities of heavy components are more likely to be located close to
large markets. Such hypothesis asserts that transportation costs are key
in order to establish wind energy facilities (Markusen and Venables,
2000; (Kirkegaard et al., 2009). Then, some components such as blades,
nacelles or towers are manufactured close to the market.
60
Figure 4. Top ten markets by cumulative installed capacity (2013).
Source: GWEC (2014).
The development of the offshore wind energy is significantly less im-
portant in terms of cumulative capacity and it is concentrated on Eu-
ropean economies with the exception of the recent Chinese develop-
ment, as the Figure 5 shows. In this way, its low level of diffusion, in
relation to onshore wind, is due to the high installation and connection
cost which increase further with distance from shore and water depth
(Green and Vasilakos, 2011). However, offshore wind farms have a
higher number of full load hours per year (Green and Vasilakos, 2011;
Wüstemeyer et al., 2015).
61
Figure 5. Main markets for the offshore wind energy (2012).
Source: GWEC (2014).
Concerning offshore wind, Europe maintains its leader position with
more than 77% of the new global capacity and the United Kingdom
was the largest market with more than 70% (Navigant Research, 2012).
With regard to the cumulative installed capacity, UK (2,948 MW) is the
leader country at the end of 2012, followed by Denmark (921MW)
(GWEC, 2014). However, UK has not developed completely its poten-
tial concerning onshore wind because of the lack of social commit-
ment (Jay, 2011). In this regard, Danish authorities are developing an
ambitious offshored planning, called “Near shore”, with around 500
MW projected. It constitutes a substantial support for the offshore
wind in Europe.
This market situation has its counterpart in the value chain. The
main wind turbine manufacturers are from Europe, such as Vestas and
Siemens Wind Power (roughly 86% of the market), as well as seven of
the global top ten utilities in this niche, such as Vattenfall, Dong Ener-
gy, E.ON and RWE (Navigant Research, 2012). The Chinese wind
turbine manufacturer Sinovel and the German REpower are also
62
agents in the offshore market with a market share around 5% (Ib.).
However, there is a progressive decoupling process between onshore
and offshore value chains, due to key components and services must
be tailored due to singularities of offshore installations (Blanco, 2009;
Wüstemeyer, Madlener and Bunn, 2015). Given an increased demand
of equipment and components and a relatively limited production,
there are currently several bottlenecks which could raise installation
costs (Green and Vasilakos, 2011). Wüstemeyer et al.; (2015) assert that
bottlenecks along the supply chain could delay the consolidation of
offshore wind as a major technology. Thus, it is necessary to develop
supply base capabilities at the same time that diffusion policies are im-
plemented. In this way, component-oriented subsidies, which should
support specific offshore products, such as main frame or transform-
ers, could be an essential policy to foster this market (Ib.).
Concerning forecasts, EWEA (2009) designed development sce-
narios both for onshore and offshore wind in Europe from the start-
ing point in 2008. According to its figures, in the conservative scenar-
io, the cumulative average annual rate of growth of offshore and on-
shore wind are 35,2% and 10,5%; respectively. Offshore wind energy
will represent 19% of total wind power capacity by 2020, when it only
represents 2% of the total capacity in 2008 (Green and Vasilakos,
2011). Likewise, it is expected some saturation for the onshore wind
energy after 2020, where the best suitable places for wind farms will be
scarce (Ib.).
Last but not least, small wind turbines (SWTs, hereinafter) repre-
sent another remarkable market for future developments in wind ener-
gy, in spite of their modern emergence in the 1980s (Navigant Re-
search, 2013). Its applications include the cattle industry in the UK and
Galicia
1
and the agriculture sector in Denmark; telecommunications or
1
For instance, Norvento, a Galician wind turbine manufacturer, is developing new wind turbines
with some success in the UK market (NED 100). This model of wind turbine is suitable for
higher wind sites, with a rotor diameter of 22 metres and a rated power of 100 kW.
