Trends in Wind Energy Component Logistics

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Trends in Wind Energy Component Logistics

• Prepared for
• AWEA Wind Energy Fall Symposium 2008
• Accelerating Wind Industry Growth Towards 20
• November 20, 2008
• Palm Desert, CA

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Introduction

• About Professional Logistics Group, Inc.
• Contents
• Sizing the Breadbox
• Current Logistics Snapshot Near Term Trends
• The Future Breadbox Under 20 by 2030
• Required Innovations to Get There
• This presentation will be available at
• www.prologisticsgroup.com
• www.awea.org

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Sizing the Breadbox

• Cost of turbine logistics equal to about 10-15
  of total turbine cost
• Approx. 225K per turbine
• Approx. 140K per MW
• 2008 1.1B US wind transportation market
  85 via truck
• Hidden costs resulting from built-in
  inefficiencies
• Carrier demurrage at origin and wind farm
• Lost crane productivity
• Construction delays
• Opportunity cost of delays to commissioning

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Sources of Component Logistics Inefficiency

• Poor planning
• Suppliers/sourcing in flux
• Logistics regarded as an afterthought non-core
  cost center
• Lack of management depth in logistics
• EXW sale terms
• Highway regulations
• Fuel costs
• Infrastructure constraints
• The larger transportation ecosystem

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The Imperative Under 20 by 2030

• Drive out inefficiencies
• Keyword Innovation
• Planning
• Mode mix
• Asset utilization
• Component design

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Current Logistics Snapshot Near Term Trends

• Double whammy
• Late renewal of PTC, and only for one year
• Credit crunch delaying or terminating wind
  projects
• Impact
• OEMs late to commit
• Slack transportation market
• Aggressive truck pricing
• No material improvement in highway permitting
• Inconsistencies in requirements, changes
• Diesel prices favoring shippers

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The Future Breadbox Under 20 by 2030

• 8 9.6 MW additions YOY over next five years
• 1.3 - 1.6B annual transportation spend
• Driver Change in avg. turbine size over time
• Forecast of key metrics
• Logistics cost per turbine est. 338K (50)
• Logistics cost per MW est. 131K (-9)
• Challenges by component
• Nacelles increased weight 3MW machines in
  multiple loads
• Towers base sections increasing diameter
• Blades - gt37.3M unable to transport 2x per
  trailer

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A Prescription for Required Innovations

• Become multimodal innovatively!
• Include logistics as part of core commercial
  strategy
• Get logistics involved early in
• Site selection
• Sourcing decisions
• Component design
• Put transportation in the palette of issues
  advanced by AWEA
• Utilize 3PL/4PL resources that are mode,
  carrier, and node neutral

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Thank you!
For more information, please contact Graham
Brisben, President Professional Logistics Group,
Inc. 1-708-386-0700 gbrisben_at_prologisticsgroup.c
om WWW.PROLOGISTICSGROUP.COM
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