Capacitors in Renewable Energy Systems: Opportunities for Growth to 2030
02.13.2013 // Dennis M. Zogbi // Passives
Introduction and Market Overview:
With global electricity needs expected to increase by 58% between 2013 and 2030, suppliers and end-users of electricity are seeking renewable sources of energy that include solar, wind, geothermal and tidal energy generation technologies.
Renewable energy systems have increased public awareness and have attracted both public and private investment around the planet. Political concerns about the continued supply of oil and natural gas, as well as scientific fears over global warming and the need to reduce carbon footprints from traditional power generation techniques have prompted widespread legislation based on specific goals outlined in the famous Kyoto Protocol (an international agreement on pollutants that calls for the reduction of greenhouse gases for the benefit of the future of the planet). This has created a significant increase in the number of national and local-level mandates regarding renewable energy systems and more importantly has created a significant increase in subsidies, especially for solar and wind generation forms of renewable energy.
For example, Germany, Italy, France and the United Kingdom, and Asian countries, such as China, India and Japan, have adopted Feed in Tariffs ("FIT") whereby the government pays between $0.30 to $0.40 per kilowatt hour over a 20-year time period for energy fed back into the utility grid. Also, in the United States, the federal government has offered tax incentives to spur the adoption of renewable energy. These incentives are intended to bring the production cost of electricity from renewable sources to be on par with power generated from fossil and other fuels, thereby encouraging creation of energy from clean and renewable sources. These incentives have proven effective in growing the renewable energy market around the planet, but have been, to date, most effective in Western Europe (Germany and Italy) which continues to account for the lion’s share of the global market for renewable energy systems and their respective sub-assemblies and components including capacitors.
IMF and the Global Economic Outlook: 2013
In its fall 2012 forecast, the International Monetary Fund (IMF) warned of the potential for a new global economic crash and has therefore reduced its forecasts for growth in the global economy for the second time in succession. The Fund is forecasting revised global growth rates of 3.3% and 3.6% for 2012 and 2013 respectively, which is 0.2 and 0.3 percentage points less than the forecast the IMF made in July 2012. The European debt crisis and the lack of economic growth in the U.S. are cited as the two primary reasons for the revised downward forecasts for the global economy. In the opinion of the IMF, the economy in the euro zone contracted by at least 0.4% in 2012 and will grow slightly, by 0.2%, in 2013. The IMF forecasts for Italy, Spain and Great Britain, were cut sharply. With regard to Germany, the International Monetary Fund expects gross domestic product (GDP) to grow by 0.9% in 2012 and 2013 because of the uncertain economic situation. The IMF still forecasts the strongest growth among the industrialized countries for the U.S. with growth rates of 2.2% for 2012 and 2.1% for 2013 but, at the same time, warns of the impact of unresolved fiscal problems in the U.S. The newly industrialized countries are likely to grow by around 5.3% on average this year and by around 5.6% in 2013. This is 0.3 and 0.2 percent points less than the forecast the IMF made in July. The IMF forecasts as well as the reality on the ground, have caused some governments to seriously reduce their feed-in tariffs for 2013, which is having the greatest affect on the European market for renewable energy systems. Major suppliers of inverters and aggregators of renewable energy technology have pointed to the reduced feed-in tariffs in Western Europe as the largest threat to market growth in 2013.
The Importance of the European Market for Renewable Energy Systems:
Europe accounted for almost 60% of global demand for renewable energy systems in 2012. Many European markets, in particular Germany and Italy, have adopted massive reductions in incentives in 2012 that will negatively impact the 2013 market. The cuts in the solar subsidy in Italy and Germany began to impact the renewable energy markets in the September 2012 quarter. Paumanok believes that demand in Europe will continue to fall sharply in 2013. At the same time, far greater price pressures are expected because comparatively large numbers of inverter manufacturers are competing in a smaller market.
The European Market and the Coming Changes in Feed-In Tariffs for Renewable Energy Systems
The European market has already been negatively affected by reductions in local government feed-in-tariffs and government subsidies in late 2012, with continued impact expected well into 2013. Changes in feed-in tariff incentives have negatively influenced customer demand for solar and wind renewable energy products in Europe. This in turn has created competitive pricing pressures that negatively impacted the revenue and profitability of turnkey suppliers of wind and solar projects and the components consumed in their manufacture. Paumanok believes that downward price pressure will have a negative effect on revenues throughout the renewable energy supply chain in 2013.
Renewable Energy Turnkey Manufacturers Focus on New and Emerging Markets: 2013
Feed-in-tariffs and other related government legislation will continue to drive the revenue levels of the global renewable energy market. And while Europe will experience a difficult economic climate in 2013, renewable energy equipment vendors will expand into high-growth markets such as China, Japan, India, Latin America, Thailand, Middle East and North America in 2013.
2013 Forecast Installation Trends in Solar and Wind Technology:
For 2013, a newly installed solar capacity of between 27 GW and 33 GW (2012: 31 GW to 34 GW) is predicted globally. Compared with 2012, when global installed solar capacity was between 31 and 33 GW, this would suggest only small growth in demand for solar energy in 2013.