63
defence, among others. According to Navigant Research (2013) esti-
mations and forecasts, the installed capacity will reach, globally, 182
MW in 2018 from 89 MW in 2013. These figures are not comparable
to those related to wind turbines, both onshore and offshore, because
SWTs have a smaller rated power. Concerning the geographical distri-
bution, Europe represents the lion’s share of the global installed capac-
ity with roughly 60 MW in 2013, followed by North America and Asia
Pacific (Ib.). Although this distribution almost will not change in 2018,
Asia Pacific would increase their global share.
The main drivers which trigger the maturation of SWT market are,
mainly, the feed-in-tariffs model
2
(FIT, hereinafter), public awareness,
the emergence of the community ownership model and the social per-
ception that SWTs are viewed as regional economic drivers (Navigant
Research, 2013). Nowadays, FIT is relevant in the promotion of SWT
technology in UK and Italy. Likewise, public awareness and the com-
munity ownership model are also essential due to the main stakehold-
ers are local or property owners instead of larger utilities. In some cas-
es, farmers and municipalities create limited liability companies in or-
der to exploit this natural resource. Finally, SWT technology would
trigger regional socioeconomic benefits, such as energy security or the
emergence of manufacturers, among others.
2
Feed-in-tariffs is a remuneration scheme to promote the diffusion of renewable energies by
means of an additional payment to the electricity market price. This instrument is based on a
market price support framework (Söderholm, 2008) which could be market-independent (fixed-
price policies), when the remuneration is independent of the electricity market price. Otherwise,
FIT would be a market-dependent polices (premium-price polices) (Couture and Gagnon,
2010).
64
3. Main sectoral stakeholders and characteristics in the
value chain
As a result of this market evolution and the aforementioned features
of the wind energy sector, Chinese manufacturers (Goldwind, United
Power and Mingyang) or the Indian multinational firm Suzlon are
gradually improving their global position in terms of installed capacity
(Lewis and Wiser, 2007; Campos and Klagge, 2013). In addition, there
is also an increasing importance of both Chinese manufacturers and
utilities, because five of the ten top global utilities are from this coun-
try (Navigant Research, 2014a). Figure 6 shows the global growing im-
portance of wind turbine manufacturers in emerging markets. This
emergence is triggered by the size of those captive markets and several
promoting policies (Lema, Berger and Schmitz, 2013; Campos and
Klagge, 2013).
The Danish global leader Vestas recovered its traditional first posi-
tion in 2013, because the late extension of wind’s tax credit in the USA
hindered the domestic market of GE Wind (Navigant Research,
2014a). Concerning other European firms, internalization was the solu-
tion in order to maintain or even increase the market share for the
Spanish Gamesa (Latin America and India) and the German Nordex
(Europe, Latin America and Africa). In this regard, Enercon has heavi-
ly relied on its home market and Siemens has undergone changes for
the United States’ stagnation (Ib.).
65
Figure 6. Main worldwide wind turbine manufacturers (2013).
Source: Navigant Research (2014a).
The current situation of overcapacity in many areas, especially in Eu-
rope, as well as the pressure on manufacturing costs triggered a more
flexible supply chain (Navigant Research, 2014b; Haakonsson and
Kirkegaard, 2016). In this regard, technology maturation and the in-
creasing global role of Asian manufacturers put pressure on price and
the need of organisational innovations. Likewise, more firm-tailored
strategies, such as make-and-buy
3
or build-to-print
4
, enable the sector
3
Make-and-buy strategy represents a decision in which the firm manufactures in-house a per-
centage of a component or product and it also outsources the other part of the production. For
instance, this strategy would be implemented due to a sudden increase in the demand, which
cannot be met by in-house production or a bottleneck in the supply chain that restrict the inputs
to the firm.
4
Build-to-print or, alternatively build-to-suit, represents an outsourcing process in which the
manufacturer produces goods according to the exact technical specifications provided by the
customer.
