Wind energy manufacturers' challenges

Using turbulent times to become fit for future

Hamburg, 2009

STR-81011-009-01-01_Wind-Challenges_v19.pptx
Content

A. Crisis 2009 and beyond Only a short calm for the wind market

Page 3

B
B. Challenges ahead Using turbulent times to become fit for future

Page 15

D. Way forward How Roland Berger can support you

Page 30

STR-81011-009-01-01_Wind-Challenges_v19.pptx 2
A. CRISIS 2009 AND BEYOND
Only a short calm for the wind market

STR-81011-009-01-01_Wind-Challenges_v19.pptx 3
The crisis has brought a calm to the wind industry Long-term
growth trend still intact with 17% growth p.a. until 2012
Forecasts comparison – Pre-crisis vs. actual
ROOT CAUSES
Worldwide yearly added capacity
[GW] Slowdown...
+17% p.a. > Lack of financing, especially for large projects – Required
55
equity share has increased typically in Europe from ~15%
to ~30% plus additional insurances
GROWTH SLOWDOWN > Reduced urgency to compensate high prices of electricity
50
from fossil sources (oil price evolution)
> Uncertainty regarding general development of the
45 worldwide economy, financing and subsidies' volume
associated to economic slowdown
40
... but growth trend still intact:
35 > Economic stimulus packages strongly support renewable
energies, especially wind
30 > Strong growth share in countries less dependant on
financial markets (China)
> Ambitious government goals for renewable energy share in
25
core markets (e.g. USA, Europe, China, India...)
2008 2009 2010 2011 2012 > Cost penalties for fossil energies in Europe (ETS)
Forecast pre-crisis Actual forecasts
Source: BTM 2008 and 2009 STR-81011-009-01-01_Wind-Challenges_v19.pptx 4
While the industry is expected to grow healthily, margins of
manufacturers will come under strong pressure
Key market trends Impact Impact
on Growth on Margin

1 Medium and long-term investment and growth plans in key markets + O

2 Wind energy costs converge towards grid parity + –

3 Large scale entry of utilities is changing rules + –

4 Focus on global network of local supply chains + +

5 New entrants pressure established players O –

+ Positive O Neutral – Negativ
Source: Roland Berger STR-81011-009-01-01_Wind-Challenges_v19.pptx 5
 1 INVESTMENT AND GROWTH PLANS

Governments are establishing ambitious investment and

growth plans for wind energy all over the world
Worldwide actual and potential wind power capacity 2008-2020 [GW]
TOP GROWTH MARKETS
Europe
EU countries
+136 > Proposed target of 20% of renewable energy sources by 2020 – wind
North America 202 contributing to 11-14% of electrical energy with 180 GW, including 35
+141 GW offshore1)
66 > Total investments between 2011-2020 accounting for EUR 120 bn
169
USA
Asia/Pacific > Proposed target of 20% wind power by 2030
28 Installed Potential > Economic stimulus bill including USD ~80 bn for renewable energy,
+163
2008 2020 including extension of production tax credits and offering of invest-
189 ment tax credits
Installed Potential > Investment plans include initiatives for the transmission system which
2008 2020 RoW constrains the wind energy growth today
26
+15 CHINA
> 3% target of non-hydro renewable electricity production by 2020 –
16 Installed Potential 100 GW of wind power capacity by 2020
2008 2020 > "10 GW Size Wind Base" program planning large scale deployment of
10 GW of wind power in four key regions until 2020
1
India
> Government plans for wind power capacity of 40 GW by 2022
Installed Potential > Offshore wind, currently untapped in India, has significant potential –
2008 2020 India has 7,000 miles of coast line
1) EWEA reference scenario
Source: EER, EWEA, GWEC STR-81011-009-01-01_Wind-Challenges_v19.pptx 6
 1 INVESTMENT AND GROWTH PLANS