The same situation exists for wind power generation, of which new additions accounted for an estimated 34 GW in 2012 (With installed global capacity now at 273 GW). 2013 forecasts are expected to be up by about 7% to 36 GW, but severe price pressure is expected.
Taking account of the price pressure expected, and even though volume may be up due to high installation rates in China, India, Japan and the Americas in 2013, the downward price pressure will cause limits on value growth in the supply chain, however the 2013 market is still expected to grow.
Renewable Energy Competition with Traditional Energy Resources:
Based on a combination of data from Siemens AG and separate research from Paumanok Publications, Inc. for the 2012 year, we estimate that global installed capacity for electricity generation was 22,771 GW. This is expected to increase by 58% by 2030 to about 36,000 GW, which is a CAGR of 58%.
Figure 1: Renewable Energy Competition With Traditional Energy Resources (Electricity Generation by Type): 2012-2030 in GW
Source: Siemens AG Estimates, Forecasts Modified by Paumanok Publications, Inc. The reader will note how renewable energy resources represent only a fraction of the global energy output required. This supports the large projected growth rates for this technology to 2030. The long-term outlook for renewable energy systems is robust. “Other systems” noted above include tidal energy and geothermal, as well as other systems, both alternative and traditional.
Emerging Renewable Energy Technologies: 2013
During the course of Paumanok Publications, Inc. recent study on capacitor markets in renewable energy systems we were surprised to see the heightened level of activity in tidal energy equipment development worldwide (especially in Europe). This included new technologies designed to harness the energy of ocean wave technology, river currents and changes in the tides in harbors, bays and estuaries. The amount of new investment in the tidal energy sector, coupled with the increasing number of vendors of equipment in the space hinted at an emerging market with great future market potential. One of the most interesting aspects about tidal energy generation is that unlike solar and wind technology, tidal energy generation is not intermittent and is a steady source of renewable energy in comparison. The other segment of the market that is also generating interest is hydrothermal steam generation, although this technology offers the design engineer a number of challenges, not the least of which is that certain parts of the system require components to operate at as high as 300° C.
Capacitor Types Consumed in Renewable Energy Systems: FY 2013:
Based on primary research conducted for this report Paumanok has determined that there are three primary types of capacitors consumed in renewable energy systems. The reader should note that there are similarities between the circuits found in solar and wind renewable energy systems, primarily in the inverter and the DC link circuits that expand the overall market for capacitors consumed in this segment. Since long-term growth is expected for both wind and solar technology, the opportunity for capacitors is significant and should not go overlooked, especially by manufacturers of plastic film capacitors, aluminum electrolytic capacitors and double layer carbon supercapacitors.
DC Film Capacitors
DC film capacitors are manufactured primarily in radial leaded designs. These radial leaded designs are either molded box or dipped configurations. In a molded box, the film is wrapped around a core, placed in the box and the voids are then back-filled with epoxy. In the dipped design, the wrapped core is “dipped” in the epoxy. In surface mount designs the film is stacked in sheets and then extruded and chopped into capacitor case sizes. The volume of DC film capacitors sold are in the 5mm polyester film capacitor which is used in filtering circuits.
Aluminum Electrolytic Capacitors
Aluminum electrolytic capacitors are constructed from two conducting aluminum foils, one of which is coated with an insulating oxide layer, and a paper spacer soaked in electrolyte. The foil insulated by the oxide layer is the anode while the liquid electrolyte and the second foil acts as the cathode. This stack is then rolled up, fitted with pin connectors and placed in a cylindrical aluminum casing. The two most popular geometries are axial leads coming from the center of each circular face of the cylinder, or two radial leads or lugs on one of the circular faces.
Also knows as Electric Double Layer Capacitors, or Supercapacitors - are alternative energy storage devices which store energy by electrostatically (physically) separating positive and negative charges. This is in contrast to batteries which store energy via orbital electron exchange (chemically). The lack of chemical reaction within permits ultracapacitors to be charged and discharged up to 1,000,000 times (compared to 100s or 1000s of charge/discharge cycles in batteries) - and at a faster rate than batteries.
Summary and Conclusions:
Market opportunities exist for capacitors in established and emerging renewable energy systems in both the short and long term, especially for polypropylene (PP) film capacitors, polyethylene terephthalate (PET) film capacitors, large can screw terminal and snap mount aluminum electrolytic (Al203) capacitors, and for large can double layer carbon supercapacitors (EDLC). Key applications include power smoothing for solar and wind inverters, pitch and nacelle control for wind turbine blades and motor run capacitors for geothermal pumps. Short term opportunities will be challenging, with 2013 seeding a transition to regional opportunities in Asia, Americas and Middle East and away from the largest market in Western Europe due to mandated adjustments in tax incentives and tariffs. Global output for electricity from renewable sources such as solar, wind, tidal and geothermal energy should increase in 2013, but we expect that price erosion will accompany the transition to regional markets outside of Europe due to the large number of vendors in the supply chain and the apparent expectation that each one will garner significant market shares in China and the U.S. in 2013. The long-term opportunities to 2030 remain robust, with many countries around the planet creating specific goals for electricity generation from renewable sources ensuring significant growth opportunities for the equipment consumed in the production of wind, solar, tidal and geothermal energy systems.
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