ANALYSIS - GE still on top in wind energy innovation

GE, Siemens/Gamesa and Vestas lead the wind energy IP ownership rankings by Totaro & Associates. The analysis republished below goes deeper into the topic of wind IP. The original article is here.

GE STILL ON TOP IN WIND ENERGY INNOVATION, BUT ASIAN OEMs SEEING BENEFITS OF R&D SPEND

The cost of energy (COE) of wind turbine technology has improved enough to compete with today’s conventional energy sources un-subsidised and without tax credits in most global markets. The development of new technology has been the result of focused innovation efforts and dedicated research & development (R&D) budgets.

The technological trends which have emerged thus far and what might be in store for the future direction of wind turbine technology are explored in this report based on a combination of patent landscape analysis as well as market and competitive intelligence gathering.

The results of this analysis reveal the US has the greatest number of patent filings on wind turbine technology, and US companies have collectively spent over USD 188 million (EUR 177m) on IP protection with over 9,331 individual patent filings there. Europe is second at USD 171 million with 7,163 filings and China third at USD 80 million with 6,782 filings.

Annual expenditure by the entire industry has dipped due to cost savings from a significant amount of patent abandonments in 2013-14. However, with a recovery in profits and increased R&D spend, this total can be expected to increase in the next few years and exceed USD 100 million by 2021.

China is poised to overtake Europe within the next six months, although the qualitative assessment of the patents filed exclusively in China by domestic entities reveals a lower than industry average quality ranking. The applicability of the patented technology is modest, and the validity of many of the Chinese patents is suspect in a notable percentage of cases due to un-cited prior art. China is becoming a more litigious jurisdiction, so foreign entities seeking to do business there are likely to require a thorough examination of the market and IP landscape before commencing sales or manufacturing operations.

Globally, the entire wind industry has spent a cumulative total of USD 644 million to date on patent protection. Expenditure on IP protection by companies in the wind industry is expected to escalate, with USD 1 billion to be spent by 2021 and USD 2 billion by 2028. This reflects an unwelcome slowdown in innovation spending brought on by the global industry crisis of 2012-13.

On an industry-wide basis, the pace of patent filings has continued to drop due to the global industry crunch in 2012-13. The corresponding reduction in R&D expenditure was the governing factor, however, higher profits in 2015 and 2016 are likely to drive those numbers back up as the industry prepares the next wave of innovations to hit the market by 2018-19.

IP ownership rankings show GE Renewable Energy still leading with over 1,863 patent families, now folding in the portfolio of Danish firm LM Wind Power as part of the General Electric (NYSE:GE) umbrella. The combined portfolio of Siemens/Gamesa (ETR:SIE) enables them to remain in the #2 spot with Vestas (CPH:VWS) in third but gradually gaining ground.

Guodian United Power remains entrenched in #4, but they have slowed the pace of their filings significantly in the past year or so. Mitsubishi stays at #5 and they have leveraged most of their portfolio through a license in onshore technology to Hitachi and provisioning most of their offshore related technology to the MHI Vestas offshore JV. Sinovel (SHA:601558) stays at #6 but their pace of patent filings has also slowed substantially since 2014.

Goldwind (HKG:2208) breaks into the top 10 at #7 with an explosion of patent filings in 2014 and 2015. Ming Yang has also had a significant innovation focus recently with their arrival on the Top 10 list at #8. The emergence of both Goldwind and Ming Yang on the top 10 list pushes Enercon down to #9, having previously enjoyed the #5 position on the list only 3 years ago. Senvion (ETR:SEN) remains as part of the top 10 and edges out Nordex/Acciona who falls off the list for the first time since Nordex (ETR:NDX1) was added in 2012.

This marks the first time ever where Asian OEMs (MHI, Guodian UP, Sinovel, Goldwind and Ming Yang) have captured five spots out of the top ten. The remaining US and Western European OEMs (GE, Siemens/Gamesa, Vestas, Enercon and Senvion) have all held relatively steady in their patent volume and their percentages of the total industry innovation landscape. Enercon and Senvion have both dropped down significantly on the list due to the emergence of the Chinese OEMs in four of the top eight spots, and their conservation of R&D spend during the market crunch of 2012-13.

The top 10 wind turbine manufacturers have increased their control on the industry with more than 59% of all wind patent filings, as well as over 75% of the patents which are broadly applicable to the entire industry or potentially infringed. While these percentages have dropped slightly from last year, they still illustrate a disparity between the ‘haves’ and ‘have nots’ when it comes to patents.

Barriers to wind technology commercialisation must be further broken down, particularly as OEMs and sub-component suppliers seek to deploy new technologies beyond simple incremental improvements on existing platforms. The impact of R&D spend on turbine and system CapEx and OpEx diminishes as the COE curve levels out, but there are still key areas of technology which the companies who are committed to the industry will cultivate.

Get more on this from Totaro's Global Wind Innovation Trends Report. Visit http://www.totaro-associates.com/research for this report.

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