Dan Radomski - Microsoft PowerPoint - Renewables Roadshow 2008

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					   Supplier Opportunities for
Manufacturing Alternative Energy
     Systems in Michigan

              Dan Radomski
           VP, Industry Services
           313-833-0100 ext. 150

             May 22, 2008

               NextEnergy Overview
Who we are:

•   Non-profit corporation dedicated to the advancement of the
    alternative energy industry in Michigan.
                    gy        y         g


•   To enable the commercialization of energy technologies that
        iti l     t ib t to       i        titi                   it
    positively contribute t economic competitiveness, energy security,
    and the environment.
NextEnergy Physical Infrastructure

Business Accelerator Facility    MicroGrid Power Pavilion

         astructure             Research Laboratories

Alternative Fuels Platform                        Research Labs
Manufacturing Potential to Serve U.S. Growth
        in Renewables (Total U S )*
 Total U.S.          # U. S. Number Millions $                 New FTE
                      MW      f Fi    Investment
                             of Firms I    t    t                J b
 Wind               124,900 16,480      $62,338                398,470
 Solar               23 150 10 272
                     23,150 10,272      $69 624
                                        $69,624                298,194
                                                               298 194
 Geothermal          15,190   3,926     $15,330                 72,324
 Biomass             21,760 12,020
                     21 760 12 020      $13 248
                                        $13,248                 81 615
 Total:             185,000 42,698 $160,541                    850,603

 * Assumes 18,500 MW installed per year for 10 years in U.S.
        (“Climate Stabilization Case”, REPP, 11/06)
Manufacturing Potential to Serve U.S. Growth
        in Renewables (Michigan)*
 Michigan             # U. S. Number Millions $             New FTE
                       MW      f Fi    Investment
                              of Firms I    t   t             Jobs
                                                              J b
 Wind                124,900    967      $3,453              24,350
 Solar                23,150
                      23 150    360      $1,256
                                         $1 256               6,644
                                                              6 644
 Geothermal           15,190    129       $272               1,502
 Biomass              21,760
                      21 760    594       $349                2,281
                                                              2 281
 Total:              185,000 2,050       $5,328              34,777

 * Assumes 18,500 installed per year for 10 years in U.S.
        (“Climate Stabilization Case”, REPP, 11/06)
      AET Michigan Market Focus

• 4 Strong Emerging Market Segments
  –   Biomass to Energy
  –   Solar Thermal and Photovoltaic
  –   Advanced Batteries for Hybrid Electric Vehicles, EV, PEV
  –   Large (Utility Scale) Wind Turbines

      All growing rapidly
      All have “anchor” companies to build off of
      Exploit Michigan’s manufacturing supply chain
      Exploit Michigan’s natural resource advantages
        The Manufacturing Opportunity -
              Wind Components
There are approximately 8,000 components in a
wind turbine design!
US Wind Turbine Supply Chain
Large-Scale US Wind Turbine Supply Chain Investments as of Q1 2008


                                                                      Blade Manufacturing
                                                                      Tower Fabrication
                                                                      Turbine Assembly
  Note: Facility locations are approximate
  Source: Manufacturers, Emerging Energy Research

 Recent investments in US supply chain have created wind turbine manufacturing
 “corridor” running from Texas through upper Midwest, with Iowa as hub
US Wind Turbine Supply Chain
US Wind Turbine Component Investment Potential through 2020 (est.)

                                                        Investment Potential Through                                      Investment Potential Through
 Wind Turbine Component
                                                        2020, US (US$ billion)*                                           2020, Global (US$ billion)*

 Rotor Blades                                                                                         $23-$27                                                         $121-$139

 Gearbox                                                                                              $13-$16                                                              $66-$85

 Generator                                                                                         $3.5-$6.0
                                                                                                   $3.5 $6.0                                                               $18 $30

 Bearings (Pitch, Yaw)                                                                             $2.5-$5.0                                                               $12-$24

 Tower                                                                                                $29-$33
                                                                                                      $29 $33                                                         $151 $169

