Wind turbines aren’t a small investment. The average wind turbine these days represents an initial investment of about US $ 3.5 million, with more costs arising through operation & maintenance. All due diligence aside, the striking predominant position of one player in different regional markets suggests that factors other than mere checkmarks behind a list of technical and financial criteria matter in the purchasing decision. Ultimately, the question seems to be whom do investors – be they commercial, public or average citizens – trust with their money?
The United States is known around the world for its iconic brands supported by the financial might of multi-billion dollar corporations dominating the consumer goods industry. It is one of those brands that has also taken over the American wind turbine market with a share of 40% of installed capacity in 2009 – General Electric.
Americans have been imbibed with the brand since infancy and though long extended to other industries, the household name GE represents in the field of all things electric made the foray into wind turbine manufacturing in 2002 seem almost natural.
We trust in what we know. Among the chiefly commercial developers of the country’s large scale wind farms, the factual evidence of GE having done it before in other sectors has certainly contributed its fair share in them trusting in GE’s power to deliver – if not, GE’s in-house bank will probably have persuaded the last doubting Thomas.
The German wind turbine market on the other hand is dominated by a very different company – Enercon, which holds a market share of a whopping 60%, multi-sector corporations are virtually absent from the top-of-the-crop. So what does Enercon do right?
While, Germans are sticklers for technological innovation and products that are built to last. Enercon, the pioneer of the gearless wind turbine, has been able to spark trust in the longevity of its products among the German developer science – mostly average citizens organized as community groups who are in it for the long haul – through in-house production of all turbine parts and the garnishing of their offer with service packages.
In the community environment, the fact that ‘my neighbour has it’ has certainly worked to Enercon’s advantage as well. Finally, Enercon is still family-owned and managed, which must strike a chord with groups who are themselves standing in with their own money for the success of a project.
Canadians haven’t had a large choice so far. The market has been small and wind farm developments mostly large in size and driven by commercial developers and tender processes initiated by provincial authorities. In this environment of limited domestic expertise and manufacturing capability, Canadians have trusted in the opinion of the world and made the global leader Vestas also market leader in Canada with a 50% share.
The dominance of Vestas highlights the importance Canadians attach to eminence and experience in their choices – not only is Vestas the wind energy pioneer but the company has been the first mover in many countries new to wind energy and could thus be counted on for its know-how of working with local suppliers and authorities not familiar with the industry.
It will be interesting to see if and how the Canadian market develops once it is picking up speed, domestic expertise grows and more manufacturers compete with their products for the trust of not only large developers but also community power groups developing their own projects.
Ingo studied business administration and economics at Kiel University where he received a PhD in economic policy and also earned an MBA from the University of Southern California in Los Angeles, USA. Visit www.koenigconsultants.ca
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