"20-20-20" targets bind EU countries to produce 20% of their power

with renewables – Wind best positioned to fill the supply gap
Impacts of the EU ETS on utilities – EU Climate and Energy Package, December 2008
IMPACTS FOR UTILITIES
Europe "20-20-20" targets 2020
> Utilities are responsible for around ¾ of CO2
emissions of all branches of industry
> Utilities will be allowed to emit only as much CO2
as they have emissions allowances (certificates)
-20% CO2 emissions > From 2013 on utilities will have to buy 100% of
… of 1990 levels by 2020 their certificates1) in auctions and may trade
them afterwards (EU ETS2))
20% renewables
… share of energy mix by 2020 > By 2020 the total number of available certificates
will be reduced by 21%
-20% energy used > A considerable number of coal-fired power plants
… of 2020 projected levels
will have to be substituted – wind is the most
mature renewable source to fill the supply gap
and to reach the national quotas of renewable
energy
1) Utilities in East European countries are exempted and will get 70% of their required certificates for free after 2013 until 2020
2) Emissions Trading Scheme

Source: EU Council STR-81011-009-01-01_Wind-Challenges_v19.pptx 7

 2 GRID PARITY

Wind energy costs still need to decrease to reach full parity with
bulk power costs – Main driver is the price for wind turbines
Historic and forecasted energy cost development in Europe 1985-2030 [EUR/MWh]
REMARKS
150
> Energy costs account for:
– Capital costs
Solar PV
– O&M costs
– Fuel costs (not for renewables)
100 – CO2 emission costs (25-30 EUR/t)
81 Grid Fossil
75
68 > Increase of wind energy costs
Wind – max between 2005 and 2010 due to
53
increased capital costs because of
50 high wind turbine prices
Grid Bulk Power
Wind – min
43
39 > Capacity constraints and high price
for wind turbines assumed to
continue until 2010
0
1985 1990 1995 2000 2005 2010 2015 2030

Source: EWEA, IEA, RISO, Roland Berger STR-81011-009-01-01_Wind-Challenges_v19.pptx 8

 2 GRID PARITY

Wind turbines' cost is the main lever to decrease wind energy

prices – strong price reductions expected
Typical life cycle costs of a 2-MW onshore wind turbine [%]
REMARKS

"Turbine costs will decline by 20% in 24% 100% > Wind turbine acquisition costs is the main lever for
utilities to reduce overall wind energy costs
the next 3 years" [Acciona Energia] > Wind turbine suppliers have to plan with strong price
and profit margins reduction in the next years
7% 76% > For offshore, the wind turbine accounts for 45%-50%
5% of the total life cycle costs, varying strongly with water
7% depth and distance to coast – deployment and O&M
57% much higher than for offshore
> Other up-front costs include:
– Land up-front costs
– Electric installation
– Consultancy
– Financial costs
– Road construction
– Control systems
> O&M account for:
– Service & spare parts 26%
– Administration 21%
– Land rent 18%
Turbine Grid Found- Other Total capex O&M Total – Miscellaneous 17%
(ex works) connec- dation up-front – Insurance 13%
– Power from the grid 5%
tion costs

Source: EWEA, DEWI, Eon, RWE, Roland Berger STR-81011-009-01-01_Wind-Challenges_v19.pptx 9

 3 ENTRY OF UTILITIES

Six key factors are driving the utilities to increase wind in their
portfolio, broadening their energy mix

OIL AND GAS RISK SHORT LEAD TIME OF WIND

> Oil and gas prices and supply uncertainty > Global energy demand grows by 10-20%
increases the need for utilities to reduce their each year
exposure > Building a standard wind park takes only
> Wind broadens the energy mix cost-effectively Utilities' growth 3-5 years, a much shorter lead time than that
in wind energygy of a conventional plant

CRISIS "WINDOW OF OPPORTUNITY" market PROMOTE GREEN IMAGE

> Problems for small and medium wind players > Strong focus on > General public increases awareness on
to access financing reliability and yield environmental issues
> Acquisition of locations, equipment and know-how > Global supply of > Utilities need to promote a green image
at low prices relying on strong cash flow from opposed to the traditional "polluter" one
wind turbines
operations
> Own project
management and
EU "20-20-20" TARGETS FOR 2020 POLITICAL INCENTIVES
O&M organizations
> Utilities are forced to auction 100% of required > Support by political initiatives making wind
CO2 certificates after 2013 energy production more attractive
> Operation with CO2-intensive energies (e.g. tax incentives, feed-in tariffs)
(e.g. coal) will become more expensive

