Industry Insight
Component standardisation: Bolstering the supply chain without blunting the competitive edge
6 November 2009
Can standardised components really deliver a robust supply chain, without compromising quality and innovation?
By Emma Clarke
A number of off-the-shelf products already exist for wind turbines. But the industry is now considering whether greater standardisation is needed for core components such as blades, gearboxes and generators - the advantage of which would manifest in reduced costs and a more secure supply chain.
Component standardisation, commonplace in the automotive industry, enables manufacturers to reduce costs by developing components that can be used across different models. Suppliers such as LM Glasfiber for blades, and Winergy and Hansen Transmissions for gearboxes, currently lead the market for standard components.
Many of the industry’s smaller manufacturers start up by constructing turbines using “standard” components from these suppliers. Larger manufacturers also rely on off-the-shelf components, such as LM’s blades, to fill gaps where they lack production capacity.
But this is only standardisation to a point, argues Christian Nath, vice president at technical assurance and consulting company, Germanischer Lloyd Industrial Services GmbH.
“Today there is little co-operation to create industry standards,” he says. Instead, off-the-shelf products are usually designed to the specifications of the larger manufacturers, which smaller manufacturers are then obliged to follow.
No ‘one size fits all’?
Indeed, the majority of major components that are used by world’s largest turbine firms are either made in house, or bought bespoke from suppliers.
This customised approach is particularly important for blades that are the heart and soul of the turbine, says Andrew Bellamy, head of rotor blade production at turbine manufacturer, REpower Systems. “Buying a standard blade usually means buying something not quite right for the turbine, often resulting in a reduction of the turbine power capability, or the need to change other components to suit the different blades,” he says.
The fact remains that technical performance is not something turbine makers can gamble with, says Eduard Sala de Vedruna, senior analyst at Emerging Energy Research. “You see more collaboration in the automotive industry because the purchasing criteria is different: people buy cars based on brand and appearance as well as performance. Whereas in wind, any aspect that has an impact on the output or the availability of the turbine is going to be protected by the company.”
Consequently, he adds, turbine makers are still reluctant to co-operate on standardisation and are continuing to bring more components in house. Gamesa, for example, increased its in-house production of gearboxes by 20 percent in 2008 over 2007, generators by 15 percent and blades by 25 percent.
Standard delivery
But could this change as the industry enters a new era characterised by slowing demand, greater competition, and better supplier capability? “If we see a higher level of competition among the turbine manufacturers and pressures on prices, they will have to accept the possibilities of using more standard components,” says Sala de Vedruna.
The ongoing development of technical and testing standards for wind turbine components (such as the ISO or IEC standards that components must meet in order to be approved) will also encourage development of more high quality products, says Dr. Jan Declercq, director business development, sales & marketing at Hansen Transmissions. "As a result of these technical standards, the rules of the game become clearer. This leads to better products, greater competition and eventually more standardized products."
Vestas also sees the benefits in standardisation, but Russell Stoddart, senior vice president, Vestas Technology R&D, warns that it shouldn't compromise quality. "Off-the-shelf products are interesting if they deliver the highest quality on the planet, the best reliability possible and the lowest possible cost of energy."
Small and mid-size manufacturers are already sold on the idea of component standardisation. "Using a high percentage of standard components was one of the main requirements during the design phases of our products,” says Stefan Heczko, managing director at German turbine manufacturer, PowerWind.
Technically proven standard components ensure lower purchase prices since they are produced in larger volumes, says Heczko. The added advantages, he explains, are that standard components secure high reliability, (insofar as it is easier to switch between a larger number of suppliers), and they make local sourcing possible in many countries.
There are also benefits for owners, in terms of turbine maintenance. “If owners have just one gearbox to maintain across all their turbines, this would reduce their working capital,” says Sala de Vedruna. The industry might then also see more companies that manage just the maintenance of turbines, that could hold spare standard components in their warehouses.
Smaller manufacturers can also secure financing more easily by buying components off the shelf, says Heczko. “In the difficult financial environment, most banks are not ready for financing projects with turbines that are both new in the market and made of bespoke components that have not been used before,” he says.
Differentiation is key
Heczko is confident that manufacturers can differentiate their own products from those of their competitors, even when using standard components. To achieve this, he says, PowerWind uses “state-of-the-art power electronics” for complying with demanding grid requirements, as well as innovative features such as its “sophisticated gearbox protection concept”.
Differentiation is also a case of defining what is - and what isn’t - core. Most agree that blades, and perhaps control systems, are an important differentiator. But beyond that, says Sala de Vedruna, “All the other big elements of the turbine are not really that key”.
Nath concurs, saying: “As soon as you agree that competitiveness starts with the assembly of the turbine, or the labour that is used in its assembly, then standardised components could work.”
Even when standard components become readily available, says Declercq, there will still be differences to choose from. In gearboxes, for example, there might be variations between different quality products, as well as different features, for example for degree of integration, overload-ability, serviceability, or features that suit different climates or environments such as offshore.
But standardisation will not happen overnight, notes Sala de Vedruna. And if the wind industry wants to follow the automotive industry, then it needs greater volumes that are necessary to develop a strong market of component suppliers. “Despite the amount of investment and the number of turbines that are installed every year, this is still a young industry,” he says. “We are in the process of moving towards standardisation but it is going to take some time.”
