Broadwind Energy (BWEN)

Company website 2020 Financial Report Stock Analysis

550

Wind Towers

BWEN is capable of producing up to 550 wind towers a year

70^%

of Total Revenue

came from the sale of wind-related equipment in 2020

View Our Analysis

The Path to Drawdown: Wind Manufacturing

To solve climate change and remain below 1.5ºC of global temperature increase, the globe needs to switch to generating power from fossil fuels to using 100% emissions free sources.

Onshore and offshore wind turbines accounted for 4.36% and 0.27% of global electricity generation in 2018, respectively.

Global wind capacity has risen steadily by around 20% per year for the past decade. Thanks to this expansion, the cost of electricity generated from wind continues to fall, even in areas with low wind speeds.

According to Project Drawdown, to be on a path to remain under 1.5C° of warming, onshore wind turbines will need to be generating 26.85% and offshore wind generating 3.2% of global electricity by 2050.

To get there, the onshore wind industry will need to continue to scale over the next few decades

<::marker> 1,212 TWh of onshore wind electricity generated in 2018
<::marker> 21,715 TWh needed by 2050
<::marker> CAGR of 9.44% from 2018 - 2050

The IEA projects (p. 198) that, to reach a 100% clean electricity grid by 2050, annual wind capacity will have to increase from 737 GW in 2020 to 3101 GW in 2030, and finally to 8265 GW in 2050.

About

Broadwind, Inc (stock ticker: BWEN) is a manufacturer of structures, equipment and components for clean tech and other specialized applications. Headquartered in Cicero, Illinois, their largest business segment is to provide steel towers and repowering adapters to wind turbine manufacturers in the US.

BWEN's Role in Drawdown

According to the IEA (p. 198), for the world to reach net-zero emissions by 2050, it needs to increase wind powered electricity capacity from 737 GW in 2020 to 3,101 GW by 2030, and to 8,265 GW by 2050.

In 2020, BWEN’s wind tower production facilities have a combined production capacity of up to 500 towers per year, enough to support 1.1 GW (p. 8) worth of new wind generation capacity, or 0.15% of global market share. For BWEN to maintain this market share through the IEA’s projected wind capacity growth, they would need to expand their wind tower production to 2,314 by 2030, and to 6,167 by 2050.

For BWEN to pull off this level of growth, its year-on-year production capacity would need to be about 15.5% between now and 2030, and 5% between 2030 and 2050. Given that their wind tower production capacity has hardly increased since 2016 (1.95% CAGR), this would be a challenging feat.

BWEN: What We Like

We applaud BWEN for making the production of equipment and components for the wind energy sector its top business segment, and we urge them to continue this focus on wind power:

Wind-related revenue has consistently accounted for 50% or more (p. 13) of total revenue since 2016

What We Want to See Improve

Report Climate-Related Metrics and Activities

While we applaud BWEN for supporting the wind energy sector through its manufacturing, we would like to see them reporting their own sustainability and climate-related activities and metrics. How many greenhouse gases do they emit in their operations and distribution? What are their commitments relating to cutting these emissions? Within ESG Reports or pages relating to sustainability on their website (the one currently on their website is a dead link), investors cannot transparently assess their contribution toward a decarbonized energy sector.

Set Clear Goals

Once BWEN begins measuring and reporting climate-related metrics, we would then like to see them set clear goals for climate-related achievements by specific dates. These should include goals for reducing (and eventually eliminating) GHG emissions, reducing and recycling waste and water use, as well as shifting their manufacturing mix so as to increase wind tower production by specified dates.

Scale Back Business with Fossil Fuel Sectors

Much of BWEN’s non-wind related business is with the gas turbine, oil, gas, and mining industries. BWEN’s intent is to diversify (p. 13) their customer base beyond the wind sector to be resilient against market fluctuations, but we believe there are more risks associated with the fossil fuel industry than with the renewable energy industry in a decarbonizing energy system. Since BWEN’s management is also aware (p. 13) of these risks, we would like to see them scale back their business with fossil fuel customers. Instead, we think BWEN should internationalize their wind turbine customer base.

Related Wind Energy Stocks in the Climate Index

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Allocated	Company	Description
0.09%	TPI Composites, Inc (TPIC)	TPIC is the largest US-based independent manufacture of composite blades for wind turbines, an important supplier helping the expansion of wind power
0.03%	Infrastructure and Energy Alternatives, Inc. (IEA)	IEA builds solar projects and wind turbines throughout the United States. They help expand renewable energy capacity for a zero-emission energy system
0.02%	Broadwind Energy (BWEN)	Broadwind makes equipment, component, and towers for making wind turbines. Wind energy is one of the cornerstones of a decarbonized future