 Power Converter                                                                                   $4.5-$7.0                                                               $24-$36

Note: *Calculations include key assumptions regarding future trends in turbine pricing; vertical integration through the supply chain; and future trends in average wind turbine model size
Source: Suppliers, Emerging Energy Research

         h d d f billi             t d to be        t    i d turbines globally th
    With hundreds of billions expected t b spent on wind t bi                       h
                                                                       l b ll through
    2020, significant investment potential exists throughout component supply chain
       o Supp e te est          e   a ets
Stages of Supplier Interest in New Markets

         Supplier Levels of Interest






        at are the Supplier ea   g Curves?
      What a e t e Supp e Learning Cu es

• Understanding the Markets

   – What is the projected growth and sustainability of the market

   – Demand Drivers

   – How does policy effect demand (e.g., RPS, PTC, Carbon Trade)

   – Industry terminology
   What are the Supplier Learning Curves?

• Understanding supply chain dynamics

   – What are the Components, equipment and sub assemblies (e.g., what
     goes into a wind turbine)

   – Size, weight, materials used for components

   – What are the Supplier sourcing dynamics affecting the industry (vertical
     integration, mergers)

     Specifications unique t th i d t
   – S   ifi ti       i    to the industry

   – What components does the OEM mfg vs. outsource
US Wind Turbine Supply Chain
Vertical Integration in the Wind Turbine Supply Chain

 In-house     Outsource       ROTOR/BLADE         GEARBOX                CONTROLS             GENERATOR              CASTINGS                  TOWER

                                                                                                        ABB, Leroy            Patel Alloy,
                                                  Winergy,                                   Vestas Summer, Elin     Vestas                               Local
                              Vestas         LM                          Vestas                                                                Vestas
                                                  Moventas,                                                                        Metso                  firms
                                                                                                        (VAT T h)
                                                  Fellar, Ja-Ke
                                                  GE       Winergy,                                                  ATI, Sakana,
                              LM, NOI, GE,                Moventas,                           LDW, GE,                                         SIAG, local
                                                      Bosch/Rexroth,     GE                                          Hodge,
                              A&R, Tecsis         l                                           Loher                                            firms
                                                      Eickhoff, Fellar                                               Felguera

                              Mitsubishi / TPI                                                                       Various local                        Local
                                                  Ishibashi              Mitsubishi           Mitsubishi                                     Mitsubishi
                              (Vientek)                                                                              firms                                firms
                                                  Echesa                                                             Fundición
                                                                                                                               Sakana,                    Local
                              Gamesa         LM            Hansen        Ingelectric          Ingelectric            Nodular Felguera,         Gamesa
                                                  (Gamesa)                                                           del Norte Hodge                      firms

                                     LM, NOI,     Winergy,
                              Nordex                                     Nordex       Mita    Loher/Winergy          Siempelkamp               Nordex     Local
                                   Baoding HT     Eickhoff
                              Siemens                                                          Loher/                                          K GW, Roug,
                                         LM       Winergy       Hansen KK Electronic                                 Metso, Local
                              Wind Power                                                       Winergy ABB           firms
                                                                                                                                               Local firms

                                                  Hansen Winergy                               Suzlon                                                      Local
                              Suzlon         LM                          Suzlon                             Elin     Patel Alloy               Suzlon

  Note: Value chain positions are approximate
  Source: Suppliers, Emerging Energy Research

       Various global turbine vendors have adopted unique vertical integration
       strategies, with several major OEMs bringing component supply in-house
     at are the Supplier ea   g Curves?
   What a e t e Supp e Learning Cu es

– Mapping your capabilities/competencies to the needs of the
   • How do my assets match up with industry needs (Work force, equipment,
     facilities, partnerships)?
   • What supply partners do I need to break into market
   • What are my business model options
   • What are the customer contract options (licensing agreement, JV, work in
     exchange for equity)
   • What investment will be required (equipment, facility, talent)
   • Does my investment allow entry into multiple AE markets (wind, solar,
     HEV’s, biomass systems)
   • A detailed market structure and penetration analysis is helpful (SWOT,
     competitive analysis/threats)
          What NextEnergy is Doing to Assist?

