TPI Composites, Inc (TPIC)

Company website 2020 Financial Report Stock Analysis 2020 ESG Report

323

Million KWh's

Sold over $1.58 billion (p. F-20) worth of wind blades in 2020, which accounted for 95% of total sales

50.75^%

Increase

TPIC’s wind blades produced from 2016 to 2020 have the potential to reduce more than 1.2 billion metric tons of CO2 over their average 20-year life span, equivalent to more than 200 million homes’ electricity use for one year

16.26^%

Reduction

19.68% CAGR between 2016 and 2020 in the energy generation capacity from the wind blade sets that TIPC produced

View Our Analysis

The Path to Drawdown: Wind Manufacturing

Solving climate change and remaining below 1.5ºC of global temperature increase requires that the world switch to generating power from fossil fuels to using 100% emissions free sources. Wind power will play a crucial role in this transition.

Onshore and offshore wind turbines accounted for 4.36% and 0.27%, respectively, of global electricity generation in 2018. This global wind capacity has risen steadily by ~20% per year for the past decade. Owing to this expansion, the cost of electricity generated from wind continues to fall, even in areas with low wind speeds.

According to Project Drawdown, being 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 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 also projects (p. 198) that reaching a 100% clean electricity grid by 2050 would require wind capacity to increase from 737 GW in 2020 to 3101 GW in 2030, and finally to 8265 GW in 2050.

About

TPI Composites, Inc., (stock ticker: TPIC) is the largest US-based independent manufacturer of composite wind blades. Headquartered in Scottsdale, Arizona but with production facilities across the US, China, Mexico, and Turkey, they reached a record net sales of $1.7 billion in 2020.

TPIC's Role in Drawdown

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

In 2020, the wind blades that TIPC produced 3,544 wind blade sets (3 blades per set), which was enough to support 12.08 GW of generation capacity, or 1.64% of the global market share. For TIPC to maintain this market share throughout the IEA’s projected wind capacity growth, they would need to expand production of wind blade sets to 14,912 by 2030, and to 39,744 by 2050.

For TIPC to attain this level of growth, they would need to go through an annual increase in production capacity of ~15.5% between now and 2030, and ~5% between 2030 and 2050. Given that TIPC’s wind blade production capacity has expanded by 19.7% annually since 2016, they seem poised to tackle the necessary growth for the rest of this decade.

TPIC: What We Like

TIPC’s business is predominantly based on selling blades for wind turbines. Over 90% of its total sales comes from selling wind blade sets, and they have been rapidly increasing their sales since 2016:

<::marker> 10.5% CAGR in wind blade sets between 2016 - 2020
<::marker> Revenue from wind blade sales has increased by 17.3% annually in the same period

In addition to contributing to the renewable energy transition through its manufacturing, TIPC has also made a clear commitment to become carbon neutral:

They set a goal of becoming carbon neutral by 2030 for scope 1 and 2 emissions, with 100% of the electricity they consume coming from renewable sources

What We Want to See Improve

Aim for Zero Emissions, Not Carbon Neutral

We applaud the fact that TIPC has set a clear goal to become carbon neutral by 2030. But carbon neutral isn’t good enough in a world that urgently needs to be on a path to zero emissions. Rather than simply canceling out emissions with avoided emissions, we want to see TIPC commit to eliminating GHG emissions altogether.

Report Scope 3 Emissions

TIPC has taken positive steps by starting to issue ESG Reports and publishing its GHG emissions since 2019. Yet their reports only include scope 1 and 2 emissions. With their world-wide production facilities and supply chain, we want to see them systematically measure and report their scope 3 emissions so that investors can comprehensively assess their trajectory toward net-zero emissions.

Eliminate Fossil Fuel Consumption

The avenue to reducing emissions is to eliminate fossil fuel consumption in the production and transportation processes. Since they started reporting their energy consumption metrics in 2019, TIPC’s use of fossil fuels and non-renewable electricity have been on a combined 28.9% rise. On the other hand, only 12.7% of TIPC’s total energy consumption comes from renewable electricity. We urge them to work toward replacing all of their non-renewable energy usage with renewable sources as soon as possible.

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

TPI Composites, Inc (TIPC)

The Path to Drawdown: Wind Manufacturing

About

TPIC's Role in Drawdown

TPIC: What We Like

What We Want to See Improve

Related Wind Energy Stocks in the Climate Index

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