66
to combine in-house production with outsourcing, depending on the
specific core activities and the competitive advantage of the auxiliary
industry in each location. Thus, there is a shifting from the traditional
vertical integration to more flexible strategies. Overall, European lead
manufacturers often show higher vertical integration around core ac-
tivities (manufacturing of blades, generators or controllers) than Chi-
nese firms, which tend to be more organisationally flexible (Haakons-
son and Kirkegaard, 2016). The main reason is based on strategy dif-
ferences concerning technology management. Thus, European interna-
tional competitiveness are built upon in-house technology develop-
ments, but Chinese are focused on assembly tasks; therefore, they out-
source manufacturing activities in order to compete on price. Howev-
er, Chinese firms are engaged in international innovation networks as a
technology catching-up strategy (Ib.). At the same time that Asian
wind turbine manufacturers increase their world’s market share, Euro-
pean turbine suppliers are increasing outsourcing to China, where
nowadays is placed, the world’s largest manufacturing base (Navigant
Research, 2014b.).
Offshore energy stands out as a different market niche for compo-
nent manufacturers and turbine designers, due to singularities concern-
ing tailoring components, as well as grid connections, foundations and
installations (Blanco, 2009; Wüstemeyer et al., 2015). The market of
some key components is oligopolistic, with only few available suppliers
in Europe, given the novelty of the offshore deployment in contrast to
the onshore (Thomsen, 2014). It could be argued that promising pro-
spects and the consolidation of this development could enhance criti-
cal mass and market competition. Although some components manu-
facturers could take advantage of learning process in onshore, others
such as main frame, gearbox, tower or transformer require launching a
different R&D line seeking remarkable improvements from onshore
products and services (Wüstemeyer et al., 2015). In this regard, based
on a survey analysis, these authors highlight that innovation in off-
67
shore and onshore are affected by different drivers. In addition, the
structure of value creation is, to a large extent, different, because value
creation in onshore depends on mass production; therefore, it is sub-
ject to learning process. On the contrary, value creation in offshore is
created on-site and their learning paths could be similar to convention-
al power plants. Moreover, there is a higher degree of volatility in costs
in offshore farms due to singularities and unexpected conditions in
each site (Myhr et al., 2014). Table 1 depicts the cost breakdown for
these kinds of wind installations in order to show the two value crea-
tion paths. Wüstemeyer et al., (2015) also underlined that the influence
of technological innovations in the projects’ future costs is 24% higher
for offshore than onshore.
Table 1. Distribution of cost for onshore and offshore wind farms
(in percentages).
Stages
Onshore
Offshore
Project development
8
4
Turbine
71
40
Infrastructure
9
Grid connections
12
14
Installation
23
Foundation
19
Source: Wüstemeyer et al., (2015).
Currently, offshore wind energy undergoes several technological im-
provements not only related to cost reductions or reliability, but also
to new market opportunities which enhance offshore diffusion. For
instance, several developments regarding floating structures make easi-
er the development of offshore projects in deep waters. In this regard,
the Norwegian utility Statoil is installing the first worldwide floating
offshore wind farm in Scotland (Hywind Scotland Pilot Park) in 2015,
using Norwegian technology (Hywind foundations). Spanish firms
Navantia and Windar are the suppliers of these floating foundations. It
68
is expected that this wind farm with five turbines rated 6 MW comes
into operation at the end of 2017.
Concerning technology and economic feasibility, Castro-Santos
and Diaz-Casás (2014) apply the life-cycle methodology to undertake
the feasibility of offshore installations along the Galician coast. In ad-
dition, Myhr et al., (2014), Bjerkseter and Ågotnes (2013) develop a
comprehensive analysis of the economic feasibility of seven different
offshore floating foundations in comparison with the traditional bot-
tom-fixed ones (jackets and monopile). In this regard, these authors
quantify the levelised cost of energy (the minimum unit price of ener-
gy) and its main drivers. The main aim is to design the best choice de-
pending on technology advantages, in terms of material costs, as well
as on-site conditions. Given that almost all the floating foundations are
still prototypes, these studies and the strong deployment of this market
highlight the increasing relevance of offshore wind within renewable
energies. However, energy cost in relation to well-established renewa-
ble energies represents a key challenge, therefore, a field for future
technological improvements.
Given the singularities of the offshore value chain, as well as the
technological opportunities, due to the relative underdeveloped state
of technology in comparison with onshore, it could be key to launch
component-oriented subsidies in order to overcome bottlenecks and
foster technological improvements (Wüstemeyer et al., 2015).