Source: Roland Berger STR-81011-009-01-01_Wind-Challenges_v19.pptx 10

3 ENTRY OF UTILITIES
Wind turbine manufacturers loose negotiation power – Current
favorable delivery and price conditions expected to decrease
From a sellers' to a buyers' market
> Intense competition for market share
in growth markets and for key clients
– Dominance of top 6 wind turbine
manufacturers constantly decrea-
sing (market share from 85% in
2005 to 69% in 2008)
– Competition from local players in
growth markets and specialists
intensifies
> Increased capacities and ability to
deliver
– Major investments are alleviating
supply shortages in critical areas
> Fewer but larger orders
– Larger project sizes, both for new
parks and repowering activities
– Global framework agreements
> Global reach of main utilities
– Main utilities operate internationally
in key growth markets – global key
accounts
Loss of
> Strong pressure to reduce renewable
negotiation energy costs
Power – Grid parity is one of the key levers
to achieve established renewable
energy targets
STR-81011-009-01-01_Wind-Challenges_v19.pptx 11
 3 ENTRY OF UTILITIES

Bigger wind park projects and framework agreements are intensi-

fying the competition among WTM for fewer but larger orders
Bigger wind park projects and framework agreements
TOWARDS BIGGER WIND PARK PROJECTS TOWARDS FRAMEWORK AGREEMENTS

40 90
Competitors have
Average number of turbines entered into major deals
35 80
Number of farms with utilities
70
30 > Siemens agreement
60
25 with Dong Energy for
50
20 1800MW
40
15
30 FEWER > REpower will
10 20 BUT manufacture for RWE
5 10 LARGER wind turbines
0 0 ORDERS amounting 1900 MW
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
> Harder
> Average wind farm size increased by 20% in the last competition > Utilities are allocating large orders and
four years – larger projects over 50 MW are expected among WTMs establishing framework agreements with
in the next years, specially offshore > Crucial importance selected suppliers – partnerships focusing to
> Wind park size is a key factor for the develop joint growth approaches
of partnerships
industrialization of wind energy and key account > Number of suppliers to the major utilities is
management reduced

STR-81011-009-01-01_Wind-Challenges_v19.pptx 12
4 LOCAL SUPPLY CHAINS

Supply chain focus is changing from the ability to deliver to the

global development of local supply networks
Focus today vs. tomorrow
FOCUS TODAY FOCUS TOMORROW

FAL
Components Manufacturing

> Ability to deliver – Secure supply of key components > Develop clusters with local supply networks in key
> Ways to overcome constraints of oligopolistic markets markets on a global level
for gearboxes and bearings > Importance of "Buy Local" to participate in governmental
economic stimulus programs

STR-81011-009-01-01_Wind-Challenges_v19.pptx 13
 5 MANUFACTURERS LANDSCAPE

Dominance by top six players is decreasing strongly –

Intense battle for market share expected the next two years
Overview market shares 2005-08 [% MW delivered]
REMARKS
100% 100% Others
9% > Market dominated by Vestas, GE, Gamesa, Enercon,
16% Sinovel
1% 2% Suzlon, and Siemens, accounting for 69% of delivered MW
85% 3%
6% 4% Acciona > Competition
p for market share intensifies – tougher
g
6% 4% Goldwind
4% conditions expected in 2009-2010
69% 3% – Market share of top 6 suppliers decreased from 85% to
14% 6% Nordex
69% in 2008
8% Siemens – More than 10 other turbine vendors fighting for market
13% Suzlon share in regional markets
9%
Enercon - Offshore specialists: REpower, Multibrid
11% - Local players: Clipper, Dongfang
18% Gamesa - Others: Mitsubishi, Windflow, Fuhrländer, Windey,
Ecotecnia, Dewind, Unison, Hyosung, Doosan
17% GE Energy
> Strong growth Chinese and American markets strengthen
28% local suppliers – further market share gains expected
18% Vestas – USA: GE from 15% in 2007 to 17% in 2008 – other
suppliers as Clipper emerging (2% in 2008)
– China: Sinovel and Goldwind from 7% to 8% together –
2005 2008 other suppliers as Dongfang emerging (3% in 2008)
Top 6 Rest
Source: BTM, EER, Companies, Roland Berger STR-81011-009-01-01_Wind-Challenges_v19.pptx 14
B. CHALLENGES AHEAD
Using turbulent times to become fit for future

