It is 100 years to the day since England declared war on Germany. Thankfully, World War I is long behind us and the emphasis is on collaboration, not combat.
One area where Germany has long led the world is green energy legislation.
Its Electricity Feed Act of 1991 introduced renewable energy feed-in tariffs; and this was followed by its Renewable Energy Sources Act of 2000, which boosted green energy and helped Germany to become a leader in wind and solar.
There has understandably been much trepidation from investors and developers in recent months worried about reforms to the Act. The German government, led by Angela Merkel, is seeking to drive down the cost of feed-in tariffs to curb energy bill rises for consumers; and to reduce the pain for traditional utilities.
On Friday, changes to the Renewable Energy Sources Act finally came into force. These changes do impose tougher regulations on wind, but the industry's muted reaction shows that it largely approves. This is a marked difference from the walkouts and protests at German factories in March at the threat of changes.
Here are some of the key changes in the revised Act:
Feed-in tariffs: Most new green energy projects will not receive fixed feed-in tariffs. Rather, owners will be obliged to directly market energy to potential customers, and would only receive subsidies to cover the gap in what they sell energy for and what they receive in feed-in tariffs.
Growth caps: The changes caps growth in offshore wind to 6.5GW in 2020 and 15GW by 2030; and sets an annual growth target in onshore wind to 2.5GW. New renewable schemes will be registered with the Federal Network Agency so it can track growth. Feed-in tariffs for schemes will be partly set based on how those targets are being met; and German states will also have more say over how many turbines can be built where.
Long-term targets: The revisions set a target that 45% of German energy must come from renewable sources by 2025; over 55% by 2035; and 80% by 2050. In the first half of 2014 this figure stood at 28.5%.
Priority access: Renewable energy and mine gas projects will continue to have priority access to the grid, ahead of energy produced by traditional ‘dirty’ sources.
Uncertainty over the nature of these regulatory changes meant developers pushed through schemes totalling 1.7GW during the first half of 2014 so they wouldn’t be affected, which is an increase of 66% year-on-year.
Despite this, we don’t see much reason to worry.
Yes, any cuts to feed-in tariffs make it tougher for investors and developers to make their projects work financially. And yes, that means a greater focus placed on early-stage financial modeling before any projects gets the green light. For some, that might even mean that the numbers no longer stack up.
However, while this may be bad news for certain projects, in the medium to long term, it’s good news for the industry, since there’s greater certainty for profitably-performing sites. To date, the German government has resisted any urge to follow Spain in re-evaluating existing schemes, which is good for investor confidence.
Policy makers are listening, and they’re learning too. And we must remember that, even though the rules may be tougher, the support for green energy remains.
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Wind Watch
It is 100 years to the day since England declared war on Germany. Thankfully, World War I is long behind us and the emphasis is on collaboration, not combat.
One area where Germany has long led the world is green energy legislation.
Its Electricity Feed Act of 1991 introduced renewable energy feed-in tariffs; and this was followed by its Renewable Energy Sources Act of 2000, which boosted green energy and helped Germany to become a leader in wind and solar.
There has understandably been much trepidation from investors and developers in recent months worried about reforms to the Act. The German government, led by Angela Merkel, is seeking to drive down the cost of feed-in tariffs to curb energy bill rises for consumers; and to reduce the pain for traditional utilities.
On Friday, changes to the Renewable Energy Sources Act finally came into force. These changes do impose tougher regulations on wind, but the industry's muted reaction shows that it largely approves. This is a marked difference from the walkouts and protests at German factories in March at the threat of changes.
Here are some of the key changes in the revised Act:
Feed-in tariffs: Most new green energy projects will not receive fixed feed-in tariffs. Rather, owners will be obliged to directly market energy to potential customers, and would only receive subsidies to cover the gap in what they sell energy for and what they receive in feed-in tariffs.
Growth caps: The changes caps growth in offshore wind to 6.5GW in 2020 and 15GW by 2030; and sets an annual growth target in onshore wind to 2.5GW. New renewable schemes will be registered with the Federal Network Agency so it can track growth. Feed-in tariffs for schemes will be partly set based on how those targets are being met; and German states will also have more say over how many turbines can be built where.
Long-term targets: The revisions set a target that 45% of German energy must come from renewable sources by 2025; over 55% by 2035; and 80% by 2050. In the first half of 2014 this figure stood at 28.5%.
Priority access: Renewable energy and mine gas projects will continue to have priority access to the grid, ahead of energy produced by traditional ‘dirty’ sources.
Uncertainty over the nature of these regulatory changes meant developers pushed through schemes totalling 1.7GW during the first half of 2014 so they wouldn’t be affected, which is an increase of 66% year-on-year.
Despite this, we don’t see much reason to worry.
Yes, any cuts to feed-in tariffs make it tougher for investors and developers to make their projects work financially. And yes, that means a greater focus placed on early-stage financial modeling before any projects gets the green light. For some, that might even mean that the numbers no longer stack up.
However, while this may be bad news for certain projects, in the medium to long term, it’s good news for the industry, since there’s greater certainty for profitably-performing sites. To date, the German government has resisted any urge to follow Spain in re-evaluating existing schemes, which is good for investor confidence.
Policy makers are listening, and they’re learning too. And we must remember that, even though the rules may be tougher, the support for green energy remains.
British Gas owner Centrica last week set out a manifesto for how to solve the UK’s energy crisis. It said the UK should stop building pricey offshore wind farms.
So it comes as no surprise that the company’s half-year results yesterday revealed it has scrapped plans to develop the Round 3 Irish Sea zone. The utility was planning to develop capacity of 4.2GW in the area in the 50:50 joint venture Celtic Array with Danish developer Dong Energy. The first project proposed in the area was the 2.2GW Rhiannon wind farm, but no longer.
The partners said they have stopped activity due to difficult seabed conditions, which make the project financially unviable. Seabed landlord the Crown Estate has agreed with Celtic Array’s assessment of the site, and said it has no plans to re-offer the zone to the market but it may do so in future as technology improves.
Such a site assessment could hardly be better for Centrica given its change of heart about offshore wind farms. Given the company's proclamations on offshore wind last week, it was always likely to want some reason to scrap Celtic Array.
The positive spin is that at least this heads off any uncertainty.
The utility’s change of heart on offshore wind is understandable. It is partly driven by a sense of injustice about being blamed for rising energy bills. Its manifesto last week blamed Government policies for the rising bills, which it said are the result of the Government’s focus on green energy sources.
The company reported that scrapping the plans had cost it £40m, principally in writing off the total book value of the project, and this drove its renewable business to an operating loss in the first half of 2014. This is a small sum for Centrica seeing as its total operating profit for the first half of this year came in at more than £1bn.