4. Sectoral R&D performance
R&D activities play a remarkable role in the wind sector as a way to
compete successfully in international markets. Wind energy continually
evolves, arising new technology solutions and management improve-
ments along the global value chain. Thus, turbine and components
manufacturers should make relevant efforts in order to develop or
69
catch-up cutting-edge technology. The increasing worldwide competi-
tion in the wind sector triggers ambitious R&D investment plans either
aimed at consolidating existing competitive advantages or catching up
cutting-edge technologies. For these reasons, R&D investment at firm
or sectoral level could represent a key indicator of competitiveness.
Concerning public domains, wind energy policy is established in
the Strategic Energy Technology Plan (SET Plan), developed by the
European Commission. In this regard, the main aims of this strategy
focused on this renewable energy are to increase the sectoral competi-
tiveness, take advantage of the offshore emergence, as well as make
easier the grid integration (AEE, 2012). The future relevance of this
sector is illustrated by the investment of 6.000 million euros of public
funds during the period 2010-2020, with a special focus on offshore
wind. At the firm level, companies are also increasing their efforts in
R&D and innovation activities, as well as in strengthening their linkag-
es with regional and worldwide innovation hubs. All of this underlines
the relevance of technological and organizational improvements.
In this section, the main features and trends of the R&D invest-
ment from the public sector, as well as at the firm level are analysed.
First of all, public RD&D budgets related to wind energy are studied
by means of the Energy Technology RD&D database published by the
International Energy Agency (IEA). In this regard, performance of the
Spanish public bodies in this field is compared with their counterparts
in Denmark, United Kingdom, Germany and USA. Later, R&D per-
formance at firm level in the global wind sector is studied through the
R&D Industrial Investment Scoreboard, published by the European
Commission. This database summarises the economic and financial
data of top European, as well as global R&D investors.
70
4.1. International comparison of RD&D performance in the wind
sector
Analysing the evolution and trends of public sector concerning basic
and applied research, as well as experimental development and demon-
stration, could be a good approximation to assess the innovation sys-
tem performance regarding public spheres. Furthermore, this assess-
ment could make easier to analyse public efforts with regard to the
government’s guidelines in energy policy. In this regard, the Interna-
tional Energy Agency (IEA) publishes annual data, for its member
countries, related to the public budgets in research and development,
as well as demonstration activities in the energy field, following the
Frascati Manual (OECD, 2002) methodology. The IEA decides to in-
clude public budgets for demonstration projects, because of their rele-
vance in context of high uncertainty regarding the outcomes of R&D
activities, mainly when demonstration projects could not be addressed
only by the private sector (IEA, 2011). Energy RD&D covers “research,
development and demonstration related to the production, storage, transportation,
distribution and rational use of all forms of energy” (IEA, 2011, p. 16). Like-
wise, RD&D programs could be included in the following seven
branches (Ib.):
Energy efficiency;
Fossil fuels;
Renewables
5
;
Nuclear fission and fusion;
Hydrogen and fuel cells;
Other power and storage techniques;
Other cross-cutting technologies or research.
5
They encompass solar energy, wind energy (onshore and offshore), ocean energy, biofuels,
geothermal energy, hydroelectricity and miscellaneous.
71
The IEA adopts a methodological perspective based on the govern-
ment budget appropriations or outlays for RD&D (GBAORD)
6
; that
is, the data gathered by the IEA includes public RD&D budgets re-
gardless of the performer (IEA, 2011). In this regard, public funding
bodies could be the central or federal government, as well as provincial
and state units. Furthermore, the analytical scope also includes state-
owned enterprises; but private funds expending by public bodies,
funds from public bodies, NGOs and charities, as well as private con-
tributions to public-private partnerships are excluded (Ib.).
With the purpose of analysing public wind RD&D in Spain, as well
its evolution in the main OECD markets, absolute and relative varia-
bles were selected from 1991 to 2014 (first and last year with available
data). Throughout this period there is comprehensive information for
the main traditional market for wind energy within the IEA member
countries. In this regard, Spain, Denmark, Germany, United Kingdom
and USA were selected on basis of their leadership in this market con-
cerning installed capacity. Likewise, all the data are expressed in US
dollars and purchasing power parity (PPP) terms. Analysing the follow-
ing flows in PPP
7
allows more accurate international comparisons and
makes easier isolate the effect of inflation on RD&D expenditures.