STR-81011-009-01-01_Wind-Challenges_v19.pptx 15
To protect the market position and margins, wind turbine
manufacturers need to address four challenges
Challenges wind turbine manufacturers
1 CAPTURE 2 LEVERAGE 3 ENHANCE 4 RESTRUCTURE
MARKET TECHNOLOGY SUPPLY CHAIN OPERATIONS

> Benefit from govern- > Drive standardization, > Manage risk of supplier > Manage liquidity shor-
ment incentive modularization and base tages and adjust ca-
programs development of > Eliminate supply pacities in the short
> Secure access to platforms constraints term
profitable key markets > Manage complex > Establish and manage > Further industrialize
and clients technology trade-offs local supply chains on operations
beyond pure perfor- a global scale > Build up global
mance criteria, focu- operations footprint
sing on life cycle costs

USE CURRENT SLOW DOWN TO PUSH AHEAD INITIATIVES!

Source: Roland Berger STR-81011-009-01-01_Wind-Challenges_v19.pptx 16
 MARKET
1
The three top markets – Europe, USA and China – have
extensive incentive programs for renewable energy on place
Overview main country markets incentive programs
> "20-20-20" targets
proposing a contribution of
wind energy of 11-14% to
EUROPE European electrical
consumption (~180GW)
> Proposed target of 20% of
electricity supplied by wind
energy in 2030
USA
> Ambitious targets fixed in
the Wind Base Program,
aiming for more than 100
CHINA GWs until 2020
> Strong willingness to
promote domestic manu-
facturing of equipment
Source: GWEC, EWEA, Roland Berger
> Energy production: Different schemes are operating, mainly feed-in-tariffs, fixed premiums, green certificates
and tendering procedures
> Project development: Depending on national and regional governments but basically tax incentives, soft loans,
contribution programs and environmental taxes /carbon certificates (indirect benefit for wind energy)
> Equipment manufacturing: No specific programs apart from national and regional schemes fostering industrial
growth typically based on job creation.
growth, creation R&D incentive programs on national and EU level.
level
> Energy production: Different schemes on federal and state level, but basically based on a production-tax-credit
(PTC). Possible introduction of a national renewable portfolio standard scheme
> Project development: Investment-tax-credits and loan guarantees on a federal level and different schemes on
state level (e.g. tax incentives, land acquisition, grants, loans...). Indirect support through specific incentives for
investment on the transmission network and a proposed cap-and-trade scheme penalizing carbon emissions
> Equipment manufacturing: Programs mostly on state level, typically based on job creation and including tax
incentives, soft-loans and low costs for land and infrastructure. R&D funding programs.
> Energy production: project specific fixed tariffs based on wind resources, transmission and production costs
(only for non-concession projects) and a tariff premium pro MW
> Project Development: tendering for national concession projects and low interest loans
> Equipment manufacturing:
– Higher taxes for importing wind turbines and key components
– Specific incentives (cash subsidies pro MW) for the manufacturing of turbines for domestic brands (>51%
chinese)
– National and regional specific subsidies, tax incentives and low interest loans for the establishment of new
companies
STR-81011-009-01-01_Wind-Challenges_v19.pptx 17
 MARKET
1

