A leading sub-suppliers view on wind energy globalisation

1. A leading sub-suppliers view on wind energy globalisation Presented in Warsaw at EWEC 2010 By Stefan Karlsson, Global Segment Manager, SKF Renewable Energy 2010-04-21

2. 1 • Globalisation of the dynamic wind energy market

3. The dynamic development of wind energy market One turbine type GE-Wind 1.5 MW State of Texas India / World #4 Market leader Vestas World total

4. The real growth of wind energy market

5. Regional development of wind installations 2002; 2008; 2005;

6. Global wind energy manufacturing overview 2010 Major turbine & gearbox OEM market Major turbine OEM market Major gearbox OEM market Smaller/emerging turbine OEM market Emerging/potential turbine OEM market

7. Gradual development towards a truly global market Up until now, a European dominated industry Next phase; a balanced growth between Europe, Asia and USA Longer term; Asia and North America to dominate growth.

8. 2 • SKF in wind energy • – a snapshot

9. SKF contribution to wind turbine technology Condition Monitoring WindCon/WebCon Gearbox bearings TRB/CRB/SRB/CARB/DRTRB Engineering Consultancy Services Automatic distributed lubrication system Pitch bearings Monitoring and diagnostics services Sealing solutions Plain bearings Mainshaft bearing(s) SRB/CARB/TRB/CRB//Nautilus Mechanical repairs & refurbishment Maintenance tools and grease Mainshaft housings and locknuts Generator bearings DGBB/InsoCoated/Hybrid Couplings Yaw bearing Bolt tensioning tools Tower alignment services Wind energy represents some 5 % of SKF Group sales, globally

10. SKF supplies to all major wind energy manufacturers

11. 3 • Globalisation case: SKF-Vestas • supply structure development

12. Logistic structure SKF-Vestas 2002

13. Logistic structure SKF-Vestas 2007

14. Logistic structure SKF-Vestas 2012

15. Learnings from the value chain development • Long term firm relations between manufacturer and supplier supports development of logistic structure and reduces costs in system. • Expansion of manufacturing capacity will take time, in particular the establishment of a new manufacturing unit in emerging markets might take years from decision to full implementation. • Close communication between parties and long term shared forecast planning is vital for securing supply in an international structure. • The present absence of supply bottlenecks in wind energy value chain might change rapidly with the return of ”normal” industry growth rate. • Security stock levels at windturbine and gearbox-manufacturers has been reduced to a minimum during the period of financial crisis. • With demand recovery in the wind energy market, there is a severe threat of ”catch-up effect” on requirements for volume supplies. • Plan ahead and plan long term in close cooperation with supply chain

16. 4 • Case: SKF Nautilus™ • global roll-out of a new design

17. One needs stiff rotor bearings And the other needs flexible rotor bearings Turbine producers have different philosophies They may appear similar, but they have totally different design criteria Different design criterias on wind turbine mainshaft requires different bearing arrangements

18. Basic drive train concepts: integration degree Degree of integration Semi-fixed bearing arrangement Fixed bearing design Fixed bearing design Fixed bearing design Fixed bearing design Flexible bearing design Flexible bearing design Flexible bearing design

19. SKF Nautilus™-A new way of thinking in mainshaft design • Nautilus ™ key features; • Designed for heavy, complex loads. • Only pure torque load is being • transmitted to the drivetrain. • Segmented cage for improved performance also under misalignment. • Extremely low friction coefficient. • Available for cold-climate locations ”Born to be stiff, and still manage to cope with deflections…” Nautilus™ equipped Sinovel 3 MW offshore turbine installed in China Initially developed to fulfill the tough requirements for Vestas V-90.

20. Global roll-out; turbine manufacturing markets where Nautilus™ design has been selected (2009) Manufacturing also established in Asia, to support the demand from the Asian markets. SKF Nautilus, officially market launched in 2005 has now been selected by customers in 9 different countries, as mainshaft arrangement on different turbine models ranging from 1,5 MW up to 5 MW.

21. 5 • Summary and conclusions

22. Issues worth considering in wind globalisation • New emerging countries as base for manufacturing are developing at exceptionally high speed within wind energy business. • The quick expansion of wind energy, as well as the rapid development of the wind business into new emerging markets is creating new challenges for actors in the value chain. • Establishment of new manufacturing units is a longer process for manufacturers of gearboxes and bearings than the time to set-up a new assembly unit for a turbine manufacturer. • A close communication between manufacturers and their suppliers is needed for reduction of value chain costs and risks. • Long term development, with manufacturing transplants to new markets should be well planned and coordinated, also with suppliers.