Figure 7 shows the total amount of public RD&D (government
and state-owned enterprises) investment. Regardless sudden fluctua-
tions of this variable, the main public supporters of wind RD&D in
absolute terms are USA and Germany, mainly because of the size of
their economies and wind sectors. In this regard, public bodies in the
USA designate annually 52,2 million USD on average; and German
public units almost 33,8 million USD. USA reached their peak in 2009
with more than 200 million USD and Germany in 2014 with almost 68
6
This methodology is the opposite of the RD&D intramural expenditures approach, in which
RD&D expenditures are quantified from the performers’ perspective. In this regard, performers
could be both from the public or private sector.
7
PPP terms are expressed in 2014 prices.
72
million (IEA, 2015). Far away from these figures, Denmark, United
Kingdom and Spain are lagged behind with more modest expenditures.
However, Denmark and United Kingdom, on the one hand, and
Spain, on the other one, show different patterns. The first two coun-
tries are increasing their public investment, but Spain depicts the op-
posite evolution in line with an adverse national institutional context.
Figure 7. Total wind public RD&D in million USD (2014 prices and PPP).
Source: IEA (2015).
Absolute RD&D figures should be complemented with estimations
which take into account the relative size of the economy in order to
measure more accurately the effort of public bodies in each country.
Figure 8 shows the evolution of total RD&D per million units of PPP
GDP in real terms
8
. Denmark stands out as the main country in terms
8
Both GDP and RD&D flows in nominal terms and national currencies were deflated through the
OECD GDP deflator. Likewise, both flows were also expressed in PPP by means of OECD
PPP indicator. The IEA only provides directly aggregated data concerning total RD&D per unit
of GDP, without a breakdown; therefore, it is advisable to estimate this measure only for wind
energy.
73
of public investment in wind RD&D per unit of GDP. In this regard,
Danish public bodies allocate, at least, $40 per million unit of GDP,
and public RD&D budgets allocates annually $58,5 on average during
the period analysed. The peak was reached in 2010 with more than
$150 per million unit of GDP. Likewise, the general trend shows that
public bodies from Denmark are increasing their relative expenditures
in terms of GDP.
Figure 8. Total wind RD&D per million unit of PPP GDP.
Source: Own elaboration based on IEA (2015).
Far away from these figures, Germany, United Kingdom, USA and
Spain are lagged behind; with average expenditures below $10 per mil-
lion unit of GDP. However, Germany, United Kingdom and Spain
double, and in some cases triple, the expenditures undertaken by USA
public bodies during this period. Nevertheless, public units in Spain
are reducing their investment in RD&D in terms of GDP since 2011;
at the same time, Germany and United Kingdom are increasing them.
These opposite trends could illustrate the different development stages
74
followed by these countries. In this way, United Kingdom is leading
the wind offshore market and several pioneer projects related to this
field. Likewise, Germany is consolidating their position in the onshore
market and also open new market niches in the offshore wind. On the
contrary, Spain is undergoing a sectoral stagnation due to institutional
instability and the economic crisis with feedback loops. According to
the most recent annual data available (2013), public bodies in Denmark
spend $106 per million unit of GDP, Germany and the United King-
dom allocate $18.7 and $11.6, respectively; and both Spain and the
USA $3,7 (IEA, 2015).
These data are consistent with the ambitious sectoral promotion
policies set up, mainly, by Denmark, Germany and the United King-
dom regarding technology infrastructure. Regarding the Danish case, it
is obvious the long-run public support through the university system,
as well as by means of public or semi-public technology centres which
strengthen the singular Danish bottom-up or “bricolage” development
model (Garud and Karnøe, 2003; Christensen, 2010). Likewise, public
bodies in the United Kingdom and, to a lesser extent Germany, are
also fostering RD&D programs, mainly in offshore wind energy. In
the case of Germany, the role played by the Fraunhoffer Institute net-
work is remarkable.
4.2. R&D performance at firm level
Nowadays, wind energy is characterised by the increasing globalisation
of its value chain, as well as the rising competition among traditional
manufacturers and those which come from emergent markets. In this
context, it is key to upgrade business, diversified portfolios and mar-
kets, as well as improve innovative performance. In this regard, R&D
intensity represents a widely used measure, which indicates the relative
degree of investment in research and development activities in terms
of the total firm sales. Alternatively, it is also used for countries and
regions in terms of the GDP. Anyway, it is widely assumed that this
75
indicator can approximate the degree of investment in generating new
knowledge (OECD, 2011).
The EU Industrial R&D Investment Scoreboard, published by the
European Commission, constitutes a database of top European, as
well as some global firms regarding their economic and financial per-
formance. This information is based on each company annual report.
For this reason, not all the top firms are involved in this database, be-
cause it depends on the information available and the willingness of
firms to collaborate. Likewise, it encompasses information of R&D
intensity by firm from 2003 to 2013. Figure shows this indicator for
the main global wind turbine manufacturers for that period of time.
Before analysing these data it is key to underline some additional
explanations. In this regard, it is included the Danish blade manufac-
turer LM, which stands out for its R&D expenditures in the wind sec-
tor. In spite of the fact that Enercon installed 10% of the total wind
turbines worldwide in 2014, its data is not available in the EU Industri-
al R&D investment Scoreboard. The Commission of the European
Communities (2009) estimated that Enercon undertook an R&D in-
vestment in the wind sector of roughly 17.5 millions of euros in 2007.
This figure is above Nordex’s investment in the same year (17.24), Re-
power (13.38) or almost the same than LM (17.77). Vestas acquired
NEG Micon (with an R&D intensity of 7.8% in 2003) in 2004; there-
fore, since that year, data from Vestas embodies the resulting group.
Moreover, data from REPower is only available until 2008, because it
was acquired by Suzlon in that year.
According to Figure 9, investment in R&D activities of the select-
ed firms represents, at least, 1% of their sales during the period of time
analysed. Nevertheless, there are remarkable differences among manu-
facturers. As long as the Danish and German firms, such as Vestas,
LM or Nordex reached 2% of the total sales allocated to R&D invest-
ment, the Spanish firm Gamesa was below between 2005 and 2010.
76
This period of time encompasses the deployment of Gamesa’s domes-
tic market, in which achieved a leader position.
Figure 9. R&D intensity of the main global wind turbine manufacturers
(2003-2013; in percentages)*
*Note: R&D intensity concerning Siemens, General Electric and Mitsubishi Electric embodies the
whole economic activity and not only wind energy.
Source: Own elaboration based on European Commission (2015).
Firms from emergent markets (Goldwind and Suzlon) performed
poorer than those from consolidate markets. For instance, Chinese
wind sector was able to close the gap with the worldwide leading sec-
tors in only ten years by means of technology transfer mechanisms
(Lewis, 2011; Klagge et al., 2012; Lema, Berger and Schmitz, 2013). Co-
designing among local and overseas firms, as well as the development
of R&D activities in technology centres in the main world hubs were
increasing, since the end of the first decade of 21st century
9
(Lewis,
9
Co-design activities among local and overseas firms was also undertaken in the Indian wind
sector in the earlier 2000s (Kristinsson and Rao, 2008).
77
2011; Klagge et al., 2012). In spite of these recent trends, the Chinese
sectoral innovation systems are undergoing several barriers to achieve
a high innovative performance (Klagge et al., 2012). In this regard, it
should be underlined the low R&D investment, the weak collaboration
between academia and industry, as well as the lack of skilled labour
force (Ib.). Lema et al., (2013) assert that innovative performance in the
Chinese sector lies in business-model innovations. Moreover, there is
still a dependence on foreign technology, through licensing, mergers
and joint ventures (Klagge et al., 2012). For these reasons, the Chinese
wind sector should foster endogenous developments and the ties with
worldwide top technological hubs to avoid lock-ins. This strategy
could be key in order to penetrate into new cutting-edge sectors, such
as offshore wind.
Current trends show an increasing R&D intensity, which could be
triggered by the rising international competences among firms in
emergent as well as consolidate markets. From the R&D intensity data
of the main global wind turbine manufacturers, wind sector could be
classified as a medium-high R&D intensity sector (between 2% and
5%), following the indications of the European Commission (2015).
