Many top steel analysts don't pay much
attention to the wind energy sector. After all, it represents
less than 10 percent of total steel demand in North America,
according to CIBC World Markets analyst Michael Willemse.
But that doesn't mean you shouldn't keep your
eye on the market, given that it is expected to grow
exponentially in coming years. In 2006, global installed wind
energy capacity jumped 26 percent to about 74 gigawatts (GW),
according to a report by the Global Wind Energy Council,
creating demand for approximately $23 billion in new
equipment-much of it made of steel.
Windmills are essentially composed of three
parts The tower, generally constructed of steel plate, which
supports the gigantic blades and turbine; the nacelle, which
includes the turbine and other bars, gears and bearings used to
create electricity; and, attached to the nacelle, the blades
(usually made of high-technology composites also used to build
some airplane frames) that harness the wind.
As tall as some skyscrapers, the towers
consume enormous quantities of plate. In fact, they represent
one of the fastest-growing markets for plate in North America,
said Paul Lowrey, managing partner at Pittsburgh-based steel
industry consulting firm SteelBase Partners. "The North
American demand for towers outstrips the capacity to
manufacture them," he said. "As a result, all the major tower
manufacturers are increasing their production capacity."
And unlike other sectors of the economy, such
as housing and automobiles, wind energy shows no signs of
slowing down. The sector grew at a rate of about 24.3 percent
from 2002 to 2006 and is expected to continue to grow at a
19-percent pace through 2010, the Global Wind Energy Council
said. Europe is currently the biggest market for wind energy,
with about 48 GW of installed capacity.
"The Europeans are very dependent on imported
energy; consequently, a domestic resource is very popular,"
said Daniel F. Ancona III, a senior mechanical/industrial
engineer at Princeton Energy Resource LLC, Rockville, Md., and
former top official with the International Energy Agency, a
Paris-based policy advisory group.
But the industry is expected to grow at its
fastest pace in coming years in the newer markets, like North
America and China. In the United States alone, wind capacity
jumped 27 percent in 2006, making it the second-fastest growing
source of new energy, behind natural gas, according to the
International Energy Agency. Coal came in third.
California had long been the U.S. leader in
wind energy. But Texas, more noted for its oil and gas
drilling, last year passed the West Coast as the top
wind-energy state in the U.S., thanks largely to state
incentives that enticed many energy companies to invest in wind
and other alternative technologies, Ancona said. "They've got
good wind resources. They can export the gas and oil (to other
states). It makes money. It's just good business."
Other states have taken notice and are
following the Texan lead, he said. "It may cost you a bit more
in the beginning, but long term it can be very attractive,"
And it's not just the steel industry that's
benefiting from the wind energy boom. The composites used to
make windmill blades might be in even shorter supply than wind
towers, said John Mothersole, senior economist at Global
Insight Inc., Waltham, Mass., because production of the new
Boeing 787 Dreamliner, which uses composites in its frame, is
expected to ramp up at the same time that demand for wind
energy units is predicted to surge. "There may be some capacity
issues for that part of the industry," he said. "There may be
an availability problem regarding those composite blades."