• Focusing on Supporting Both…
   – Michigan suppliers who want to diversify
            d t      d       h      d f help
   – AET product producers who need mfg h l

• Defined the Manufacturing Value Chain
   – Michigan suppliers who want to diversify
   – AET product producers who need mfg help

• Education and Intelligence Sharing
   – Held several educational seminars for Suppliers on Mfg Opportunities in the
     Renewable Energy industry
   – Developed market briefings and manufacturing/component resource guides for
     wind, PV, advanced batteries and biomass systems

• Brokering Relationships
   – Reached out to OEM’s, tier 1’s to identify mfg bottle necks
   – Hosting supplier match making events
                 y               p
          Industry Value Chain Map: WIND
                                              From Raw Material‐to‐Installation

   Raw Material                 Design &                                                     Construction & 
                                                 Component            Wind  Turbine                                          Wind 
   & Machinery                Development                                                      Installation 
                                                  Suppliers            Companies                                           Developers
     Suppliers                  Services                                                         Services
•Steel                           g
                            •Design            •Gear Boxes
                                                                    •OEMs                   •Engineering &               •Feasibility 
•Carbon Fiber               •Engineering       •Bearing
                                                                    •Large Utility Scale    Procurement (EPC)            Analysis Firms
•Balsa Wood                 •University        •Tower
                                                                    •Small Wind             •Construction                •Project 
•Fiberglass                 Research           •Generators
                                                                    •New Wind Energy        Companies                    Developers
•Other materials            •Machining         •Blades
                                                                    Designers               •Transportation              •Utilities
•Machinery                  •Automation        •Electronics
                                                                    •Turbine Mfg            Services
•Tooling                    •Assembly
                                                                    Licensees                  p
                                                                                            •Operation & 

 NEC Suppliers/Partners 
  •Axson                     •Kerkau Mfg       •Cascade             •GE                    •Walbridge                   •Mackinaw Power
  •Gurgeon Brothers          •Huron County     •Cobasys             •Clipper               •Conestoga                   •Noble Power
   Steel Industries
  •Steel Industries          Mfg Consortium
                                g               Kaydon Bearings
                                               •Kaydon Bearings     •Vestas                   g            p
                                                                                           •High Rise Escape                      y
                                                                                                                        •FES Surveyors
  •Great Lakes Gear          •Merrill Fab      •Williams Forum      •Bergey                •Buist Electric              •DTE
  •Unimerco                  •Allegheny/ATI    •SKF                 •Southwest Wind        •Industrial Control Repair   •Consumers Energy
                             •Ricardo                                                      •Hov‐aire                    •Wolverine Power
                             •Three M Tool                                                 •Liptin
 *NEC New TechnologyClients
 P        Di
•Paragon Die                   Fl S *
                              •FlexSys*         D     k*
                                               •Danotek*           ADSC*
•3G Services                                                      •Aerotecture*
•Great Lakes Carbon Fiber                                         •Franklin Energy*
                                                                  •Heron Wind
                                                                  •Tool North
•   500+ manufacturers who are in our Michigan supplier network
•           li     t h   ki        t / ti iti
    20+ supplier match making events/activities
    –   Wind Turbine OEM’s: Clipper, GE, Vestas, Siemens, Acciona, Nordic Wind Power
    –   Wind Energy Tier 1 Suppliers: Moventas - Gear Boxes, SKF – Bearings, Danotek - PM
    –   Solar/PV OEM’s: Uni-Solar, Prime Star Solar, Infinia, Soliant
    –   Fuel Cells: Nuvera, Adaptive Materials
    –   Biomass Systems: Greenville Mfg
    –   Automotive EV/HEV OEM’s: Tesla Motors, Chrysler
•   100+ organized private meetings and several more personal
    introductions between Michigan suppliers and AE product
•   70+ quoting on new business
•   Helped current AE suppliers take on additional business
•   Helped suppliers receive their first order in the AE market
   Economic Security
through Energy Diversity

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