Siemens and, to a lesser extent, Mitsubishi Electric perform better
than the sectoral average, because their data embodies industrial R&D
investment in more sectors than wind power. In fact, both firms are
classified into Electronic & Electrical Equipment branch, following the
European Commission (2015) breakdown. Figure 10 shows the differ-
ent performance between firms included into Electronic & Electrical
Equipment branch and the general results for the top European firms.
In this regard, firms included into this aforementioned branch per-
formed better that the average, being currently the difference higher
than two perceptual points. Given Siemens and Mitsubishi Electric
undertake more activities involved in medium-high and high R&D in-
tensity than wind energy (see Figure 9), their overall R&D intensity is
higher than their competitors in the wind energy sector. Likewise, oth-
78
er manufacturers analysed are mainly included into Alternative Energy,
as well as into Industrial Engineering. However, temporal comparison
is complex due to the inexistence of these branches for the whole pe-
riod analysed (2003-2013).
Figure 10. Comparison between R&D intensity in Electronic & Electrical Equip-
ment branch and the general performance of the top European firms.
Source: Own elaboration based on European Commission (2015).
5. Conclusions
At the same time that wind energy reaches global diffusion, the sector
has been undergoing several changes concerning main markets and
agents, new market niches, as well as new technology improvements.
In spite of the traditional utilisation of this renewable resource, Den-
mark was the modern pioneer, based on a bottom-up development
model, regarding commercial deployment and its integration in the
grid. Several development models arose around the world in order to
take advantage of the environment and socioeconomic benefits trig-
gered by wind energy.
79
Despite European and North American origins, the relevance of
emergent markets is increasing due to ambitious strategies, which
combine market promotion policies with technology policies aimed at
catching-up cutting-edge regional hubs. Currently, these emergent
markets constitute the sectoral driving forces and they are responsible
of remarkable changes in global value chains. In this regard, Chinese
and Indian multinational manufacturers are gradually improving their
global position in terms of installed capacity. Domestic market size and
a comprehensive set of national promotion policies could explain these
progressions.
Offshore wind emergence, together with its value chain singulari-
ties, as well market potentialities, are also changing the global wind sec-
tor. Regardless of its concentration on Europe, offshore wind could
represent another step ahead in the green revolution due to the huge
opportunities of electricity generation in deep waters. Production costs
as well as supply chain bottlenecks could be the most remarkable chal-
lenges for this new wind sector.
As the main sectoral features show, sectoral stakeholders are facing
a global competitive context in constant transition. In this regard,
R&D activities stand out as one of the most essential indicators in or-
der to assess the competitiveness, not only at the firm level, but also of
the innovation system as a whole. Concerning the performance of
public bodies regarding RD&D budgets, the IEA Energy Technology
RD&D Statistics provides an exhaustive database of national perfor-
mance. Denmark public units stand out for their funds allocated to
basic and applied research, as well as demonstration activities, in terms
of its national GDP. Germany and UK are gradually increasing their
budgets. At the same time, Spain, due to sectoral institutional and fi-
nancial unstable contexts, undergoes a moderate decrease.
Concerning R&D performance at firm level, it could be highlight-
ed that European turbine manufacturers allocates significantly more
80
funds than manufacturers from emergent markets, in terms of their
firm sales. These different patterns could be explained by the diverse
development paths and institutional contexts. In this regard, manufac-
turers from mature markets are used to face high competitive market
conditions in contrast to the characteristic captive markets in China or
India. Moreover, manufacturers from emergent markets are catching
up cutting-edge technologies and methods by means of technology
transfer, acquisitions and mergers and, to a lesser extent, getting in
touch with top regional hubs.
These features and trends highlight that wind sector is facing a
wide array of socioeconomic, technology and environment pressures
to ensure sectoral competitiveness, as well as dealing with the response
to global challenges, such as global warming and energy security.