Each of the top markets require a different strategy and

positioning approach
Key success factors for WTMs in top markets

USA CHINA
> Partnering g with > Partnering with
local and European domestic manufac-
utilities/IPPs turers and suppliers
leading capacity Subsidies for manu-
build-up facturing of turbines only
for domestic brands
> Build up own (>51% chinese)
domestic capacity
and supplier network > Build up local manu-
Reduce logistic facturing capacity to
costs and currency supply the market
risks EUROPA Reduce costs,
> Partner with major utilities, with a including high import
focus on offshore, repowering and taxes for wind turbine
markets in growth phase (e.g. France) components

> Reduction of wind turbine costs driven

by industrialization and efficiency
Source: Roland Berger STR-81011-009-01-01_Wind-Challenges_v19.pptx 18
 MARKET
1

Main challenge is to secure top line growth in the next years –

Focused and orchestrated market approach essential
Overview market approach
MARKET > Identify and select growth markets to target
MAPPING & > Collect information and build market profiles Orchestrated market
ANALYSIS (structure, volumes, legislation, renewable approach to:
programs …)
> Secure participation
in the growth of key
markets (USA,
CUSTOMER > Identify and map customers and competitors China, Europe)
PORTRAIT & > Collect customer & competitor intelligence, including govern-
COMPETITOR building-up an in-depth understanding of the ment renewable in-
PROFILES target markets vestment programs
> Establish global fra-
mework agreements
ACTIVATION > Define targets and gain major
contracts with key
STRATEGY > Identify levers and barriers to action
utilities
> Establish market/client specific actions
strategies and action plans

STR-81011-009-01-01_Wind-Challenges_v19.pptx 19
 TECHNOLOGY
2

Modularization and platform strategy can reap significant

benefits in investment and variable costs
Platform strategy/modularization – Project example
PROJECT RESULTS
> Standardized torque area for gearboxes
> Significant decrease in number of designs and parts
> F
Fewer critical
iti l variants,
i t more reliable
li bl modules
d l
> Increased flexibility for more focused product
differentiation

Unique designs Part numbers Investment [hours] Variable costs [EUR '000/unit]

-67% -61% -40% > Engineering -22% > Material cost

> Manufacturing > Manufacturing
– Production cost
6 90 250 facilities 5.0 > Warranty &
150 3.9
– Tools goodwill
2 35
> Logistics

Actual Target Actual Target Actual Target Actual Target

Source: Roland Berger STR-81011-009-01-01_Wind-Challenges_v19.pptx 20

 TECHNOLOGY
2

Complex technology trade-offs require holistic evaluations of

performance, supply chain and life cycle costs requirements
COMPLEX TECHNOLOGY TRADE-OFFS
EXAMPLE CASE: COMPOSITES
Performance Supply chain > Performance and technical challenges
> Design solutions > Components and – Development of design solutions using CFRP low weight and high stiffness,
> Yield/costs trade- materials availability e.g. longer blades enabling more efficient energy harvesting
offs aandd capacity
capac ty – Operating life constraints and environmental damage, e.g., lightning strike
> Design
D i ffor requirements – Design for manufacturing – complex manufacturing processes and
manufacturing > Supplier landscape tolerances
> etc. > etc. > Supply chain
– Suppliers landscape – three companies, Toray, Tohotenax and Mitsubishi
Rayon, account for >75% of the market
– Most of the capacity today focused on high margins industries as
Life cycle costs aerospace – secondary players focus on wing (e.g. Zoltek)
> Materials and components – In 2015, material requirements for wind turbines would account for 25,000
manufacturing costs tons, ~2,5 times the volume of material required for new aircraft programs1)
> Assembly costs > Life cycle costs
> Deployment costs – Material costs – high costs of CFRP, ~350 USD/kg for aerospace high-
> Operation and maintenance grade materials. Lower-grade materials still far from 12 USD/kg target for
> etc. wing industry
– Manufacturing costs – expensive and complex processes
Additional regvired future focus – Maintenance – new methods and processes for inspection and repairs
Main focus today

1) Based on the assumption of 3% CFRP application for blades; aircraft programs A380, A350 and B787
STR-81011-009-01-01_Wind-Challenges_v19.pptx 21
 TECHNOLOGY
2

