Milind Phadke, a director in Klines energy practice, said that although the wind turbine lubricants market is small – about 20,000 tons in 2011 – the market is attractive because of its high margins and growth. Realistically he noted, the market should see a 16 percent annual increase through 2016. Phadke said that about 80 percent of all wind turbine lubricants are synthetic, with the highest percentage in gear oils.

Phadke said that the wind turbine market is likely to grow in all regions of the world, adding that a slowdown in Europe may be offset by higher growth in Asia. He cautioned that because the wind turbine industry is heavily subsidized by governments, cost-cutting measures could result in undercutting pricing support and other subsidies that could curtail growth.

According to Phadke, from 2001 to 2011 global wind energy capacity averaged an annual 27 percent growth rate, but projections over the next five years see a reduced, but still healthy, growth rate of 17 percent. Off-shore will be the fastest growing segment.

He pointed out that existing lubricant marketers face the challenge of new lubricant suppliers emerging, especially in the service fill market where previous relationships were forged with OEMs. Now, new end-user groups, such as wind farm operators, off-shore operators, and maintenance service providers companies, are becoming increasingly important.

Overall, the market offers strong margins to leading lubricant marketers who sell their products on the basis of performance guarantees, proven track record, and OEM alliances.

Phadke said that deterrents to robust wind turbine growth include the state of each countrys electricity supply-demand situation, and governments willingness to support the industry based on economics and public opinion.

He explained that technical developments, such as the adoption of low lubricant-consuming direct-drive units in some major markets like Germany, ostensibly foretell a lowering of demand. However, he noted that this can be counterbalanced by an ongoing vast expansion in overall general capacity.

Finding suitable wind farm real estate is becoming difficult for a variety of reasons. Phadke said that farms must be located away from populations, eco-sensitive areas, bird migratory flyways, and tourist destinations. He added that wind farms must be located near the electrical grid, have high wind potential, and need to be spread out across regions because if wind farms are clustered, they would all be idle or operating at the same time, resulting in supply problems.