SKF Plans to Grow Renewables Business Faster Than Wind Industry

SKF AB (SKFB), the world’s largest maker of ball-bearings, said growth in its renewable energy business will outpace the wind industry in the next few years.

Renewables, mainly wind, generated about 3 billion kronor ($440 million) for Sweden-based SKF in 2010. That represented 5 percent of revenue, up from 1 percent in 2005, said Stefan Karlsson, head of strategic development at SKF’s renewable energy unit. The company expects the wind industry to grow 10 percent to 15 percent a year.

“The target is that this will be a bigger portion of our business,” Karlsson said in an interview at the European wind Energy Association conference in Copenhagen. “We have been growing our renewable business somewhat quicker than the wind industry, and our aim is to carry on outgrowing the industry. It’s a market in strong development.”

SKF’s clients include at least 13 of the 15 biggest wind turbine-makers, according to Karlsson. He declined to name them. SKF’s products, which include bearings, seals and turbine- monitoring systems, make up 2 percent to 5 percent of the total cost of a turbine, he said.

With turbines selling for an average of $910,000 per megawatt of capacity, and the total turbine market forecast by the Global Wind Energy Council to rise to 46 gigawatts this year, turbine sales would total $37 billion. That means SKF is vying for a share of a market that’s worth as much as 5 percent of that, or $1.9 billion.

“The part of the value of the turbine that we provide is exceptionally high,” Karlsson said. “Offshore is the next generation of challenges. The seals and all parts have to be more robust because if something goes wrong and there’s bad weather, it can take you a week to access the turbine. With onshore turbines you can just send a repairman in car.”

SKF also makes tracking systems for solar panels that swivel to follow the sun through the sky during the day, and bearings and seals for wave and tidal power devices.

To contact the reporters on this story: Alex Morales in Copenhagen via amorales2@bloomberg.net; Gelu Sulugiuc in Copenhagen at gsulugiuc@bloomberg.net

To contact the editor responsible for this story: Reed Landberg via landberg@bloomberg.net.

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