The renewable energy sector has been steadily expanding, and global targets indicate that this trend will continue. What does this mean for your company?
We are completely committed to decarbonization and have worked very hard, both as an industry and as TPI, to drive down the levelized cost of wind energy to the point where it is now cheaper to build a new wind farm than to operate an existing thermal power plant. One challenge we faced as an industry was that once we reached parity with fossil fuel plants, pricing continued to fall - so the question now is how do we get our pricing back in line with the value we provide to society.
TPI recognized the importance of having a global footprint early on and invested well over USD 300 million to ensure we can serve our customers cost effectively in multiple regions of the world - blades aren't getting any smaller, and this affects the customers' total delivered cost. Because we have a global presence we can reduce overall costs, and help our customers be more competitive in their respective regions.
Some of your peers referred to the pricing changes as a race to the bottom, with the supply chain bearing the brunt of the burden. How did you handle it?
Our global scale did help us drive the commodity price down. On top of that, we use a concept called "shared pain and gain" - in a nutshell, when we drive costs down we share that with the customer. This is significant for two reasons: first, it makes their product more competitive, and second, it allows us to drive margins and continue to expand our footprint. Nonetheless, since the pandemic, commodity prices have risen, and we are now in an inflationary market, affecting some of our customers, particularly those who must deliver on fixed-price contracts.
Delivery timelines for wind turbines have become relatively long, ranging between one and four years. In your particular segment, what aspects are most likely to cause delays?
Our industry has been around for a long time, but it is still relatively immature in terms of industrial scale and standardization, unlike the automotive industry for instance. While we may use the same materials for Vestas and GE, the specifications or qualification methods are likely to be completely different.
At the same time, during the period when we were racing to catch up with fossil fuels pricing, new product introductions happened very fast. When you change models frequently it's tough to maximize your margins and profitability. Now that we have gotten to the point where we are on par, or even cheaper than traditional sources of energy, I expect our customers will slow down their product introduction cycle, and instead maximize the productivity around existing models. This works to everybody's advantage.
Are there any recent technological innovations that have improved the performance of blades?
Most innovation has to do with materials, you want blades to be as light as possible and this is where carbon comes into play. A few years ago very few blades had carbon components whereas nowadays virtually all of them do. There's also a lot of innovation and creativity in the process of building the blade - we're known as the "24 hour guys" because we can finish a blade in this time, which is somewhat uncommon. We do this through selective automation, unique testing procedures etc.
One source of concern with wind power has been waste management and blade recycling; how far have we come in this regard?
Waste management is still a major issue, approximately 30-40% of materials go to waste presently. This is bad for the environment and bad for our results - imagine how much money is lost. There is a continuous pursuit of solutions in every meeting that we have.
The problem with recycling right now is that once the blade comes down, it's very difficult to separate the fiber from the resin.
However, we are moving toward different resin types that will allow for a fully recyclable blade - where chemical reactions or heat can truly separate the fiberglass or carbon from the resin, and all of them can be reused.
We don't talk much about these things in public, but we've been working on solutions for over a decade that will allow us to build blades that will withstand the test of time and then be fully recyclable.
What goals are you pursuing with priority for the next few years?
First and foremost we want to maintain a strong balance sheet and optimize our footprint. We recently closed some facilities in Iowa and China, and will continue to optimize that global footprint to ensure we have the right amount of capacity in the right regions.
We also plan to expand what we offer our customers - today we build blades and also have a services organization that has grown substantially; going forward we want to also design
