Background and challenge
A diversified steel products company wanted to better understand the opportunity to serve the U.S. offshore and onshore wind infrastructure market with steel and specialty steel components. Leadership asked L.E.K. Consulting to assess the market, evaluate how the offshore market’s domestic supply chain might develop over the next 10 years and make recommendations for a potential growth strategy.
Approach and recommendations
Our research and analysis was divided into four areas:
- Offshore market: We assessed the current state of the U.S. offshore wind project pipeline and outlined how spend and development are expected to evolve over the course of the next five to 10 years. We found that the offshore market is expected to partially offset an expected decline in onshore opportunities. Also looking at offshore capacity additions, we identified which were associated with projects in pre-permitting phases and which were currently under construction.
- Onshore market: The market dynamics and outlook for the U.S. onshore wind market were explored. We found that wind is slowly losing share to solar, but that there were a number of regions where onshore wind generation was expected to grow, particularly in the Western U.S.
- Wind value chain: We examined the wind value chain landscape in relation to steel and steel components and mapped out how the supply chain is configured. Our research showed that while the supply chain had relied on imports in the early years of U.S. onshore wind development, today most onshore project components were being domestically sourced. For the nascent domestic supply chain serving the emerging offshore segment of the market, we mapped how tower and monopile foundation fabrication might develop. Specifically, our actions helped identify near-term construction projects and scenarios for how capacity would expand to support the project pipeline through 2030.
- Market opportunity: The potential opportunity for the client to serve the U.S. offshore and onshore wind market was quantified. We identified the largest value pools in wind steel and where margins were expected to grow the most.
Our research and analysis formed the basis for a set of recommendations for entering the market across the wind opportunity landscape, with particular focus on the high-priority areas identified.
The company received a detailed outlook on the state and expected development of the U.S. wind pipeline over the next 10 years. They also received recommendations for which parts of the onshore and offshore wind products market were most attractive and what a go-to-market strategy might look like. The company used this information to launch a new group with a strategic focus on capturing opportunities from the wind market. We also provided them with a list of the most attractive companies for initiating discussions.