Many challenging technology trade-offs expected in the near

future – Increasing focus on reliability, costs and yield
Overview key technical challenges - Focus on reliability, costs and yield
BLADES AND ROTOR DRIVE TRAIN AND GENERATOR
> Focus > Focus
– Larger sizes for more efficient energy harvesting – Reliability and efficiency (e.g. gearbox accounts for ~40%
– Capability to sustain higher loads of wind turbine failures)
– Quality (e.g. cracks, delamination, …) – Operational lifetime
– Costs for transport and handling – Service and maintenance
– Manufacturing costs – Installation costs
– Operational lifetime
> Challenges
– Low weight and high stiffness of structures
– Lighter and more compact housings (e.g. integration of
> Challenges
drive train and generator)
– Introduction of new materials (e.g. CFRP)
– Simplification and new design solutions for drive trains
– Manufacturing constraints
(e.g. reduction of bearings and roller parts)
– Endurance to environmental damage (e.g. weather,
– Integration of new generator technologies (e.g.
lighting)
superconductor generators)
TOWER AND FOUNDATION GRID CONNECTION & INTEGRATION
> Focus
– Lighter and leaner structures > Focus
– Material, handling and installation costs – Adaptation to grid requirements (e.g. stability, voltage
– Installation and costs of foundations, specially offshore fluctuations)
> Challenges – Integration costs (e.g. due to intermittency)
– New foundations design, construction techniques and > Challenges
materials, specially for Offshore – Industrial customization and modularization of wind
turbines
– New integration technologies
Source: Roland Berger STR-81011-009-01-01_Wind-Challenges_v19.pptx 22
 SUPPLY CHAIN
3

In the light of the current economic crisis it is key to assess

and manage the risk along the supply chain

A PRIORITIZATION
OF PRODUCTS AND
SUPPLIERS
B IDENTIFICATION OF RISKY
SUPPLIERS C SELECTION OF LEVERS &
DEFINITION OF EMERGENCY
PLANS

Long-list of suppliers Short-list of risky suppliers Fact sheets, levers &

emergency plans for risky
suppliers

STR-81011-009-01-01_Wind-Challenges_v19.pptx 23
 SUPPLY CHAIN
3

Bottlenecks on lower-tier levels are characteristic for the

dynamically growing wind turbine industry
Context and challenges of bottlenecks on lower tier levels of the supply chain
CONTEXT CHALLENGES
Symptoms Causes Key questions to be addressed in order to build a comprehen-
sive supply chain capacity model to identify hidden bottlenecks
> Increasingly quality > Dynamically growing
are:
problems of components industry with CAGR > 20%
(quantity over quality) > How to structure the supply chain?
> Lack of predictability of
> "Blame game" between Bottle- sales plan
> How to get suitable data (availability and quality)?
different parties involved necks in
> Lack of commitment
lower > How to challenge tier-1 suppliers (verify what tier-1 suppliers state
tiers of > Lack of communication about tier-2 suppliers)?
the regarding requirements
supply and volumes (reactive
chain rather than pro-active)

OEM Tier-1 Tier-2

Main challenge for OEM – Traditionally only communication tier-by-tier

Supply chain ramp-up (quantity and quality) in times of – Challenge for OEM to understand tier-2 suppliers
difficult prediction of own market share

Source: Roland Berger STR-81011-009-01-01_Wind-Challenges_v19.pptx 24

 SUPPLY CHAIN
3

A Supply chain capacity model brings supply and demand to-

gether on each tier level allowing for flexible scenario analysis
Illustration supply chain capacity model
SUPPLY SUPPLY CHAIN CAPACITY MODEL DEMAND
Bottom-up approach Scenario > Conversion of Top-down approach
dashboard inputs into one
> In-depth desk research Supply / common unit > Based on market studies
demand
> Extensive interviews with (pieces ship-sets,
(pieces, ship-sets > Validated through desk
internal/external partners MW, etc.) research and interviews
> Prioritize components on all SUPPLY DEMAND > Allowing scenario > Leverage own internal/
tier level Supply Demand analysis through external expertise
dash-board in Excel
> Prioritize components on all
tier levels
1st tier

