Outsourcing
Why are OEMs in renewables seeking an outsourcing partner?
Market insights
February 27, 2025
6 min read
The renewable energy industry is facing a wave of uncertainty. From geopolitical tensions and shifting regulations to operational challenges and financial constraints, the entire energy value chain is under pressure.
As the sector works to expand and accelerate the transition to clean energy, these risks create hurdles that impact everything from investment decisions to project execution. As a result, many OEMs in the renewable energy sector have started to consider and pursue an outsourcing strategy.
Outsourcing parts of their production to third-party sub-suppliers has been a way of trying to lower the costs of materials, production, and services. So, what are the benefits and risks of carrying out an outsourcing strategy?
We have invited Kasia Kandulski Lindegaard, Senior Director of Marketing & Business Innovation at Opoura, and Lars Yde Jensen, OEM Sales Director at Opoura, to comment on the rising trend of third-party outsourcing.
Sub-suppliers give more competitive pricing
With the prevailing challenges in procuring critical components for wind turbines, combined with the increasing inflation rates, OEMs are pushed to the limit in terms of profitability. Delegating tasks to third-party suppliers can be a strategic way to reduce both cost and risk:
“During periods of market uncertainty and rising costs, companies often restructure to optimize efficiency and scalability. This frequently involves partnering with third-party suppliers to handle tasks outside their core business, allowing them to manage expenses while maintaining control and delivery capabilities”, says Lars Yde Jensen.
Kasia Kandulski Lindegaard adds: "We see this trend across many industries. In times of rough waters, there is a tendency that companies focus more on their cashflows and contingency plans, and, in that way, spread the risk in their production setup."
Delegating parts of the value chain, such as hardware, server, or cabinet outsourcing, can often also contribute to lower production costs:
“When OEMs open bidding for production services to sub-suppliers, the increased competition typically drives prices down, which favors the OEMs”, explains Lars Yde Jensen.
OEMs access specialized expertise and gain flexibility when outsourcing SCADA
“Outsourcing to the right experts allows you to tap into specialized skills and knowledge without the overhead of building and maintaining an in-house team”, says Lars Yde Jensen.
A clear example of this is SCADA systems, which may seem like a small component within the vast renewable energy value chain – but their importance cannot be overstated. Acting as the nervous system of wind turbines and solar panels, SCADA systems are essential for ensuring efficient, controlled, and reliable power plant operations.
However, designing and configuring these systems is highly complex, often requiring significant resources despite representing only a fraction of the overall value chain. For this reason, many companies outsource SCADA projects to specialized sub-suppliers who bring deep expertise in SCADA and communication setups.
“This approach not only provides flexibility but also enables cost savings by optimizing resource allocation,” says Lars Yde Jensen, emphasizing the strategic advantage of leveraging external expertise to stay agile and competitive in a rapidly evolving market.
Because, in today’s macroeconomic environment, flexibility is key. Kasia Kandulski Lindegaard highlights that sub-suppliers within SCADA are often characterized by a higher level of agility, which can be beneficial for the OEMs:
“Sub-suppliers sometimes have more possibilities to scale up and down in, for example, reserve and safety stocks, because they are specialized in delivering just this subpart. For the OEMs, this can mitigate risks of delays, ensure the safety of delivery, and quicken the time to market.”
Automizing and simplifying processes with single-point accountability
For Lars Yde Jensen, outsourcing has become even more crucial in today’s market climate:
"In recent years, Vestas has raised concerns about the limited industrialization in turbine production, urging a greater focus on cost reduction and planning to enhance profitability. In my experience, sub-suppliers play a vital role in bringing more transparency into the value chain, providing valuable insights into cost structures and project management.”
That’s because a key advantage of outsourcing is the ability to automate and simplify complex processes. When an OEM partners with the right sub-supplier, they streamline their supply chain and reduce the number of touchpoints and administrative burden. This allows for quicker decision-making, fewer miscommunications, and a more efficient workflow across all stages of production.
“An outsourced production project should begin with a thorough supply chain analysis, helping identify areas where automation can be implemented and processes can be simplified”, remarks Kasia Kandulski Lindegaard. “By evaluating everything – from sourcing raw materials to final delivery – OEMs can spot inefficiencies and determine where outsourcing can add value.”
“This thorough evaluation ensures that the right partners are selected, and resources are allocated effectively, enabling automation and simplifying operations,” says Lars Yde Jensen. “The result is greater transparency and a streamlined process that improves both quality and efficiency.”
By consolidating responsibilities with a single point of accountability, OEMs gain better control over the entire production process, improving coordination and reducing complexity.
The fear of losing control and how to reduce this risk
On the topic of control, one of the main concerns of outsourcing to third-party suppliers is its handover and loss of ownership and expertise.
“When you outsource parts of your production, you, in some way, also outsource specialized knowledge and insights. Some might worry that there will be a gap in understanding the core business. And that is why it is important to find a partner or vendor that is experienced within the industry and knows the company’s ways and ambitions,” says Kasia Kandulski Lindegaard.
Lars Yde Jensen agrees:
“OEMs often hesitate to outsource due to concerns over losing control, a valid worry that can hinder the optimization of their business performance. However, this challenge can be easily addressed through a strategic solution: a close, collaborative partnership with a trusted vendor.”
There are numerous ways to structure an outsourcing relationship that ensures OEMs retain control over critical aspects. “They don’t need to relinquish ownership of Intellectual Property Rights, abandon core configurations, or compromise on IP protection. More flexible, tailored agreements can be established to maintain control while benefiting from external expertise,” he adds. So, from his perspective, partnerships can benefit all parties in the value chain:
“OEMs are experts in producing and servicing turbines – with sub-suppliers by their side, they can accelerate at this while having the sub-suppliers doing what they do best.”
Summary: The benefits outweigh the risks of outsourcing renewable production
In an industry where reliability is everything, outsourcing isn’t just a cost-saving measure. It’s a competitive advantage.
The benefits of outsourcing:
- Enhanced cost-effectiveness through optimized resource allocation and competitive pricing structures
- Lower operational and financial risks by leveraging specialized third-party expertise and proven industry practices
- More time to focus on value-adding core business activities by offloading non-essential tasks to reliable partners
- Greater agility with a leaner, more adaptable supplier network that scales with business needs
- Access to specialized expertise by partnering with an experienced vendor in the renewable energy sector
The risks of outsourcing:
Yes, many OEMs worry about transferring control, ownership, and expertise to an external provider when looking into outsourcing. However, this challenge can be effectively managed by selecting not just a supplier but a true strategic partner. The key lies in choosing the right outsourcing partner – one that aligns with your goals and supports your journey toward optimized operations.