There are some lessons we should take away from Celtic Array.
First, it shows that if the UK Government really does want a major programme of offshore wind development by 2020 then it must tread carefully. It is tough to give utilities a public kicking over rising energy bills and then expect them to toe the line on green energy. You can’t force someone built a project that they don’t want to.
Second, it is a reminder for investors about how tough it is to get projects through the planning system. There are many challenges — environmental, technological, financial, political — to get schemes built, and the seabed is one. Offshore wind is maturing, but many of these big headline-grabbers are still expensive gambles.
And third, it highlights the folly of basing the future UK wind solely on offshore. It makes little sense to be so hostile to schemes on land given the challenges out at sea. And, let's not forget, the offshore industry is reliant on a handful of large firms. But Centrica is now not one of them.
Wind Watch
British Gas owner Centrica last week set out a manifesto for how to solve the UK’s energy crisis. It said the UK should stop building pricey offshore wind farms.
So it comes as no surprise that the company’s half-year results yesterday revealed it has scrapped plans to develop the Round 3 Irish Sea zone. The utility was planning to develop capacity of 4.2GW in the area in the 50:50 joint venture Celtic Array with Danish developer Dong Energy. The first project proposed in the area was the 2.2GW Rhiannon wind farm, but no longer.
The partners said they have stopped activity due to difficult seabed conditions, which make the project financially unviable. Seabed landlord the Crown Estate has agreed with Celtic Array’s assessment of the site, and said it has no plans to re-offer the zone to the market but it may do so in future as technology improves.
Such a site assessment could hardly be better for Centrica given its change of heart about offshore wind farms. Given the company's proclamations on offshore wind last week, it was always likely to want some reason to scrap Celtic Array.
The positive spin is that at least this heads off any uncertainty.
The utility’s change of heart on offshore wind is understandable. It is partly driven by a sense of injustice about being blamed for rising energy bills. Its manifesto last week blamed Government policies for the rising bills, which it said are the result of the Government’s focus on green energy sources.
The company reported that scrapping the plans had cost it £40m, principally in writing off the total book value of the project, and this drove its renewable business to an operating loss in the first half of 2014. This is a small sum for Centrica seeing as its total operating profit for the first half of this year came in at more than £1bn.
There are some lessons we should take away from Celtic Array.
First, it shows that if the UK Government really does want a major programme of offshore wind development by 2020 then it must tread carefully. It is tough to give utilities a public kicking over rising energy bills and then expect them to toe the line on green energy. You can’t force someone built a project that they don’t want to.
Second, it is a reminder for investors about how tough it is to get projects through the planning system. There are many challenges — environmental, technological, financial, political — to get schemes built, and the seabed is one. Offshore wind is maturing, but many of these big headline-grabbers are still expensive gambles.
And third, it highlights the folly of basing the future UK wind solely on offshore. It makes little sense to be so hostile to schemes on land given the challenges out at sea. And, let's not forget, the offshore industry is reliant on a handful of large firms. But Centrica is now not one of them.
Subsidy slashing stifles Spanish schemes…
Only one turbine, of 80kW, was installed in Spain in the first six months of 2014 as the country’s wind sector struggles after the slashing of wind farm subsidies.
The Spanish government, led by the right-wing People’s Party, confirmed in June that wind farms that became operational before 2005 have been stripped of all subsidies; and those finished between 2005 and 2013 have been significantly cut. The Spanish Wind Energy Association (AEE) said this is "punishing" the industry.
The regulatory changes have curtailed investment in the domestic wind market, and AEE said that manufacturers are now facing the dilemma of whether to keep factories in the country open. There is currently 23.0GW of wind capacity in Spain.
…and German onshore surges as cuts loom
Onshore turbines of more than 1.7GW have been installed in Germany in the first half of 2014 before changes to green energy laws that come into force on Friday.
The German Wind Energy Association (BWE) has reported that the capacity installed in the first half of 2014 was 66% higher than the equivalent period in 2013. This is because developers want to complete projects before the revised Renewable Energy Act come into force in August, which introduces tighter rules on wind power including tougher regulations on where turbines can be built.
In the first half of 2014, 260MW of capacity was installed in repowering schemes. The country has a total grid-connected wind capacity of more than 37.0GW.
NRG in $400m bond issue for Alta buy
NRG Energy subsidiary NRG Yield Operating LLC has announced plans to raise $400m through an offering of green bonds to invest in renewable energy projects.
NRG Yield Operating LLC is a subsidiary of NRG Yield, the yieldco launched on the New York Stock Exchange by utility NRG last summer. It plans to offer $400m of senior unsecured notes which are due in 2024 and guaranteed by NRG Yield.
The fundraising follows news last week that NRG Yield is set to issue 10.5million of new Class A common shares, worth $542m. Both deals are intended to help the company raise funds for the proposed $870m acquisition of California’s 947MW Alta Wind scheme, from Terra-Gen Power, which was revealed last month.
Iberdrola kicks off 202MW Baffin in Texas
Iberdrola has started installation at the 202MW Baffin wind farm in its 606MW Penascal complex in Texas, which its largest facility worldwide.
The Spanish utility is set to install 101 of Gamesa’s G97 turbines at the project, which is the third wind farm in the Penascal complex. Penascal I and Penascal II were completed in 2009 and 2010 respectively, each with an installed capacity of 202MW. The Baffin scheme is due to be commissioned by the end of 2014.
The Penascal complex is located in the southeast of Kenedy County in Texas. Iberdrola is set to have total wind capacity of more than 5.6GW in the US when Baffin is completed.
Enel starts work on 50MW in Uruguay
Enel Green Power has started work on its 50MW Melowind project in the Cerro Largo area of Uruguay, which is around 200 miles from capital Montevideo.
This is the Italian utility’s first project in Uruguay and will involve an investment of around $98m. The scheme is using 20 N100/2500 turbines from German manufacturer Nordex, which yesterday revealed a 50MW deal with “a subsidiary of one of Italy’s largest utilities”.
The electricity produced by the project will be sold to state energy company Administracion Nacional de Usinas y Trasmisiones Electricas (UTE) under a 20-year power purchase deal.
Wind Watch
When you talk about ‘green’ investment then the topic of ‘greenwashing’ is never far away. And, with the growing popularity of green bonds, the topic is certainly worth another look.
Green bonds have been around for seven years, and were pioneered by organisations such as the World Bank, European Investment Bank and African Development Bank to raise money to invest in green projects. Wind farms are among the main beneficiaries.
We are now seeing a new type of green bond emerging: corporate green bonds. French energy company, GDF Suez launched a €2.5bn bond in May to invest in renewable energy projects, and it was three times oversubscribed. There was also a £250m green bond that was launched by Unilever in March; and a €1.4bn green bond by EDF in November 2013.
And, this week, German development bank KfW got in on the action with its own green bond, with the aim of raising €1.5bn to invest in renewable energy and climate change mitigation projects. The AAA-rated bond was oversubscribed, with orders of €2.65bn. It says that this shows how mainstream investors want to put their money into clean energy.
This all sounds great but we have to sound a word of caution.
Now, we’re all in favour of investors putting their money into wind farms and other green projects. Developers need money if they’re going to keep developing, and green bonds are one way that they can gain this funding. But the flaw with some of these green bonds is whether they really offer investors as much greenness as they promise.
In the case of corporate bonds, for example, some investors would be put off investing in a green bond from a business like EDF or GDF Suez because they invest in other types of energy too. There is no recourse for investors if money from the ‘green bond’ goes into supporting other non-green projects, and so investors will have to scrutinise very carefully.
And, in the case of KfW, the question some investors will ask is whether it will end up investing in green energy projects, or other types of infrastructure with links to green infrastructure — such as energy transmission networks. KfW hasn’t made clear exactly which assets it will invest in and, until it does, it is tough to scrutinise its green credentials.
Investors need to be wise to these risks. In general, there is little recourse if their money ends up supporting a non-green project, and the risk is to the investor’s own reputation. The court of public opinion sees little distinction between companies that invest directly into something unethical and those who do it indirectly and unwittingly through a fund.
There is also the question of why investors would put money into these kinds of bonds when there are investment managers out there like Resonance or Greencoat. These are more focused on green projects and have a strong track record of focused investments, along with the potential of far better returns.
Some investors will accept slightly lower returns to invest in something ethical. Without research, this carries the risk that the project they’ve invested in isn’t as ethical as they would have liked — and the lower returns are still the same.
And some will claim it is mercenary to focus on the money when investing in green projects should be about doing the right thing. Well, we disagree. If we’re going to get more investors putting their money into green projects like wind farms then we need to make sure they see good returns and their investment being used for green projects.
If people feel let down by ‘green bonds’ then they’ll put their cash elsewhere.
When you talk about ‘green’ investment then the topic of ‘greenwashing’ is never far away. And, with the growing popularity of green bonds, the topic is certainly worth another look.
Green bonds have been around for seven years, and were pioneered by organisations such as the World Bank, European Investment Bank and African Development Bank to raise money to invest in green projects. Wind farms are among the main beneficiaries.
We are now seeing a new type of green bond emerging: corporate green bonds. French energy company, GDF Suez launched a €2.5bn bond in May to invest in renewable energy projects, and it was three times oversubscribed. There was also a £250m green bond that was launched by Unilever in March; and a €1.4bn green bond by EDF in November 2013.
And, this week, German development bank KfW got in on the action with its own green bond, with the aim of raising €1.5bn to invest in renewable energy and climate change mitigation projects. The AAA-rated bond was oversubscribed, with orders of €2.65bn. It says that this shows how mainstream investors want to put their money into clean energy.
This all sounds great but we have to sound a word of caution.
Now, we’re all in favour of investors putting their money into wind farms and other green projects. Developers need money if they’re going to keep developing, and green bonds are one way that they can gain this funding. But the flaw with some of these green bonds is whether they really offer investors as much greenness as they promise.
In the case of corporate bonds, for example, some investors would be put off investing in a green bond from a business like EDF or GDF Suez because they invest in other types of energy too. There is no recourse for investors if money from the ‘green bond’ goes into supporting other non-green projects, and so investors will have to scrutinise very carefully.
And, in the case of KfW, the question some investors will ask is whether it will end up investing in green energy projects, or other types of infrastructure with links to green infrastructure — such as energy transmission networks. KfW hasn’t made clear exactly which assets it will invest in and, until it does, it is tough to scrutinise its green credentials.
Investors need to be wise to these risks. In general, there is little recourse if their money ends up supporting a non-green project, and the risk is to the investor’s own reputation. The court of public opinion sees little distinction between companies that invest directly into something unethical and those who do it indirectly and unwittingly through a fund.
There is also the question of why investors would put money into these kinds of bonds when there are investment managers out there like Resonance or Greencoat. These are more focused on green projects and have a strong track record of focused investments, along with the potential of far better returns.
Some investors will accept slightly lower returns to invest in something ethical. Without research, this carries the risk that the project they’ve invested in isn’t as ethical as they would have liked — and the lower returns are still the same.
And some will claim it is mercenary to focus on the money when investing in green projects should be about doing the right thing. Well, we disagree. If we’re going to get more investors putting their money into green projects like wind farms then we need to make sure they see good returns and their investment being used for green projects.
If people feel let down by ‘green bonds’ then they’ll put their cash elsewhere.
Energy producers in Europe use more water than farmers and the public combined.
This is an interesting fact though not a new one. The European Environment Agency reported in 2009 that the energy sector accounts for 44% of Europe’s total water use, mainly for cooling electricity generation equipment. But the European Union is surely poised to look at this more closely as concerns grow globally about water scarcity.
If European politicians take more action on water scarcity then it would be good for the wind sector. Wind farms use virtually no water, which means that owners and investors have little to fear when water costs rise and laws on water use are toughened — as they surely will be. In fact, it would help wind if water-hungry rivals like shale gas are hit hard.
This is why investors should take an interest in the European Wind Energy Association’s report, “Saving water with wind energy”, published last month. This sets out three ways that the EU should take action to drastically cut water consumption in the energy sector.
First, it should promote higher water efficiency standards in future energy policies. Second, it should promote adequate pricing of water use throughout the EU. And third, it should set binding renewable energy targets for 2030 to move away from water-intensive technology such as thermal power plants and towards technologies such as wind energy.
These are sensible objectives that deserve support from wind investors. They will create a more favourable environment for wind schemes, as well as helping the environment.
EWEA reports that, since 2012, Europe has saved enough water for 7million citizens by using wind farms rather than other more water-hungry energy sources. If wind can take a bigger market share from nuclear, gas and coal then these benefits would be multiplied.
And it makes sense to do it now as global giants like Coca-Cola, Google and Nestle are talking publicly about issues of water scarcity. You may disagree with their ethics in other areas of their businesses, but you can’t deny that they are making water waste an issue.
The other aspect of water scarcity that is of interest to the wind sector is in manufacturing, where manufacturers will use water in their production processes. Growing concerns over water capacity will force manufacturers to be more efficient how they use this resource.
For instance, the Carbon Disclosure Project (CDP) is calling for a shift in how businesses think about these issues. In its Global Water Report 2013, which was launched in October 2013, it looked at the steps that 593 corporations are taking to reduce their eater use.
Three-quarters of respondents (70%) said they saw water scarcity as a big business risk, with potential disruptions due to inadequate public infrastructure and in their supply chain. Manufacturers in the wind sector are little different than other sectors, although would face harsh criticism if see as building green products while simultaneously wasting water.
But, on balance, it's imperative that we see the opportunities here.
Wind Watch
Energy producers in Europe use more water than farmers and the public combined.
This is an interesting fact though not a new one. The European Environment Agency reported in 2009 that the energy sector accounts for 44% of Europe’s total water use, mainly for cooling electricity generation equipment. But the European Union is surely poised to look at this more closely as concerns grow globally about water scarcity.
If European politicians take more action on water scarcity then it would be good for the wind sector. Wind farms use virtually no water, which means that owners and investors have little to fear when water costs rise and laws on water use are toughened — as they surely will be. In fact, it would help wind if water-hungry rivals like shale gas are hit hard.
This is why investors should take an interest in the European Wind Energy Association’s report, “Saving water with wind energy”, published last month. This sets out three ways that the EU should take action to drastically cut water consumption in the energy sector.
First, it should promote higher water efficiency standards in future energy policies. Second, it should promote adequate pricing of water use throughout the EU. And third, it should set binding renewable energy targets for 2030 to move away from water-intensive technology such as thermal power plants and towards technologies such as wind energy.
These are sensible objectives that deserve support from wind investors. They will create a more favourable environment for wind schemes, as well as helping the environment.
EWEA reports that, since 2012, Europe has saved enough water for 7million citizens by using wind farms rather than other more water-hungry energy sources. If wind can take a bigger market share from nuclear, gas and coal then these benefits would be multiplied.
And it makes sense to do it now as global giants like Coca-Cola, Google and Nestle are talking publicly about issues of water scarcity. You may disagree with their ethics in other areas of their businesses, but you can’t deny that they are making water waste an issue.
The other aspect of water scarcity that is of interest to the wind sector is in manufacturing, where manufacturers will use water in their production processes. Growing concerns over water capacity will force manufacturers to be more efficient how they use this resource.
For instance, the Carbon Disclosure Project (CDP) is calling for a shift in how businesses think about these issues. In its Global Water Report 2013, which was launched in October 2013, it looked at the steps that 593 corporations are taking to reduce their eater use.
Three-quarters of respondents (70%) said they saw water scarcity as a big business risk, with potential disruptions due to inadequate public infrastructure and in their supply chain. Manufacturers in the wind sector are little different than other sectors, although would face harsh criticism if see as building green products while simultaneously wasting water.
But, on balance, it's imperative that we see the opportunities here.
Wind Watch
Summer holiday season is upon us. However, it will soon be over and there is no better time to start putting in places plans for the rest of the year.
This is why you need to put our next invitation-only Quarterly Drinks event in your diary. On Thursday 4th September from 5.30pm-9.00pm we are due to hold our next Quarterly Drinks networking event, in association with DNV GL, in London.
Many of you have already attended one or more of these events, and we look forward to seeing you again — but, for those who haven’t, here is a quick rundown of the format.
These evenings provide you with a chance to network with your counterparts working in financing and investment in the wind sector.
You'll be able to listen, learn, make new connections and win work, in a focused but informal setting. You will also get a good feeling for how your senior colleagues expect the market to develop in the second half of 2014 and beyond.
As ever, we have chosen a smart bar in the City of London; and there will be complimentary wine, beer, soft drinks and canapés throughout.
In June – at our most recent networking event – over 50 senior executives joined us, to discuss the latest news and views. Places are secured on a first come, first served basis. So, if you’d like to secure a place, you can register here.
Looking forward to seeing you there.
At this event, we will also have more details of our annual half-day conference, Financing Wind Energy 2014: Profiting From Risk, which we are going to be running on the morning of Wednesday 1st October, in association with EY (Ernst & Young).
With future finance for the UK’s onshore and offshore wind energy markets far from secure, this event brings together key decision-makers and influencers working throughout the investor and energy sectors.
We look forward to meeting you so we can explain more – in the meantime, do go ahead and sign up for your complimentary member’s pass.
Thailand’s Nopporn “Nick” Suppipat might just be the most successful wind energy investor you’ve never heard of.
At the tender age of 43, he’s just debuted on the Forbes rich list – thanks to a billion dollar fortune that’s been built up, in the main, through his canny investment in developing and building out the very first two Thai Wind farms.
And here’s the really interesting part: those two projects have a combined capacity of just 207MW. Not a bad return, based on a pure MW-by-MW basis.
Owned and operated by Wind Energy Holdings – the business he founded in 2009 and in which he retains a majority (65%) stake – the two wind farms have benefitted from a lucrative government feed-in tariff. His story shows the sheer audacity required to be a modern-day developer; and the risks you have to be willing to take in order to break new ground.
Back when he was seeking approval for the projects, the Thai authorities were certain that the wind resource within the country was insufficient to make large-scale commercial wind energy a viable electricity generating opportunity.
The resource just wasn’t there — or so they thought.
That meant that the Thai government set a feed-in tariff for wind that was unusually high. The rationale was that this would encourage early interest before developers eventually settled on something a little safer – like solar, perhaps. And lo, many developers followed this logic straight into solar.
Not so for Suppipat. He stuck to his view that wind energy development was a viable energy-generating alternative. He commissioned Garrad Hassan to undertake a wind yield assessment and, shortly thereafter, signed a 45 2.3MW turbine supply agreement with Siemens. And then he held his nerve.
Scroll forwards five years and those generous government subsidies have helped Wind Energy Holdings to pay back its original debt. The company is already registering strong returns, with a reported profit of a cool $25m last year.
Little wonder, then, that Suppipat is now eyeing an initial public offering to help fund a proposed regional expansion totalling 650MW, most likely through early-stage project acquisition.
If he succeeds, he’ll have the opportunity to head off the growing competition within the region. This competition includes Thai developer Annex Power and Singapore-based firm Blue Circle, who recently confirmed a $200m partnership to invest in Thai wind.
Suppipat may have installed the first 207MW of Thai wind energy installed but, with the market forecast to continue to grow in the next few years, he’ll need a clear commercial strategy mapped out ahead of him. That is vital if he is to retain first mover advantage and that Forbes billion-dollar crown.
Wind Watch
Thailand’s Nopporn “Nick” Suppipat might just be the most successful wind energy investor you’ve never heard of.
At the tender age of 43, he’s just debuted on the Forbes rich list – thanks to a billion dollar fortune that’s been built up, in the main, through his canny investment in developing and building out the very first two Thai Wind farms.
And here’s the really interesting part: those two projects have a combined capacity of just 207MW. Not a bad return, based on a pure MW-by-MW basis.
Owned and operated by Wind Energy Holdings – the business he founded in 2009 and in which he retains a majority (65%) stake – the two wind farms have benefitted from a lucrative government feed-in tariff. His story shows the sheer audacity required to be a modern-day developer; and the risks you have to be willing to take in order to break new ground.
Back when he was seeking approval for the projects, the Thai authorities were certain that the wind resource within the country was insufficient to make large-scale commercial wind energy a viable electricity generating opportunity.
The resource just wasn’t there — or so they thought.
That meant that the Thai government set a feed-in tariff for wind that was unusually high. The rationale was that this would encourage early interest before developers eventually settled on something a little safer – like solar, perhaps. And lo, many developers followed this logic straight into solar.
Not so for Suppipat. He stuck to his view that wind energy development was a viable energy-generating alternative. He commissioned Garrad Hassan to undertake a wind yield assessment and, shortly thereafter, signed a 45 2.3MW turbine supply agreement with Siemens. And then he held his nerve.
Scroll forwards five years and those generous government subsidies have helped Wind Energy Holdings to pay back its original debt. The company is already registering strong returns, with a reported profit of a cool $25m last year.
Little wonder, then, that Suppipat is now eyeing an initial public offering to help fund a proposed regional expansion totalling 650MW, most likely through early-stage project acquisition.
If he succeeds, he’ll have the opportunity to head off the growing competition within the region. This competition includes Thai developer Annex Power and Singapore-based firm Blue Circle, who recently confirmed a $200m partnership to invest in Thai wind.
Suppipat may have installed the first 207MW of Thai wind energy installed but, with the market forecast to continue to grow in the next few years, he’ll need a clear commercial strategy mapped out ahead of him. That is vital if he is to retain first mover advantage and that Forbes billion-dollar crown.
Wind Watch
It is some feat to turn a country from a global leader into a global embarrassment within ten months. But, on green energy, Australia's Tony Abbott has managed it.
The potted version is that Abbott became prime minister on 18 September 2013 and immediately set about dismantling Australian green laws. Hardly surprising for a man who derided the science of man-made climate change as ‘crap’ in 2009. His views clearly haven’t changed much.
Earlier this week, his government scrapped carbon pricing that seeks to reduce carbon emissions, and other plans include cutting A$435m from the budget of the Australian Renewable Energy Agency (ARENA). It also appointed climate change sceptic Dick Warburton to advise on the future of renewable energy targets.
Debates over the wisdom of these policies are raging, but the effect on investors in wind power is already showing. Over the last ten months, Australia has dropped from fourth to ninth in Ernst & Young’s ranking of nations based on how attractive they are for investors in renewable energy.
This reflects uncertainty over the Renewable Energy Target, which has left wind and solar projects worth A$1bn in limbo. RET mandates that 20% of electricity used in Australia by 2020 must come from renewable sources. It has been a key factor in wind’s growth and, if it is scrapped, then it will make the country more hostile to investors in the sector.
And it will also force investors to turn their attention to opportunities elsewhere.
That is not to say that the government will have an easy ride in making the changes that it wants to. For example, earlier this month rookie senator Ricky Muirblocked the proposed repeal of Australia’s carbon pricing mechanism by voting with Labor and the Greens. This was a setback for Abbott, but only delayed this week’s scrapping of carbon pricing rather than de-railing it.
Now, we agree with reviewing policies to ensure they work properly and see if they can be improved. This is necessary for the evolution of a sensible policy regime.
But hostility from Abbott and his government to the RET is not sensible. The prime minister says the renewable energy sector is driving up power prices “very significantly”, although this looks like it is based on skewed logic. The Australia Institute, for example, has argued that power price rises follow A$40bn spent upgrading the electricity grid in recent years.
Politically, it puts Australia out of step with most other developed countries before a United Nations conference on climate change, which is scheduled for Paris in November 2015. It shows Australia is pinning its hopes on coal and, on green energy, it is moving backwards at a time when most nations are moving forwards.
And, economically, it sends a clear message to developers and investors that they aren’t wanted, and that Australia is supportive of neither green projects nor green products. If Abbott doesn’t want money from these investors then others will.
It is some feat to turn a country from a global leader into a global embarrassment within ten months. But, on green energy, Australia's Tony Abbott has managed it.
The potted version is that Abbott became prime minister on 18 September 2013 and immediately set about dismantling Australian green laws. Hardly surprising for a man who derided the science of man-made climate change as ‘crap’ in 2009. His views clearly haven’t changed much.
Earlier this week, his government scrapped carbon pricing that seeks to reduce carbon emissions, and other plans include cutting A$435m from the budget of the Australian Renewable Energy Agency (ARENA). It also appointed climate change sceptic Dick Warburton to advise on the future of renewable energy targets.
Debates over the wisdom of these policies are raging, but the effect on investors in wind power is already showing. Over the last ten months, Australia has dropped from fourth to ninth in Ernst & Young’s ranking of nations based on how attractive they are for investors in renewable energy.
This reflects uncertainty over the Renewable Energy Target, which has left wind and solar projects worth A$1bn in limbo. RET mandates that 20% of electricity used in Australia by 2020 must come from renewable sources. It has been a key factor in wind’s growth and, if it is scrapped, then it will make the country more hostile to investors in the sector.
And it will also force investors to turn their attention to opportunities elsewhere.
That is not to say that the government will have an easy ride in making the changes that it wants to. For example, earlier this month rookie senator Ricky Muirblocked the proposed repeal of Australia’s carbon pricing mechanism by voting with Labor and the Greens. This was a setback for Abbott, but only delayed this week’s scrapping of carbon pricing rather than de-railing it.
Now, we agree with reviewing policies to ensure they work properly and see if they can be improved. This is necessary for the evolution of a sensible policy regime.
But hostility from Abbott and his government to the RET is not sensible. The prime minister says the renewable energy sector is driving up power prices “very significantly”, although this looks like it is based on skewed logic. The Australia Institute, for example, has argued that power price rises follow A$40bn spent upgrading the electricity grid in recent years.
Politically, it puts Australia out of step with most other developed countries before a United Nations conference on climate change, which is scheduled for Paris in November 2015. It shows Australia is pinning its hopes on coal and, on green energy, it is moving backwards at a time when most nations are moving forwards.
And, economically, it sends a clear message to developers and investors that they aren’t wanted, and that Australia is supportive of neither green projects nor green products. If Abbott doesn’t want money from these investors then others will.
Wind Watch
You’ve been waiting weeks to put another A Word About Wind networking event in your diary — and now two have come along at once.
On Thursday 4th September from 5.30pm-9.00pm we are due to hold our next Quarterly Drinks in the City of London, in association with DNV GL.
If you haven’t been before, these exclusive opportunities enable senior wind energy industry professionals to network with their counterparts working in finance and investment in the City.
In June - at our most recent networking event - over 50 senior executives joined us, to discuss the latest news and views. We give out places on a first come, first served basis so, if you’d like to secure a place, simply hit reply to this email, or contact the team directly at events@awordaboutwind.com.
Then, on Wednesday 1st October from 08.00am-1.00pm, we are due to host our annual half-day conference and networking event, Financing Wind Energy 2014: Profiting From Risk, in association with Ernst & Young.
With future finance for the UK’s onshore and offshore wind energy markets far from secure, this event brings together key decision-makers and influencers working throughout the investor and energy sectors.
Again, get in touch if you’d like to attend, and we will be in touch with more information, including details of speakers, in due course.
It won’t be quick. That is, if it happens at all. But talks are underway to try to form a global agreement for free trade of environmental goods, including wind turbines.
Last Tuesday, diplomats from the European Union, US, China and 11 other governments in the World Trade Organisation kicked off talks about a proposed Environmental Goods Agreement. The aim is to liberalise international trade worth almost $1trn each year, which could cut import tariffs by up to 35% on a wide range of clean technologies.
The first phase of negotiations will focus on eliminating tariffs on clean technology, and the second state will aim to remove non-tariff barriers, including bureaucratic and legal issues. If all goes to plan — and, given the protracted nature of these types of discussions, we’re sceptical —then a deal would be done by next November’s Paris climate change summit.
Instinctively, scrapping such tariffs looks like it should be a good idea. It would reduce the barriers for firms looking to sell products overseas, and the plan’s backers say it would also lead to the rollout of the most innovative and efficient products globally. But, alas, it isn’t that simple.
We need only look at the dispute over tariffs that were introduced by the US a couple of years ago to reduce an unfair advantage for Chinese manufacturers selling turbine towers in the US. This is a controversial area and such an agreement would require close inspection.
Some manufacturers would stand to lose more than they win. Yes, it would enable them to sell their products in other countries without having to pay such punitive tariffs, but it also means they would face more pressure in their home markets from international rivals. This isn’t necessarily a problem if it forces companies to improve the quality of their products.
The argument about innovation is also somewhat spurious. Such an agreement may enable innovative manufacturers to sell their products to sell their products without punitive tariffs. But it also makes it easier for lesser manufacturers with cheaply made products to go into overseas markets and undercut their more innovative rivals.
History shows us that it isn’t always the manufacturers with the best products that win out. In retail, we need only look at the popularity of Primark to see how low-cost often wins. Businesses can’t be afraid of competition, of course.
But scrapping tariffs could put unintended pressure on manufacturers’ margins. That in turn affects how much money they can invest in research and development; and will make it tougher for new entrants to establish their own indigenous manufacturing base. And then there is the pure commercial reality about whether it makes sense to buy a more efficient product from the other side of the world, if the energy cost of shipping is higher.
This isn’t to say that we’d be against an Environmental Goods Agreement. We just greater transparency and clarity of policy decision making at an early stage, if commerce is to truly benefit.
Wind Watch
It won’t be quick. That is, if it happens at all. But talks are underway to try to form a global agreement for free trade of environmental goods, including wind turbines.
Last Tuesday, diplomats from the European Union, US, China and 11 other governments in the World Trade Organisation kicked off talks about a proposed Environmental Goods Agreement. The aim is to liberalise international trade worth almost $1trn each year, which could cut import tariffs by up to 35% on a wide range of clean technologies.
The first phase of negotiations will focus on eliminating tariffs on clean technology, and the second state will aim to remove non-tariff barriers, including bureaucratic and legal issues. If all goes to plan — and, given the protracted nature of these types of discussions, we’re sceptical —then a deal would be done by next November’s Paris climate change summit.
Instinctively, scrapping such tariffs looks like it should be a good idea. It would reduce the barriers for firms looking to sell products overseas, and the plan’s backers say it would also lead to the rollout of the most innovative and efficient products globally. But, alas, it isn’t that simple.
We need only look at the dispute over tariffs that were introduced by the US a couple of years ago to reduce an unfair advantage for Chinese manufacturers selling turbine towers in the US. This is a controversial area and such an agreement would require close inspection.
Some manufacturers would stand to lose more than they win. Yes, it would enable them to sell their products in other countries without having to pay such punitive tariffs, but it also means they would face more pressure in their home markets from international rivals. This isn’t necessarily a problem if it forces companies to improve the quality of their products.
The argument about innovation is also somewhat spurious. Such an agreement may enable innovative manufacturers to sell their products to sell their products without punitive tariffs. But it also makes it easier for lesser manufacturers with cheaply made products to go into overseas markets and undercut their more innovative rivals.
History shows us that it isn’t always the manufacturers with the best products that win out. In retail, we need only look at the popularity of Primark to see how low-cost often wins. Businesses can’t be afraid of competition, of course.
But scrapping tariffs could put unintended pressure on manufacturers’ margins. That in turn affects how much money they can invest in research and development; and will make it tougher for new entrants to establish their own indigenous manufacturing base. And then there is the pure commercial reality about whether it makes sense to buy a more efficient product from the other side of the world, if the energy cost of shipping is higher.
This isn’t to say that we’d be against an Environmental Goods Agreement. We just greater transparency and clarity of policy decision making at an early stage, if commerce is to truly benefit.
Wind Watch
You know those couples, the ones where the partners are so different you can’t imagine how they fit together. And yet, despite their differences, it seems to work.
Like those couples, manufacturing giants Areva and Gamesa will hope their €475m joint venture goes the distance. The French and Spanish firms confirmed the plan in January and binding contracts were signed this week. They may both be manufacturers, but the different business cultures in France and Spain mean it won’t be a straightforward match-up.
They hope they can outweigh this by bringing different strengths to the venture.
The assets going into the venture appear to complement each other quite nicely.
Areva is putting in assets worth €280m, of which €70m is working capital. Its other assets include its operational 5MW turbine M5000, the 8MW cousin it has in development, and a pipeline of 2.8GW of offshore projects including 1GW in two offshore projects in France.
Gamesa doesn’t have the same offshore expertise in the €195m of assets that it is putting in. Its 5GW and 8GW offshore turbines are still in development. But it makes up for this with far more experience of research and development in onshore wind technology, and a large amount of experience of gaining a foothold in markets in Asia and South America.
The combination of their assets means that the tie-up starts life with no debt on its balance sheet and no need to raise funding from third parties. The pieces appear to jigsaw together nicely, and both parties have important expertise to bring.
Their plan will be to optimise a 5MW turbine based on Areva’s M5000; and develop an 8GW platform to supply to developments including the 1GW of offshore projects in France, made up of the 500MW Treport and 500MW Yeu and Noirmoutier schemes.
Establishing itself as a global leader in offshore wind will be more of a challenge.
The venture is seeking to maintain the 20% market share that Areva has already achieved in Europe. This will be tough given that there are no opportunities in the UK at present; the German market is sewn up by Siemens; and they will face competition from MHI Vestas. If France steps up its offshore wind ambitions then this looks ready-made for Areva.
Even more difficult will be making an impact in Asia-Pacific, as China and India aren’t short of indigenous manufacturers. This is where Gamesa will be vital, as it has a knack for developing long-term relationships in key markets. It has also built a compelling model of building kit and then developing sites before selling them on, which can work offshore.
Areva has the established offshore wind technology, and Gamesa has more experience of tapping into emerging markets. If cultural differences don’t get in the way then it looks like it could be a good coupling. But, as with all relationships, we’ll only know how strong it is when it hits a rocky patch.
You know those couples, the ones where the partners are so different you can’t imagine how they fit together. And yet, despite their differences, it seems to work.
Like those couples, manufacturing giants Areva and Gamesa will hope their €475m joint venture goes the distance. The French and Spanish firms confirmed the plan in January and binding contracts were signed this week. They may both be manufacturers, but the different business cultures in France and Spain mean it won’t be a straightforward match-up.
They hope they can outweigh this by bringing different strengths to the venture.
The assets going into the venture appear to complement each other quite nicely.
Areva is putting in assets worth €280m, of which €70m is working capital. Its other assets include its operational 5MW turbine M5000, the 8MW cousin it has in development, and a pipeline of 2.8GW of offshore projects including 1GW in two offshore projects in France.
Gamesa doesn’t have the same offshore expertise in the €195m of assets that it is putting in. Its 5GW and 8GW offshore turbines are still in development. But it makes up for this with far more experience of research and development in onshore wind technology, and a large amount of experience of gaining a foothold in markets in Asia and South America.
The combination of their assets means that the tie-up starts life with no debt on its balance sheet and no need to raise funding from third parties. The pieces appear to jigsaw together nicely, and both parties have important expertise to bring.
Their plan will be to optimise a 5MW turbine based on Areva’s M5000; and develop an 8GW platform to supply to developments including the 1GW of offshore projects in France, made up of the 500MW Treport and 500MW Yeu and Noirmoutier schemes.
Establishing itself as a global leader in offshore wind will be more of a challenge.
The venture is seeking to maintain the 20% market share that Areva has already achieved in Europe. This will be tough given that there are no opportunities in the UK at present; the German market is sewn up by Siemens; and they will face competition from MHI Vestas. If France steps up its offshore wind ambitions then this looks ready-made for Areva.
Even more difficult will be making an impact in Asia-Pacific, as China and India aren’t short of indigenous manufacturers. This is where Gamesa will be vital, as it has a knack for developing long-term relationships in key markets. It has also built a compelling model of building kit and then developing sites before selling them on, which can work offshore.
Areva has the established offshore wind technology, and Gamesa has more experience of tapping into emerging markets. If cultural differences don’t get in the way then it looks like it could be a good coupling. But, as with all relationships, we’ll only know how strong it is when it hits a rocky patch.
Wind Watch
Today, we are publishing our special report, Hidden Investment Opportunities.
This will equip you with vital intelligence and insight about emerging markets and sectors you need to be aware of, from Africa to the grid battery storage sector.
Now, we know that no market can be totally ‘hidden’. Developers including Mainstream Renewable Power are making their mark in South Africa, while the likes of Bill Gates and Warren Buffett are backing firms in grid battery storage.
Even so, these are markets that most of our readers will not yet have explored.
Getting involved in new markets isn’t always easy, of course. It can offer investors the chance to make higher returns than in more established markets, but there are risks. Being among the first into a market means higher set-up costs, lack of a supportive infrastructure to help if things go wrong, and risks — both economic and political — that investors may not take if they were doing business at home.
It isn't just our insights either. We have also gained contributions from the likes of Google and Green Giraffe Energy Bankers. Premium members can read the fullHidden Investment Opportunities report now by clicking on this link.
But with the publication of one report comes the start of work on the next one!
Our next report, Investing in Tech, is due out on Wednesday 10th September, and will focus on ten technology trends that will shape the industry over the next ten years. We have started work on this and are on the lookout for ideas -- as well as advertisers! Feel free to get in touch for either of those.
For now, though, do take the time to read our report and, if you want to drop the team a note, go right ahead – editorial@awordaboutwind.com.
Wind Watch
When novelty countryside band The Wurzels released an anti-wind farm song in May, you’d be forgiven for thinking all British farmers were angry about wind farms.
Not so. Farm-scale installations can help farmers cut their energy bills, and thus saving money on the cost of producing food. It also lets them sell excess energy to the grid. The UK’s small and medium wind market is healthier than you may think.
Yes, you’ve got communities minister Eric Pickles throwing his weight around after he took the right to veto any UK onshore wind farm on any site at any time.
He has already turned down applications for ten out of the 12 projects he has looked at, of which four went against the recommendations of local planning inspectors. But he does not tend to get involved in farm-scale schemes, instead focusing his ire on proposals that he believes will have a major negative impact on the look of the countryside. This means there is still significant potential for investors and manufacturers who work with farmers — and other individual property owners — on small to medium scale turbine sites.
The fundamentals of the market are still strong.
Farmers have access to land and windy sites. They have a need for energy and are exposed to rising prices from the big six utility companies. And they are in remote communities where energy supply can be intermittent.
Meanwhile, the number of manufacturers set up to cater for this market will gradually drive down the costs of this technology. For instance, Endurance Wind Power opened a factory near Kidderminster a few months to specifically focus on building ‘farm-scale’ turbines; and Spanish firm Norvento launched a 100kW turbine late last year for smaller landowners.
Conventional energy costs are rising whereas the cost of generating energy from a turbine on your own land is falling. It really looks like a no-brainer.
And, as the price of kit comes down, then more property owners will be able to afford to install it. In turn, this means that manufacturers and developers will be ever less reliant on government subsidies and support to back up their demand pipeline. It removes some unease about uncertain policies and may create a platform for investors.
It is easy to imagine a farmer selling a wind turbine on his land to an external investor after agreeing a favourable power purchase agreement. This would enable the farmer to benefit from low-cost energy and recoup the money spent installing the turbine. The investor could sell excess energy to sell to the grid, as well as taking responsibility for maintenance.
The other benefit of driving down the cost of small and medium turbines it that it enables the wind sector to expand in new markets including Ethiopia, Kenya and Morocco. Low-cost wind can become a vital component of rural electrification in developing nations.
But it is not only farmers in those countries that stand to benefit.
When novelty countryside band The Wurzels released an anti-wind farm song in May, you’d be forgiven for thinking all British farmers were angry about wind farms.
Not so. Farm-scale installations can help farmers cut their energy bills, and thus saving money on the cost of producing food. It also lets them sell excess energy to the grid. The UK’s small and medium wind market is healthier than you may think.
Yes, you’ve got communities minister Eric Pickles throwing his weight around after he took the right to veto any UK onshore wind farm on any site at any time.
He has already turned down applications for ten out of the 12 projects he has looked at, of which four went against the recommendations of local planning inspectors. But he does not tend to get involved in farm-scale schemes, instead focusing his ire on proposals that he believes will have a major negative impact on the look of the countryside. This means there is still significant potential for investors and manufacturers who work with farmers — and other individual property owners — on small to medium scale turbine sites.
The fundamentals of the market are still strong.
Farmers have access to land and windy sites. They have a need for energy and are exposed to rising prices from the big six utility companies. And they are in remote communities where energy supply can be intermittent.
Meanwhile, the number of manufacturers set up to cater for this market will gradually drive down the costs of this technology. For instance, Endurance Wind Power opened a factory near Kidderminster a few months to specifically focus on building ‘farm-scale’ turbines; and Spanish firm Norvento launched a 100kW turbine late last year for smaller landowners.
Conventional energy costs are rising whereas the cost of generating energy from a turbine on your own land is falling. It really looks like a no-brainer.
And, as the price of kit comes down, then more property owners will be able to afford to install it. In turn, this means that manufacturers and developers will be ever less reliant on government subsidies and support to back up their demand pipeline. It removes some unease about uncertain policies and may create a platform for investors.
It is easy to imagine a farmer selling a wind turbine on his land to an external investor after agreeing a favourable power purchase agreement. This would enable the farmer to benefit from low-cost energy and recoup the money spent installing the turbine. The investor could sell excess energy to sell to the grid, as well as taking responsibility for maintenance.
The other benefit of driving down the cost of small and medium turbines it that it enables the wind sector to expand in new markets including Ethiopia, Kenya and Morocco. Low-cost wind can become a vital component of rural electrification in developing nations.
But it is not only farmers in those countries that stand to benefit.
Do you know Energetic Bear? No, he’s not a children’s character. It’s more sinister.
IT security firm Symantec says Energetic Bear is a group of Russian hackers that targets power producers and grid operators in Europe and the US. It started life in or before 2011, and has been focusing on infiltrating energy companies in the US and Europe since 2013.
Symantec says Energetic Bear’s malware lets it monitor energy consumption in real time, and enables it to damage and disrupt physical systems including wind turbines. We live in a world surrounded by data, which makes hacking a vital concern for wind investors.
Now, hacking in the energy sector isn’t new. The US is battling with China over claims that Chinese hackers stole secrets from US firms, including information about solar innovations and nuclear technology. Big manufacturers already know they need to protect their ideas.
But Energetic Bear shows how hacking now goes way beyond corporate secrets. It gives hackers the ability to directly control your investments, and hit you financially. If they can stop your turbines from turning then that is a direct financial impact on project owners.
We could try to reduce the amount of data we gather about wind farms, but there will be little appetite from investors to do that. Gathering information on how projects and individual turbines are performing can enable operators to manage and maintain their wind farms more effectively. This increases their profitability and maximises their value.
The solution has to be making sure the growing amount of data is better protected.
The difficulty is knowing where to start. Grids need data in order to track the fluctuating production of wind farms, and make sure energy gets where it needs to be and when. Governments in Europe and the US wants millions more homes to have smart meters by 2020, to help cut energy use, but this will mean more ways for hackers to get into the grid.
Therefore, grids need to be more secure, and utilities will have to fork out billions to try to stop hackers getting in. Manufacturers are in a constant arms race to upgrade their tech.
Investors should also take more of an interest in what happens to the data about their wind farms. This information is being made more accessible to firms in the supply chain, from the contractors who fix the turbines to the consultants who analyse the data. Sharing this information means there are many more points through which hackers can attack.
One danger Symantec highlights is that hackers will try to get data directly from their large targets but, if they can’t, they will happily target firms in the supply chain. Investors need to know about how safe their data is, and that it only goes to people who need it.
You may find it valuable to know all about your assets and control them remotely — but, as Energetic Bear shows, you aren’t alone.
Wind Watch
Samsung has a reputation for not backing down. The South Korean firm's two-year legal battle with Apple over smartphone technology patents is a case in point.
So it has surprised some wind industry onlookers to hear that the conglomerate’s offshore wind arm, Samsung Heavy Industries, is poised to exit European offshore wind. If the firm is happy to go toe-to-toe with Apple then why not go into battle with a dominant turbine maker like Siemens?
But this talk of an exit from European offshore wind looks premature.
The company confirmed it is carrying out a review of its operations in the sector, and we will see the results of this review in the next couple of months. It has also said that reports that it has decided to pull back from European offshore are “not true”, and it is simply reviewing its future plans. This is something we would expect good companies to be doing in all sectors all the time.
Still, let’s say it decides to exit European offshore. What impact would that have?
The firm’s operations in European offshore are limited to two areas.
The first strand is that it has installed a prototype 7MW turbine at Energy Park Fifeoff the coast of Methil, eastern Scotland. Commissioning was delayed until March because of a damaged blade. This is the world’s largest installed turbine and the best-known prototype installed by an Asian manufacturer in European waters.
The second strand is that the company has been shortlisted as supplier for the EDPR-led 1.1GW Moray Firth project planned in Scottish waters. It is in competition with MHI Vestas, which is the joint venture between Mitsubishi Heavy Industries and Vestas, but no deal has yet been done.
And that, pretty much, is that.
Yes, the company said two years ago that it would set up a £100m manufacturing plant in Fife, but that hasn’t yet happened. The upshot is that, actually, it would not have a huge immediate impact if the firm did decide to scale back its commitments in Europe. It would be good news for MHI Vestas because it would take away the competition in the race at 1.1GW Moray Firth. But let's see what happens.
All this speculation about Samsung’s future highlights a danger of going over-the-top when a business installs a prototype. Yes, prototypes may be exciting, but we can only say a firm has made a big commitment to a market when it has made or received big orders. At present, Samsung doesn’t meet this basic criteria.
We can also see why an Asian manufacturer would want to set up a prototype in Europe, to gain knowledge it can then apply in its local market. It will be easier to make an impact in a fledgling Asian market than in Siemens-dominated Europe. In short, it would make sense for Samsung to focus on offshore elsewhere.
But that isn’t to say we don’t want to see Samsung in Europe. If it can establish itself then this could bring competition and innovation that can only help the sector.
It wouldn’t be easy — but neither is going into a legal battle with Apple.