2nd tier DELIVERABLES 1st tier

3rd tier > Condensed representation using traffic-light

logic 2nd tier

> Stand-alone and aggregated view on total 3rd tier

supply chain including "hit list" of bottlenecks

Source: Roland Berger STR-81011-009-01-01_Wind-Challenges_v19.pptx 25

 OPERATIONS
4
A major challenge is the further industrialization and build up of
global operational excellence
I MANAGE LIQUIDITY SHORT-
AGES AND ADJUST CAPACITIES
> Perform diligent liquidity analysis
> Work on all levels to improve
cash position: Working capital,
investments, financial
restructuring
Source: Roland Berger
III BUILD UP GLOBAL
OPERATIONS FOOTPRINT
II FURTHER INDUSTRIALIZE > Build up footprint in target
OPERATIONS markets involving local suppliers
– global network of manufactu-
> Continue establishing solid and ring clusters
efficient industrial processes
along the whole value chain for
wind turbine assembly and
components manufacturing
> Elaborate comprehensive
development scenarios and work
on operational improvement
levers across all of them
STR-81011-009-01-01_Wind-Challenges_v19.pptx 26
 OPERATIONS
4 I

Short-term liquidity is ensured via three main levers: Working

capital reduction, CAPEX reduction and financial restructuring
Main levers to ensure liquidity
WORKING CAPITAL CAPEX REDUCTION FINANCIAL RESTRUCTURING
REDUCTION

1 Inventory management 4 Overall reduction of capital 7 Freeze of dividends

expenditures
2 Modification of payment terms 8 Equity cure
(with suppliers and clients) 5 Disposal of non-core assets
9 New money restructuring
3 Factoring 6 Sale and lease back of own
assets 10 Debt buyback

11 Covenant reset

12 Debt to equity swap

13 Debt to hybrid swap

Source: Roland Berger STR-81011-009-01-01_Wind-Challenges_v19.pptx 27

 OPERATIONS
4 II
A robust industrialization of operations is key to face pressure
on profit margins
Key levers for a robust industrialization
Product
Development
> Design to life-cycle-costs
> Design
g to Manufacture &
Assembly
> Modularization & complexity
management
> Integrated development
teams
> Standardization of com-
ponents and manufacturing
processes
> Quality and testing programs
> Requirements based
development
Focus product develop-
ment on life-cycle-costs
Source: Roland Berger
Factories
Flow & Layout
> Planning and scheduling
> Internal industrial footprint
p indicators
and layouts
> Storage and intralogistics
> Balancing flow & production
line design – Pull flow
> Batch size and bottleneck
management
> Leadtime reduction
> Rework management
> Production and flow
monitoring
Implement excellent
industrial processes
Organization
> Management of performance
> Organization structure
> Team management
> Continuous improvement
management
> 5S implementation
> Quality of manufacturing
support services
> Wage policy
> Training and skills
management
Work for people
effectiveness
Equipment
> Flexibility of machines and
tools
> Efficiency of test benches
> Machine & equipment output
monitoring
> Equipment reliability and
maintenance
> Work for higher OEEs
> Tools spares management
> Equipment capacity increase
& new equipment
introduction
Optimize overall equip-
ment availability & output
STR-81011-009-01-01_Wind-Challenges_v19.pptx
Supply Chain
> Procurement planning &
scheduling
> Procurement management
> Supply chain administration
> Operational monitoring of
supplier performance
> Supplier structure
> Lean logistics
Establish a robust and
efficient supply chain
28
 OPERATIONS
4 III

The development of global operations footprint is a must to

access key markets and keep costs low
Overview development of global operations footprint

KEY CHALLENGES TO BE ADDRESSED

> Development on a global level of local

clusters for the final assembly and
components manufacturing in key markets
> Development of own domestic infrastructure
in target markets establishing solid
production clusters partnering with local
suppliers
> Secure access to market growth and
government incentive programs by
partnering and establishing framework
agreements with key utilities and
developers
FAL
Components Manufacturing

Source: Roland Berger STR-81011-009-01-01_Wind-Challenges_v19.pptx 29