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Renewable Energy and Related Services: Recent Developments

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Renewable Energy and Related Services: Recent Developments ( renewable-energy-and-related-services-recent-developments )

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Project Development, Construction, and Installation Services Growth in global installations of wind farms over the past decade has created profitable opportunities for project developers. As a result of projected slow growth in their home markets, many European and U.S. service firms have sought to expand their presence in foreign markets, with a particular focus on Asia and Latin America.109 Developers typically look for opportunities in politically stable countries with a consistent regulatory regime, strong contract law infrastructure, and demonstrated experience with successful PPAs.110 Additionally, wind energy tends to be most competitive in markets, such as Central and South America, that are heavily reliant on fossil fuels (typically diesel), which tend to be imported and very expensive.111 European multinational service providers tend to be more active than U.S. firms in most regions of the world, possibly due to their greater experience.112 German and Spanish firms in particular have shifted their focus to international activities and are actively targeting South America.113 For example, Spain’s Iberdrola has announced that Brazil will be the second-largest destination of renewable energy spending through 2014, after the UK.114 Turbine manufacturers have also expanded their presence into emerging markets,115 largely by building factories and providing services alongside equipment.116 The largest project developers have typically been established multinational firms from European countries, such as Iberdrola.117 However, due to the growth of the Chinese market and the high level of U.S. demand in 2012, 5 of the 10 largest developers of new wind projects in 2012 were from China (all of which are state-owned enterprises), and 3 were from the United States (table 4.5).118 EPC firms are less likely than project developers to be active outside their home markets. However, global wind EPC contractors (table 4.6) use their multinational presence to operate across multiple sectors including wind. Growth in global wind installations has facilitated the rise of EPC firms with a stronger focus on wind, such as Iberdrola Ingeniería y Construcción―the developer’s construction and engineering branch. 109 For example, during the first nine months of 2011, 71 percent of investment by Italian wind energy firms occurred outside Italy. O’Brien, “Uncertainty Drives Italian Firms Abroad,” December 23, 2011; Morales and Sills, “Spain Ejects Clean-Power Industry,” May 30, 2012; industry representative, interview by USITC staff, São Paulo, Brazil, May 8–10, 2013. 110 Industry representative, telephone interview by USITC staff, January 30, 2013. 111 Industry representative, telephone interview by USITC staff, January 18, 2013; industry representative, interview by USITC staff, São Paulo, Brazil, May 8, 2013. 112 Industry representative, telephone interview by USITC staff, January 28, 2013. 113 Industry representative, telephone interview by USITC staff, March 12, 2013. 114 Nielsen, “Cheapest Wind Energy Spurring Renewable Energy Deals,” January 29, 2013. 115 OEMs GE Wind, Vestas, and Siemens, among others, have manufacturing facilities in Brazil and India. Sen, “Wind Energy Majors Set Up Low-Cost Plants,” February 23, 2011; Cleantechinvestor.com, “Brazil—Wind Manufacturing Hub,” August 15, 2011. 116 Industry representative, telephone interview by USITC staff, January 25, 2013. 117 Industry representative, interview by USITC staff, Washington, DC, January 23, 2013. 118 Rankings compiled by USITC using project data from BNEF database. Available data cover 84 percent of projects commissioned in 2012. These Chinese firms will be discussed further in the foreign market profiles section. 4-20

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