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The purpose of this article is to put forward a methodology in order to evaluate the Cost Breakdown Structure (CBS) of a Floating Offshore Wind Farm (FOWF). In this paper CBS is evaluated linked to Life-Cycle Cost System (LCS) and taking into account each of the phases of the FOWF life cycle. In this sense, six phases will be defined: definition, design, manufacturing, installation, exploitation and dismantling. Each and every one of these costs can be subdivided into different sub-costs in order to obtain the key variables that run the life-cycle cost. In addition, three different floating platforms will be considered: semisubmersible, Tensioned Leg Platform (TLP) and spar. Several types of results will be analysed according to each type of floating platform considered: the percentage of the costs, the value of the cost of each phase of the life-cycle and the value of the total cost in each point of the coast. The results obtained allow us to become conscious of what the most important costs are and minimize them, which is one of the most important contributions nowadays. It will be useful to improve the competitiveness of floating wind farms in the future.
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Technology and Culture 39.4 (1998) 641-670 A huge body of scholarship in recent decades has convincingly demonstrated the contingent and contextual character of technological development. Technologies are shaped by social factors and thus "mirror our societies." Regional and national characteristics of technological developments can often be explained by their embedment in different cultures and environments. To describe or explain technological differences, historians of technology have employed the loosely defined concept of "technological style," which in recent years has received growing attention. Drawing extensively on this concept, John Staudenmaier has raised the possibility of a "link between technological style and national character." The development of wind technology from 1940 to 1990 in Germany, Denmark, and the United States does at first glance appear to corroborate Staudenmaier's hypothesis. Wind technology in these countries differs in conspicuous ways. The renaissance of wind power technology in California and Denmark in the 1980s contained several notable surprises. California produced scores of unsuccessful turbine designs, poorly performing turbines, and disastrous turbine failures, especially when compared to the clearly superior Danish wind technology. The American failure looks even worse when one considers that between 1975 and 1988 the United States government spent twenty times (and Germany five times) as much for wind power research and development as did Denmark, yet Danish manufacturers made better turbines -- have, indeed, since the early 1980s been the most successful wind turbine producers. Danish wind turbines supplied about 45 percent of the total worldwide wind turbine capacity in 1990. Most U.S. manufacturers failed in the 1980s, and by 1990 only one major manufacturer of commercial turbines (US Windpower) remained. Producers from other countries had little impact on the total wind turbine capacity in the 1980s. The failure of numerous turbine designs and the remarkable contrast between R&D expenditures and commercial success raise important questions. Why did so many designs fail? What made Danish turbines superior? How could small Danish companies outclass large American and German high-tech concerns? Forrest Stoddard, an American engineer, identified characteristic technical differences of Danish and American turbines that he considered responsible for Danish success and American failures. Peter Karnøe, a Danish political scientist, has explained the superiority of Danish wind turbines as a result of Danish manufacturers' "bottom-up" strategy for development: a slow, crafts-oriented, step-by-step process including incremental learning through practical experience. This strategy, Karnøe argues, proved superior to the "top-down" approaches of science-oriented German and American researchers and manufacturers, which aimed at both quick and ambitious full-scale developments. Karnøe has shown that many striking wind turbine failures may be attributed to the disadvantages of top-down development. Stoddard's and Karnøe's interpretations offer interesting explanations for the remarkable Danish success, but they do not answer all the questions posed. Why did the Danish bottom-up strategy prove more successful than American and German top-down approaches, and why did this strategy evolve in Denmark, and only there? Historical analysis shows that technical and conceptual differences in wind turbine development had important roots in the 1940s and 1950s. Individual and collective ideas and working styles can be attributed to individual actors and particular communities, both of which have characteristic patterns of knowledge, actions, and artifacts. These patterns may be called technological styles. The failure of a top-down approach to the development of wind technology reveals the limits of science-oriented technological development, or engineering science, and hints at technological hubris. Big-science and high-tech approaches were in this case mistakenly considered powerful enough to support gigantism, extreme technical sophistication, and immediate full-scale development. Wind power's long and rich history reached its zenith in industrializing western Europe and North America in the late nineteenth century. In the twentieth century the use of wind power declined, and thousands of windmills and wind turbines disappeared within a few decades. By the 1980s, however, oil crises, growing concern over environmental degradation, and nuclear-power protests were contributing to a revival of wind technology. Supported by government subsidies, California and Denmark became by far the biggest markets for wind turbines. By the late 1980s, California accounted for 79 percent...