Note: this article first appeared in Renewable Energy Focus March/April 2013 - Click here for a free signup - and in 2 parts online in May 2013. Part 3 will also be published online shortly...
Introduction - Executive Summary
Between 1995 and 2004, there was a revolution in wind turbine design in which variable-speed, pitch-controlled (VSPC) machines outcompeted the early fixed-speed, stall-controlled (FSSC) machines in the marketplace, rising from 14% to 73% market share. The variable speed concept was invented simultaneously on both sides of the Atlantic, giving the impression that the “selfish invention” was just an idea whose time had come.
The new machines succeeded (despite early setbacks), providing up to 10% greater energy capture and more grid-friendly operation. Moreover, the reduced loads at/near rated power reduced the structural materials required (eg. tower), enabling the enormous scale-up that occurred in the industry in this period, from about 100kW to 3MW, a factor of 30.
While the original VSPC machines did not live up to the hype of “5 cents per kWh,” their successors did; this figure for cost-of-energy was reached by 2002, enabling wind turbines to compete head-to-head with fossil fuels, or nearly so. The global market for wind turbine generators (WTGs) exploded, growing 100% per year for over a decade.
The cost required to achieve variable-speed was initially quite daunting, as power electronics (IGBTs) in the early 1990s were expensive; however, as converter costs fell precipitously, VSPC machines could be priced at near-parity to FSSC machines, which themselves had to adapt via two-speed and active-stall techniques just to survive. By 2010, FSSC machines had essentially disappeared from the global market, and manufacturers like Nordtank, Micon, and Bonus were a distant memory.
Value creation during the period 1995–2004 was extraordinary: the global market for wind turbines grew from about 1000MW installed annually to over 11,000MW. Analysis shows that more than $3 billion in manufacturer margin was created over the decade – this equated to tens of thousands of high-quality jobs, dozens of factories and several personal fortunes. While many factors contributed to the growth of the industry, there is no doubt that the introduction of VSPC was a key enabler of turbine scaling, and that the industry would never have grown to such size if it had been limited to the 100kW models that were common in 1990.
The original patent-holders such as Kenetech Windpower did not reap the rewards of their innovation. Instead, three bankruptcies later, General Electric picked up the pieces of Enron Wind and their 1.5MW machine has surpassed 20,000 standing turbines, by far the biggest (and most profitable) seller of all time. The “selfish invention” found a way to market, even though its original host was long since deceased.
More in part 2...
About: Chris Varrone is a former McKinsey consultant who specialises in wind energy technology. His firm, Riverview Consulting, advises on topics including product/market strategy and financing.
Other articles by Chris Varrone published by Renewable Energy Focus: