Wind Watch
The Americans and the French have been getting on well of late.
President Francois Hollande’s successful visit to the White House in February is a case in point — despite the backdrop of his high-profile sex scandal.
However, the US-France relationship may be put to the test later this week if the reported bid by General Electric (GE) to acquire Alstom comes to pass.
The French are famous for fiercely guarding the country’s assets, jobs and the ownership of its companies. Indeed, the French government last week warned GE that it was ready to fight for its national interests if GE did make a multi-billion dollar bid.
The background here is that the government bailed out Alstom ten years ago to the tune of €2.5bn; and the firm relies heavily on orders from state-owned rail operator SNCF and utility EDF. The government won’t want to put that legacy at risk.
If GE does seek to buy Alstom or its energy assets - which account for 70% of the French company's sales - then completing an acquisition would not be simple or quick.
There are plenty of reasons why such a deal would be of interest.
Over the last few years Alstom has built up a significant global market share within the international energy markets.
In early 2011 it opened a turbine nacelle factory in Amarillo in the US. Later that year it opened a 300MW manufacturing facility in Brazil. And, in March 2012, it confirmed plans to open factories in Cherbourg and Saint-Nazaire after winning a French offshore wind farm tender with EDF and Dong Energy.
That is not to say the company is problem-free. It has been hit by the shift in European energy markets away from traditional energy sources, and last year it revealed plans to cut 1,300 jobs, mainly in its coal-fired boiler business.
But there is still plenty to recommend the company to GE. It has seen some stable group financial performance and strong growth within the energy division, in particular within renewables. This presents a compelling case.
The deal would also be a smart way for the US manufacturer to consolidate its position within key growth markets, such as Brazil.
Here, both firms have already established an operating base, and merging the two units could reduce overheads and costs and remove a key competitor.
Couple this with GE's increasing desire to tap into the global offshore market - an area in which it has been largely shut out - and the rationale stacks up.
But that doesn't mean it's a done deal, as it has become public over the weekend that Siemens is also in the running for Alstom's energy assets to prevent GE growing its presence in Europe. A deal with Siemens may find more favour with France's leaders.
Both Alstom and GE senior management have remained tight-lipped in recent days. Alstom has denied a formal approach; GE has refused to comment; and Bouygues, which owns almost 30% of Alstom, has also said nothing.
Whatever happens, all this speculation has certainly been well timed to create maximum impact for Alstom, which is scheduled to deliver its financial results on 7th May.
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The Americans and the French have been getting on well of late.
President Francois Hollande’s successful visit to the White House in February is a case in point — despite the backdrop of his high-profile sex scandal.
However, the US-France relationship may be put to the test later this week if the reported bid by General Electric (GE) to acquire Alstom comes to pass.
The French are famous for fiercely guarding the country’s assets, jobs and the ownership of its companies. Indeed, the French government last week warned GE that it was ready to fight for its national interests if GE did make a multi-billion dollar bid.
The background here is that the government bailed out Alstom ten years ago to the tune of €2.5bn; and the firm relies heavily on orders from state-owned rail operator SNCF and utility EDF. The government won’t want to put that legacy at risk.
If GE does seek to buy Alstom or its energy assets - which account for 70% of the French company's sales - then completing an acquisition would not be simple or quick.
There are plenty of reasons why such a deal would be of interest.
Over the last few years Alstom has built up a significant global market share within the international energy markets.
In early 2011 it opened a turbine nacelle factory in Amarillo in the US. Later that year it opened a 300MW manufacturing facility in Brazil. And, in March 2012, it confirmed plans to open factories in Cherbourg and Saint-Nazaire after winning a French offshore wind farm tender with EDF and Dong Energy.
That is not to say the company is problem-free. It has been hit by the shift in European energy markets away from traditional energy sources, and last year it revealed plans to cut 1,300 jobs, mainly in its coal-fired boiler business.
But there is still plenty to recommend the company to GE. It has seen some stable group financial performance and strong growth within the energy division, in particular within renewables. This presents a compelling case.
The deal would also be a smart way for the US manufacturer to consolidate its position within key growth markets, such as Brazil.
Here, both firms have already established an operating base, and merging the two units could reduce overheads and costs and remove a key competitor.
Couple this with GE's increasing desire to tap into the global offshore market - an area in which it has been largely shut out - and the rationale stacks up.
But that doesn't mean it's a done deal, as it has become public over the weekend that Siemens is also in the running for Alstom's energy assets to prevent GE growing its presence in Europe. A deal with Siemens may find more favour with France's leaders.
Both Alstom and GE senior management have remained tight-lipped in recent days. Alstom has denied a formal approach; GE has refused to comment; and Bouygues, which owns almost 30% of Alstom, has also said nothing.
Whatever happens, all this speculation has certainly been well timed to create maximum impact for Alstom, which is scheduled to deliver its financial results on 7th May.
Wind Watch
It has been a week of renewable energy doublespeak from the UK government.
If you believe energy and climate change secretary Ed Davey we are now in a “green energy investment boom”. Davey, a Liberal Democrat, said this on Wednesday when revealing eight projects to get support from the Contracts for Difference (CfD) regime. These eight include five offshore wind farms.
But yesterday energy minister Michael Fallon said that the Conservative Party would not subsidise any new onshore wind farms if the party wins the 2015 general election; and came out publicly in support of shale gas and fracking.
Investors would be forgiven for getting confused by the mixed messages. The government is talking about a green investment boom, but then it backs gas over onshore wind.
So what is really going on?
The big myth is that the CfD announcement marks the start of a UK green energy boom. It doesn’t.
The government has confirmed five offshore wind farms that will get subsidies if they happen: Dong Energy’s 1.2GW Hornsea 1, 660MW Walney, and 258MW Burbo Bank extension; SSE’s 664MW Beatrice; and Statoil and Statkraft’s 402MW Dudgeon.
Naturally it is good to see the government providing support for projects through its CfD regime, but the CfD regime does not mean these projects will definitely happen. It just gives the developers a little more certainty when making decisions about whether to proceed.
For example, SSE is set to finally decide on Beatrice in 2016.
If anything, the CfD regime just reinforces what the government is already doing. And remember, it is no accident that CfD strike prices are set at levels that favour offshore schemes over onshore.
The Conservatives are still planning a moratorium on planning permission and subsidies for new onshore wind farms if they win the 2015 general election.
The final say on planning permission for new onshore wind farms is still in the control of communities secretary Eric Pickles until then, too.
And the carbon price floor remains frozen, as announced by chancellor George Osborne in his Budget in March. This will slow the UK’s transition to new sources of renewable energy.
So with that in mind, here's what investors should take from all this double talk.
It is bad news for UK onshore wind investors. The CfD announcement made no mention of this market, which reinforces government apathy towards its future development and growth.
However, it is good for offshore investment. Put bluntly, it demonstrates exactly how UK policymakers want to grow this sector - and how the support mechanisms will pan out.
And for the UK as a whole?
This laser focus on offshore wind reflects a high-risk approach. Yes, it could help UK firms to export products, skills and services overseas. However, global growth in offshore wind is far from assured.
And in a market that continues to evolve and adapt, it's an approach that leaves little room for future manoeuvre.
It has been a week of renewable energy doublespeak from the UK government.
If you believe energy and climate change secretary Ed Davey we are now in a “green energy investment boom”. Davey, a Liberal Democrat, said this on Wednesday when revealing eight projects to get support from the Contracts for Difference (CfD) regime. These eight include five offshore wind farms.
But yesterday energy minister Michael Fallon said that the Conservative Party would not subsidise any new onshore wind farms if the party wins the 2015 general election; and came out publicly in support of shale gas and fracking.
Investors would be forgiven for getting confused by the mixed messages. The government is talking about a green investment boom, but then it backs gas over onshore wind.
So what is really going on?
The big myth is that the CfD announcement marks the start of a UK green energy boom. It doesn’t.
The government has confirmed five offshore wind farms that will get subsidies if they happen: Dong Energy’s 1.2GW Hornsea 1, 660MW Walney, and 258MW Burbo Bank extension; SSE’s 664MW Beatrice; and Statoil and Statkraft’s 402MW Dudgeon.
Naturally it is good to see the government providing support for projects through its CfD regime, but the CfD regime does not mean these projects will definitely happen. It just gives the developers a little more certainty when making decisions about whether to proceed.
For example, SSE is set to finally decide on Beatrice in 2016.
If anything, the CfD regime just reinforces what the government is already doing. And remember, it is no accident that CfD strike prices are set at levels that favour offshore schemes over onshore.
The Conservatives are still planning a moratorium on planning permission and subsidies for new onshore wind farms if they win the 2015 general election.
The final say on planning permission for new onshore wind farms is still in the control of communities secretary Eric Pickles until then, too.
And the carbon price floor remains frozen, as announced by chancellor George Osborne in his Budget in March. This will slow the UK’s transition to new sources of renewable energy.
So with that in mind, here's what investors should take from all this double talk.
It is bad news for UK onshore wind investors. The CfD announcement made no mention of this market, which reinforces government apathy towards its future development and growth.
However, it is good for offshore investment. Put bluntly, it demonstrates exactly how UK policymakers want to grow this sector - and how the support mechanisms will pan out.
And for the UK as a whole?
This laser focus on offshore wind reflects a high-risk approach. Yes, it could help UK firms to export products, skills and services overseas. However, global growth in offshore wind is far from assured.
And in a market that continues to evolve and adapt, it's an approach that leaves little room for future manoeuvre.
Google agrees largest wind purchase
Google has agreed a 407MW deal with MidAmerican Energy to use wind energy to power its data centre in Council Bluffs in Iowa.
The internet giant's deal with the US utility, part of billionaire Warren Buffett's Berkshire Hathaway, is its largest renewable energy purchase to date.
Power for the Iowa data centre will come from several wind projects in MidAmerican's Wind VIII programme, which is aiming to bring more than 1GW of new wind power online by the end of 2015.
InterGen buys half of 155MW Mexico scheme
US power company InterGen has agreed to buy a 50% stake in the 155MW Energia Sierra Juarez project in Mexico from a Sempra Energy subsidiary.
The $300m scheme is located 70km east of San Diego and south of the US-Mexico border. InterGen bought the stake from IEnova, the majority-owned Mexican subsidiary of US utility Sempra Energy.
The first phase of the project is due to complete next year. San Diego Gas & Electric has signed a 20-year deal to buy power from the scheme.
Gamesa 4.5MW turbine makes Finnish debut
Gamesa has installed four of its G128-4.5MW turbines at the 18MW Simo wind farm, which is being developed in Lapland by Finnish firm TuuliWatti.
The Spanish manufacturer’s 4.5MW turbines have been designed to withstand low temperatures, and this is the first commercial wind farm where they have been installed.
The turbines are also the most powerful installed so far in Finland.
KfW IPEX-Bank invests in 46MW French farms
KfW IPEX-Bank is lending €65m to Boralex for the Fortel-Bonnieres and Saint-Francois wind farms in northern France, which total 46MW.
The German bank has entered a 15-year agreement with Borelax Europe, a subsidiary of Canadian developer Borelax.
The deal is due to complete this month. Construction is underway at both sites; and the two schemes are scheduled to complete in early 2015.
Finavera concludes 184MW Canada sale
Finavera Wind Energy has completed the sale of the 184MW Melkie wind farm project in British Columbia in Canada to US company Pattern Energy.
The Canadian developer has sold the project for C$28m. Construction is due to start towards the end of 2014, with the scheme operational in 2016.
The deal, announced last year, gives Pattern the option to buy Finavera’s 77MW Wildmare and 60MW Bullmoose energy projects by April 2016.
This week British Airways (BA) committed to invest in a facility that converts landfill waste into jet fuel.
It is working on the project, called GreenSky, with Solena Fuels on a site in Essex. When complete, BA will buy 50,000 tonnes of fuel a year from the facility — or 42% of its total output. Which is all very well, but why is it relevant for wind?
The answer lies in the structure of the deal. We need more wind energy firms to undertake similar agreements to that which BA has finalised with GreenSky.
The reason for this is certainty. Governments are looking to rein in the subsidies that give developers and investors the certainty to proceed. In the absence of fresh capital from the traditional investment market, corporate deals could step in and help.
We have of course, already seen some similar deals in wind.
Last week, furniture giant Ikea bought the 98MW Hoopeston wind farm in Illinois to provide the energy needed by its US operations.
This is good for Apex Clean Energy, which will continue to develop the wind farm and run it after construction completes; and it gives Ikea certainty over its future energy supply.
Ikea's deal isn't a one-off. Microsoft announced in November that it would buy the entire output from the 110MW Keechi Wind facility in Texas to power its data centres.
And Google has done similar deals globally, including a ten-year deal with Eolus Wind in January to buy energy from four Swedish wind farms to power a Finnish data centre.
Even so, given the scale of the market these deals are rare and more should be done.
Such deals can give developers the confidence to start projects as it is guaranteed that they will be able to sell what they produce.
There is a parallel here with shopping and retail developers too – since they don't start to build without having the tenants lined up to fill their major units. Those big headline deals give them the confidence that they need to start building. Similar rules apply in wind.
And here’s the thing. These corporate deals are more attractive than conventional export deals where the wind farm operator rarely gets long-term certainty over how much energy the grid will buy, or at what price.
The benefits for blue-chip firms of buying energy in this way is that they get assurance about energy pricing and can safeguard long-term supply. It helps with adding a little ‘green’ to the financial reports, too.
But the wind sector can't sit back and wait for these deals to land.
Traditionally, the sector has developed a reputation for the strength of its government lobbying – particularly where securing subsidies are concerned. While this still remains critical, perhaps this focus now needs to be split. And directed at a new target – namely, lobbying the blue chips and the corporates, to buy more energy directly.
As subsidies reside, these deals offer more certainty than many might think.
Wind Watch
This week British Airways (BA) committed to invest in a facility that converts landfill waste into jet fuel.
It is working on the project, called GreenSky, with Solena Fuels on a site in Essex. When complete, BA will buy 50,000 tonnes of fuel a year from the facility — or 42% of its total output. Which is all very well, but why is it relevant for wind?
The answer lies in the structure of the deal. We need more wind energy firms to undertake similar agreements to that which BA has finalised with GreenSky.
The reason for this is certainty. Governments are looking to rein in the subsidies that give developers and investors the certainty to proceed. In the absence of fresh capital from the traditional investment market, corporate deals could step in and help.
We have of course, already seen some similar deals in wind.
Last week, furniture giant Ikea bought the 98MW Hoopeston wind farm in Illinois to provide the energy needed by its US operations.
This is good for Apex Clean Energy, which will continue to develop the wind farm and run it after construction completes; and it gives Ikea certainty over its future energy supply.
Ikea's deal isn't a one-off. Microsoft announced in November that it would buy the entire output from the 110MW Keechi Wind facility in Texas to power its data centres.
And Google has done similar deals globally, including a ten-year deal with Eolus Wind in January to buy energy from four Swedish wind farms to power a Finnish data centre.
Even so, given the scale of the market these deals are rare and more should be done.
Such deals can give developers the confidence to start projects as it is guaranteed that they will be able to sell what they produce.
There is a parallel here with shopping and retail developers too – since they don't start to build without having the tenants lined up to fill their major units. Those big headline deals give them the confidence that they need to start building. Similar rules apply in wind.
And here’s the thing. These corporate deals are more attractive than conventional export deals where the wind farm operator rarely gets long-term certainty over how much energy the grid will buy, or at what price.
The benefits for blue-chip firms of buying energy in this way is that they get assurance about energy pricing and can safeguard long-term supply. It helps with adding a little ‘green’ to the financial reports, too.
But the wind sector can't sit back and wait for these deals to land.
Traditionally, the sector has developed a reputation for the strength of its government lobbying – particularly where securing subsidies are concerned. While this still remains critical, perhaps this focus now needs to be split. And directed at a new target – namely, lobbying the blue chips and the corporates, to buy more energy directly.
As subsidies reside, these deals offer more certainty than many might think.
Siemens de-risks in €1bn grid link deal
Siemens is set to build a fifth German offshore grid connection in a deal that cuts its risk of incurring extra costs in case of delays.
Grid operator TenneT has awarded Siemens and energy services firm Petrofac the contract to develop the €1bn BorWin 3 link in the North Sea, with capacity of 900MW. It is due to complete in 2019.
Delays to four previous German offshore grid link projects have cost Siemens over €800m since 2011. The BorWin 3 deal has been structured to reduce the risk of adding to this.
Siemens will have five years to complete the project rather than the three years in previous deals; and the contract is valued at more than €1bn, compared with €500m for previous projects.
Read more on grid delays in our report, Tackling Transmission
GE wins 96MW Texas turbine deal
Akuo Energy has chosen General Electric’s 1.7-103 turbines for the first phase of its Rocksprings wind farm in Texas.
The French developer's subsidiary Akuo Energy USA is set to use 56 of the GE turbines for the 96MW first phase of the Rocksprings project. The scheme is due to be operational next year.
The total installed capacity of Rocksprings is set to total 180MW over two phases, and is part of Akuo’s strategy to build a 1GW portfolio of US wind and solar schemes.
Canada’s largest wind farm completes
Samsung Renewable Energy and Pattern Energy have completed Canada’s largest wind farm.
The development partners have announced that the 270MW South Kent Wind project in Ontario is now operational. It is using 124 Siemens 2.3MW turbines.
Samsung and Pattern are working on three more projects in Ontario: the under-construction 150MW Grand Renewable Energy Park; the 180MW Armow project; and the 270MW K2.
Impax concludes 78MW of Finnish deals
Impax Asset Management has completed its acquisition of the 51MW Finnish wind farm Kuolavaara-Keulakkopaa from developer Fortum & Metsahallitus.
The UK investor has also agreed a project finance deal for the 27MW Joukhaisselka scheme with Swedish financial group Skandinaviska Enskilda Banken. Construction started this year.
Impax has made the investments through its New Energy Investors II fund, which has more than €330m of capital committed to investments in the renewable energy sector.
Orix eyes US wind in £883m spree
Orix plans to spend 150 billion yen (£883m) in the next 12 months on company takeovers, including US wind farm operators.
The Japanese financial services firm's president Makoto Inoue has revealed that the company is also keen to buy US solar projects, and peripheral assets from European banks.
The firm’s investment in renewable energy has focused on solar, where it has a pipeline of projects totalling 425MW with 67MW operational, but it is now seeking to grow its portfolio of wind projects in countries outside Japan with high energy demand.
E.On deserts Sahara green scheme
E.On and HSH Nordbank are pulling out of a major scheme to develop wind and solar projects in Africa's Sahara desert.
The German utility plans to leave the Desertec Industrial Initiative (DII) consortium when its contract expires this year to focus on its own projects. The German bank has also confirmed it is leaving.
DII was launched in 2009 to develop wind and solar projects in the Sahara and import the energy to Europe. Siemens and Bosch left the consortium in 2012. The DII group now includes firms including ABB, Deutsche Bank, Munich Re, RWE and Shell.
970MW Navitus application submitted
Eneco and EDF Energy have submitted the planning application for their 970MW Navitus Bay wind farm off the UK south coast.
The £3.5bn wind farm is set to be located in the Solent, between Dorset and the Isle of Wight. The developers have submitted an application to the Planning Inspectorate, and are planning to start construction on the site in 2017.
In February, the partners reduced the scheme from 1.1GW to 970MW and moved it 3.8km further from the Dorset coast.
Ikea buys 98MW Hoopeston scheme
Ikea has bought the 98MW Hoopeston wind farm in Illinois, which it says will generate enough electricity to cover its US energy use.
The Swedish furniture retailer has bought the project, which is due to complete in 2015, from US developer Apex Clean Energy for an undisclosed sum. Apex Clean will continue to develop the wind farm and operate it after construction.
This is Ikea’s first wind farm investment in the US and its largest renewable energy investment to date.
Australia to miss 2020 target by 40%
Renewable energy policy rollbacks in Australia will harm the wind sector and mean the country fails to hit long-standing renewable energy targets, according to new research.
Energy consultancy RepuTex said government plans to repeal the carbon price mechanism and cut its renewable energy target mean that renewable energy sources totalling only 24.6GW would be built by 2020, which is 40% below the existing target of 41GW.
This would lead to a significant reduction in new onshore wind plans. Further details on the policy changes are due this month.
US wind installations drop 92% in 2013
Developers completed US wind farms totalling just 1.1GW in 2013, which is a 92% drop from a record level of 13.1GW in 2012.
The American Wind Energy Association (AWEA) has reported the drop in its latest annual survey. It said that uncertainty about the federal production tax credit (PTC) had caused the slowdown, and called for more policy certainty over the future of the PTC.
AWEA added that 100 projects totalling 12GW were being built in the US at the end of 2013. The US has total capacity of 61GW.
Wind Watch
by Richard Heap
Listen to critics of wind farms and you’ll often hear how these projects kill the countryside, increase blackouts and damage health. Sadly, there isn’t space here to de-bunk all of these.
But there is one common criticism worthy of further scrutiny. This is the idea that building more wind farms is stupid because they’re only useful when the wind is blowing. This isn't the case.
Last week, the UK’s Royal Academy of Engineering released a study on how the UK grid has to change by 2030 to accommodate more wind farms. The ideas in this report will also be of interest for other countries grappling with the same challenge.
So let's look at its findings in more detail.
The UK’s big challenge is its demand-led grid, which means that energy sources must be generating enough energy when people need it. Sadly, the wind doesn't always blow when required and, as more wind farms are built, this could cause supply problems.
However, this can be managed using daily wind farm output forecasts. These are reliable, although not 100% accurate.
There is also the problem of wind farms generating too much energy when it isn’t needed, and so the government has to pay them to shut off. Cue angry comments about these "constraint payments" on online chat threads, conveniently ignoring how traditional power producers also get such payments.
Wind farm critics think these are killer blows, but they aren’t.
The academy’s study says the UK grid is able to cope with both of these issues until 2020; and that it can be adapted to cope with this by 2030 and beyond. This takes into account the potential for increased energy demand from, for example, electric vehicles.
Its proposals to adapt the grid fall into three categories: storage, demand management and interconnection.
The first of these ideas is that the grid needs more energy storage capacity. This means that, when wind farms are generating too much power, the excess can be stored in large battery-like systems and used when needed at a later date. Low wind periods only tend to last a few days in the UK, and such a system would help cope during these times.
The second idea - demand management - looks at cutting domestic energy demand when there isn’t enough supply. For example, household appliances can be fitted with chips that enable the electricity grid to tell them to reduce their energy consumption at busy times. This would be part of a “smart” grid, or a system that some IT firms call the “internet of things”.
And the third idea - interconnection - proposes linking the UK grid to others overseas. This means the UK could export energy when it is producing too much, and import when it isn’t producing enough. The European Union is currently looking at plans along these lines as it considers policies to support an EU super-grid.
These are all vital changes that can future proof the grid and help to cope with growing numbers of wind farms.
Of course, much of this technology is untested at such a large scale, and making these changes would need funding, long-term political backing; and time to find the right blend of solutions. But it can be done if we re-think what a grid is and what it does.
It is also helpful that this study is written by a group with little interest in talking up the wind industry. In theory, this means that its ideas should carry more weight with wind farm critics.
Still, good luck getting those critics to listen.
Listen to critics of wind farms and you’ll often hear how these projects kill the countryside, increase blackouts and damage health. Sadly, there isn’t space here to de-bunk all of these.
But there is one common criticism worthy of further scrutiny. This is the idea that building more wind farms is stupid because they’re only useful when the wind is blowing. This isn't the case.
Last week, the UK’s Royal Academy of Engineering released a study on how the UK grid has to change by 2030 to accommodate more wind farms. The ideas in this report will also be of interest for other countries grappling with the same challenge.
So let's look at its findings in more detail.
The UK’s big challenge is its demand-led grid, which means that energy sources must be generating enough energy when people need it. Sadly, the wind doesn't always blow when required and, as more wind farms are built, this could cause supply problems.
However, this can be managed using daily wind farm output forecasts. These are reliable, although not 100% accurate.
There is also the problem of wind farms generating too much energy when it isn’t needed, and so the government has to pay them to shut off. Cue angry comments about these "constraint payments" on online chat threads, conveniently ignoring how traditional power producers also get such payments.
Wind farm critics think these are killer blows, but they aren’t.
The academy’s study says the UK grid is able to cope with both of these issues until 2020; and that it can be adapted to cope with this by 2030 and beyond. This takes into account the potential for increased energy demand from, for example, electric vehicles.
Its proposals to adapt the grid fall into three categories: storage, demand management and interconnection.
The first of these ideas is that the grid needs more energy storage capacity. This means that, when wind farms are generating too much power, the excess can be stored in large battery-like systems and used when needed at a later date. Low wind periods only tend to last a few days in the UK, and such a system would help cope during these times.
The second idea - demand management - looks at cutting domestic energy demand when there isn’t enough supply. For example, household appliances can be fitted with chips that enable the electricity grid to tell them to reduce their energy consumption at busy times. This would be part of a “smart” grid, or a system that some IT firms call the “internet of things”.
And the third idea - interconnection - proposes linking the UK grid to others overseas. This means the UK could export energy when it is producing too much, and import when it isn’t producing enough. The European Union is currently looking at plans along these lines as it considers policies to support an EU super-grid.
These are all vital changes that can future proof the grid and help to cope with growing numbers of wind farms.
Of course, much of this technology is untested at such a large scale, and making these changes would need funding, long-term political backing; and time to find the right blend of solutions. But it can be done if we re-think what a grid is and what it does.
It is also helpful that this study is written by a group with little interest in talking up the wind industry. In theory, this means that its ideas should carry more weight with wind farm critics.
Still, good luck getting those critics to listen.
Wind Watch
It isn’t often that £2bn of extra funding for renewables feels like a disappointment. But, this time, it does.
Norwegian prime minister Erna Solberg last month announced that the country’s £521bn sovereign wealth fund was going to increase its exposure to the renewable energy sector. This was greeted with great excitement, and for good reason.
The Government Pension Fund of Norway is the world’s biggest sovereign wealth fund, ahead even of Abu Dhabi's. Set up in 1996 to invest proceeds from North Sea oil and gas reserves, it now owns 1.2% of the world’s listed stocks and has huge clout.
Therefore, Solberg’s public commitment that the fund was gearing up to make “an important contribution towards greener growth” augured well for companies in the wind sector.
The fund already has an interest in wind. It backs companies such as Italy’s Enel Green Power, which has a portfolio of renewable energy schemes including wind farms. In total, the fund backs 166 firms that it defines as environmentally-friendly and Solberg’s announcement suggested this would grow significantly.
There was also the fun irony of an oil fund growing support for renewable energy firms.
However, the initial enthusiasm is waning since full details of the strategy came out last week in the Norwegian finance ministry’s report about how the fund was managed in 2013.
The fund is indeed planning to grow its green investments, but the figures are underwhelming. It plans to grow its investments in renewable energy firms from £3bn to £5bn, which is a decent rise but not the transformational change we were expecting.
While it would be churlish to dismiss the prospect of extra funding worth £2bn coming into the renewable energy sector, there is still a feeling that much more could be done.
Yes, some companies in the wind sector are likely to benefit, but the total of £5bn is still less than 1% of the total value of the Norwegian sovereign wealth fund.
It is also less ambitious than other funds in the sector. Danish fund PensionDanmark has a target of making 10% of its direct investments in renewable energy assets, and it has done a series of deals in projects ranging from US wind farms to German transmission assets.
It is not a totally fair comparison, of course. PensionDanmark’s assets total £15.5bn, which is tiny compared to the Norwegian fund. This means it can get involved investing in individual assets that would be much too small for the Norwegians.
But it does hint at a sense of ambition that some feel is lacking in the Norwegian fund's plans.
The disappointment is not just about numbers.
The ministry’s report gives no indication of the fund making good on its idea of divesting from fossil fuels. And it is also scrapping the ethical council that oversees which companies it invests in, which raises concerns that future “green” investments will be subject to less scrutiny than they have in the past.
These are all reasonable concerns. But, of course, they will be forgotten if the deals start to flow.
It isn’t often that £2bn of extra funding for renewables feels like a disappointment. But, this time, it does.
Norwegian prime minister Erna Solberg last month announced that the country’s £521bn sovereign wealth fund was going to increase its exposure to the renewable energy sector. This was greeted with great excitement, and for good reason.
The Government Pension Fund of Norway is the world’s biggest sovereign wealth fund, ahead even of Abu Dhabi's. Set up in 1996 to invest proceeds from North Sea oil and gas reserves, it now owns 1.2% of the world’s listed stocks and has huge clout.
Therefore, Solberg’s public commitment that the fund was gearing up to make “an important contribution towards greener growth” augured well for companies in the wind sector.
The fund already has an interest in wind. It backs companies such as Italy’s Enel Green Power, which has a portfolio of renewable energy schemes including wind farms. In total, the fund backs 166 firms that it defines as environmentally-friendly and Solberg’s announcement suggested this would grow significantly.
There was also the fun irony of an oil fund growing support for renewable energy firms.
However, the initial enthusiasm is waning since full details of the strategy came out last week in the Norwegian finance ministry’s report about how the fund was managed in 2013.
The fund is indeed planning to grow its green investments, but the figures are underwhelming. It plans to grow its investments in renewable energy firms from £3bn to £5bn, which is a decent rise but not the transformational change we were expecting.
While it would be churlish to dismiss the prospect of extra funding worth £2bn coming into the renewable energy sector, there is still a feeling that much more could be done.
Yes, some companies in the wind sector are likely to benefit, but the total of £5bn is still less than 1% of the total value of the Norwegian sovereign wealth fund.
It is also less ambitious than other funds in the sector. Danish fund PensionDanmark has a target of making 10% of its direct investments in renewable energy assets, and it has done a series of deals in projects ranging from US wind farms to German transmission assets.
It is not a totally fair comparison, of course. PensionDanmark’s assets total £15.5bn, which is tiny compared to the Norwegian fund. This means it can get involved investing in individual assets that would be much too small for the Norwegians.
But it does hint at a sense of ambition that some feel is lacking in the Norwegian fund's plans.
The disappointment is not just about numbers.
The ministry’s report gives no indication of the fund making good on its idea of divesting from fossil fuels. And it is also scrapping the ethical council that oversees which companies it invests in, which raises concerns that future “green” investments will be subject to less scrutiny than they have in the past.
These are all reasonable concerns. But, of course, they will be forgotten if the deals start to flow.
Senvion grows working capital to €850m
Senvion has secured €850m of working capital from a group of 14 financiers led by BayernLB, Commerzbank and Deutsche Bank.
The German manufacturer, which is a subsidiary of Indian firm Suzlon, agreed the three-year loan to refinance €750m of credit facilities due to expire this August. The €100m increase is a boost to Suzlon, which has struggled with debts over the last few years.
Suzlon is also understood to be considering floating Senvion, formerly known as Repower, on the London Stock Exchange.
Wind spend levels at $73.5bn in 2013
Total investment in wind power held steady at $73.5bn in 2013, according to research by Pew Charitable Trusts.
The US-based non-governmental body reported in its study 2013: Who’s Winning the Clean Energy Race? that 38% of total wind investment, or $27.9bn, was directed at the Chinese market.
The country deployed wind power totalling more than 10GW last year, with 12.1GW of solar power.
Tories admit 2020 onshore ban plan…
Conservative Party chairman Grant Shapps has given the party's first public indication that it is planning a ban on new onshore wind farms from 2020.
He told a group of journalists on Monday that the party feels wind farms “blight” the countryside and are best located offshore. This is the clearest indication yet that the party is to pledge a ban on onshore wind farms in its 2015 general election manifesto.
However, the party is also expected to step up the development of offshore wind farms and grow the use of solar panels.
…as Germany approves energy reforms
German chancellor Angela Merkel yesterday approved a package of reforms to Germany’s renewable energy laws.
This confirms the government's plan to reduce green subsidies; to slow the expansion of onshore wind power, at 2.5GW capacity growth per year; and limit total offshore wind to 6.5GW by 2020.
It has also committed to grow the share of energy from renewable sources from around one quarter now to 55%-60% by 2035.
Atkins picked for 580MW substation
Dong Energy has awarded Atkins the contract to design the substation for its 580MW Race Bank offshore wind farm.
The Danish developer bought the project from utility Centrica for £50m in December. Dong has already appointed Atkins to design substations at its Walney and Burbo Bank projects.
The developer is aiming to cut the cost of offshore wind by up to 40% by 2020, and it wants Atkins to help it implement this with standardised approaches to substation designs.
Wind Watch
Everybody likes a spending spree, and few can match that of the pace and scale of the one by the UK’s Green Investment Bank.
Last week alone, Shaun Kingsbury and his team committed a further £460m to offshore wind projects. The investments in Westermost Rough (£240m) and Gwynt y Mor (£220m) will see the bank pick up equity stakes of 25% and 10% respectively.
These add to the bank’s three existing offshore wind investments made since its inception in November 2012 – Walney, Rhyl Flatsand London Array. The two new purchases are two of the largest single investments that the bank has made to date; and bring its total offshore wind financial commitment to nigh on £600m.
These deals are significant because the bank has a mandate to mobilise capital within this emerging sector. It is imperative that it enables developers to free up fresh capital for future projects.
Moreover, Kingsbury has always maintained that, by making these investments on fully commercial terms, the bank can “crowd in” future funding; and create a clear and viable model that future prospective investors can follow.
In principle, this plan makes sense. And there’s no denying that the bank has – and continues to – play a critical role within securing the industry’s future.
But it is not clear whether all of the current developers are indeed using this fresh capital, which is injected back onto their balance sheet, to finance a fresh round of offshore wind energy projects.
Dong Energy certainly is. The Danish firm maintains that it wants totriple its current installed capacity by 2020. Its strengthened financial partnership with Marubeni – which took a 25% stake in Westermost Rough last week alongside the Green Investment Bank – certainly helps underscore this goal. Dong's project development pipeline remains strong, as do its ties with key manufacturers and contractors throughout the supply chain.
However, for RWE Innogy, part of German utility RWE, questions remain. In January, it confirmed plans to reduce its renewable energy investments by half, to €500m in 2014. Meanwhile, it continues to seek partners for its 504MW Galloper Offshore Wind Farm to further dilute its current 50% interest.
That makes for a curious situation. While the Green Investment Bank must - and will - continue to place strategic financial bets on future projects, the extent to which this capital will get recycled back into the system by all developers is a decision that remains out of the control of the bank.
The bank is an innovative and increasingly powerful investor, and it is able to crowd in fresh capital. But it has much less power to control or influence the strategic decisions of developers.
The Green Investment Bank will continue to grow in stature. As this happens, the extent to which it can dictate development terms with existing developers remains one to watch.
Everybody likes a spending spree, and few can match that of the pace and scale of the one by the UK’s Green Investment Bank.
Last week alone, Shaun Kingsbury and his team committed a further £460m to offshore wind projects. The investments in Westermost Rough (£240m) and Gwynt y Mor (£220m) will see the bank pick up equity stakes of 25% and 10% respectively.
These add to the bank’s three existing offshore wind investments made since its inception in November 2012 – Walney, Rhyl Flats and London Array. The two new purchases are two of the largest single investments that the bank has made to date; and bring its total offshore wind financial commitment to nigh on £600m.
These deals are significant because the bank has a mandate to mobilise capital within this emerging sector. It is imperative that it enables developers to free up fresh capital for future projects.
Moreover, Kingsbury has always maintained that, by making these investments on fully commercial terms, the bank can “crowd in” future funding; and create a clear and viable model that future prospective investors can follow.
In principle, this plan makes sense. And there’s no denying that the bank has – and continues to – play a critical role within securing the industry’s future.
But it is not clear whether all of the current developers are indeed using this fresh capital, which is injected back onto their balance sheet, to finance a fresh round of offshore wind energy projects.
Dong Energy certainly is. The Danish firm maintains that it wants to triple its current installed capacity by 2020. Its strengthened financial partnership with Marubeni – which took a 25% stake in Westermost Rough last week alongside the Green Investment Bank – certainly helps underscore this goal. Dong's project development pipeline remains strong, as do its ties with key manufacturers and contractors throughout the supply chain.
However, for RWE Innogy, part of German utility RWE, questions remain. In January, it confirmed plans to reduce its renewable energy investments by half, to €500m in 2014. Meanwhile, it continues to seek partners for its 504MW Galloper Offshore Wind Farm to further dilute its current 50% interest.
That makes for a curious situation. While the Green Investment Bank must - and will - continue to place strategic financial bets on future projects, the extent to which this capital will get recycled back into the system by all developers is a decision that remains out of the control of the bank.
The bank is an innovative and increasingly powerful investor, and it is able to crowd in fresh capital. But it has much less power to control or influence the strategic decisions of developers.
The Green Investment Bank will continue to grow in stature. As this happens, the extent to which it can dictate development terms with existing developers remains one to watch.
Wind Watch
The German wind sector is claiming a couple of victories against Angela Merkel.
This week, the German government revealed a plan to cut its 2020 target for total capacity in its waters by 20% to 8GW. This would not normally be cause for celebration, but the industry has welcomed it because a cut by 35% to 6.5GW had been mooted.
The cap will still stifle the country’s offshore wind sector, but it could have been worse.
The onshore sector has been celebrating too. The government is still committing to a 2.5GW annual cap for expansion of German onshore wind, but it has revealed this week that it does not plan to include repowering schemes in this cap, as previously expected.
Both policies are parts of a controversial overhaul of the Renewable Energy Sources Act, where reform plans are due to be finalised on Tuesday and come into force in August. The government wants to reduce the amount that consumers pay in subsidies to renewable energy producers; and it also wants to increase support for traditional power producers.
So why has the government had a change of heart on some of its tougher policies?
Well, it partly reflects the growing political clout of the wind sector.
The proposed reforms have provoked anger among developers and manufacturers, particularly those in north Germany, who claim that swingeing government reforms would harm the nation’s move towards clean energy and put thousands of jobs at risk.
The government has had to listen to the wind sector because of those thousands of jobs. Severe cuts to renewable subsidies in Germany would put many people out of work and stifle the development of technological innovations it can sell elsewhere.
It is also politically difficult for the government to turn its back on green energy as evidence for man-made climate change gets stronger. The Intergovernmental Panel on Climate Change has this week reiterated dire warnings about the state of the planet.
And herein lies an interesting paradox for political leaders.
They may, like Germany, want to cut renewable energy subsidies when the renewables sector gets too big. But, when the sector gets to that size, it also becomes more difficult to make those cuts because of the number of livelihoods that rely on the sector.
We can look at the UK’s Conservative Party as another example. The Conservatives' Liberal Democrat coalition partners have said that prime minister David Cameron is planning a moratorium on all new onshore wind farms. This is a big cause for concern.
But such a moratorium would also be politically tricky given that the UK's onshore wind sector now supports thousands of jobs. The Siemens deal in Hull last week may have been focused on offshore, but it still shows how the sector can help job creation.
Governments cannot rein in a fast-growth sector like wind without also putting jobs at risk. Will the Tories have the guts for a moratorium when they how see many jobs it puts at risk?
It is a dilemma that Merkel has been dealing with - and that Cameron has yet to tackle.
The German wind sector is claiming a couple of victories against Angela Merkel.
This week, the German government revealed a plan to cut its 2020 target for total capacity in its waters by 20% to 8GW. This would not normally be cause for celebration, but the industry has welcomed it because a cut by 35% to 6.5GW had been mooted.
The cap will still stifle the country’s offshore wind sector, but it could have been worse.
The onshore sector has been celebrating too. The government is still committing to a 2.5GW annual cap for expansion of German onshore wind, but it has revealed this week that it does not plan to include repowering schemes in this cap, as previously expected.
Both policies are parts of a controversial overhaul of the Renewable Energy Services Act, where reform plans are due to be finalised on Tuesday and come into force in August. The government wants to reduce the amount that consumers pay in subsidies to renewable energy producers; and it also wants to increase support for traditional power producers.
So why has the government had a change of heart on some of its tougher policies?
Well, it partly reflects the growing political clout of the wind sector.
The proposed reforms have provoked anger among developers and manufacturers, particularly those in north Germany, who claim that swingeing government reforms would harm the nation’s move towards clean energy and put thousands of jobs at risk.
The government has had to listen to the wind sector because of those thousands of jobs. Severe cuts to renewable subsidies in Germany would put many people out of work and stifle the development of technological innovations it can sell elsewhere.
It is also politically difficult for the government to turn its back on green energy as evidence for man-made climate change gets stronger. The Intergovernmental Panel on Climate Change has this week reiterated dire warnings about the state of the planet.
And herein lies an interesting paradox for political leaders.
They may, like Germany, want to cut renewable energy subsidies when the renewables sector gets too big. But, when the sector gets to that size, it also becomes more difficult to make those cuts because of the number of livelihoods that rely on the sector.
We can look at the UK’s Conservative Party as another example. The Conservatives' Liberal Democrat coalition partners have said that prime minister David Cameron is planning a moratorium on all new onshore wind farms. This is a big cause for concern.
But such a moratorium would also be politically tricky given that the UK's onshore wind sector now supports thousands of jobs. The Siemens deal in Hull last week may have been focused on offshore, but it still shows how the sector can help job creation.
Governments cannot rein in a fast-growth sector like wind without also putting jobs at risk. Will the Tories have the guts for a moratorium when they how see many jobs it puts at risk?
It is a dilemma that Merkel has been dealing with - and that Cameron has yet to tackle.
UK coalition partners in wind spat
The Liberal Democrats have said deputy prime minister Nick Clegg vetoed Tory plans to block new onshore wind farms.
The party has said that the Conservative Party is planning to cap onshore wind generation. This would restrict proposed onshore wind farms that have not been granted planning approval.
The Liberal Democrats said Clegg vetoed the proposal during a meeting with the Conservatives on Monday. The Conservatives have not commented on this specific claim, but a spokesman has said it wants to give local people more say over wind farms.
Dong sells 50% of Westermost Rough
Dong Energy has sold half of its 210MW Westermost Rough offshore scheme to the Marubeni Corporation and UK Green Investment Bank.
The Danish developer has announced that it sold a 25% stake to Japanese conglomerate Marubeni and a further 25% stake to the bank, for around £240m each.
The scheme is due to be fully commissioned in the first half of 2015. It is 25km north of the mouth of the Humber estuary.
RWE sells 10% stake in Gwynt y Mor
RWE Innogy has sold a 10% stake in its 576MW offshore project Gwynt y Mor to the UK Green Investment Bank for £220m.
The developer, part of German utility RWE, said it would reinvest the funding in other renewables projects. The deal is set to close when construction finishes, which is due by the end of this year.
Gwynt y Mor is largest offshore wind farm currently under construction in Europe.
Vestas secures €1bn credit facility…
Vestas has secured a five-year €1bn revolving credit facility from a group of six banks.
The Danish manufacturer agreed the deal with a group comprising Nordea, DNB, HSBC, SEC, Societe Generale and UniCredit. The firm said the credit facility would provide a long-term financing platform to support its aim of profitable growth.
This €1bn represents an increase from the €850m credit facility it agreed in February.
…and two US orders totalling 292MW
Vestas has received a 194MW order for 97 V100-2.0MW turbines as part of a supply agreement with EDF Renewable Energy.
The Danish manufacturer is due to deliver the turbines and commission them in the fourth quarter of 2015.
The company has also announced a 98MW with an undisclosed US customer. It is set to deliver the turbines in late 2014 and complete commissioning in early 2015.
Brookfield Renewable has one of the largest publicly-traded pure play power portfolios in the Americas. It’s natural that it should look further afield.
As such, confirmation last week of the Canadian investment fund’s purchase of the 321MW portfolio of wind farms from Ireland’s Bord Gais comes as no surprise. It was selected as preferred bidder in December, and has been quick to use the opportunity to make its international expansion plans clear.
The sale is part of a wider €1.1bn privatisation plan that involves state-backed Bord Gais offloading the whole of it energy business to three firms: Centrica, Icon Infrastructure and, of course, Brookfield Renewable.
In Dublin, the sale is bittersweet.
The city has come under significant pressure from international lenders to sell state assets to pay down debt and fund a jobs stimulus plan, and 18 months ago it put public assets worth €3bn on the block. That’s quite the garage sale.
Against that backdrop, it’s no surprise to learn that the paperwork for all three parties has been finalised with the deal due to complete in the second quarter. That’s a relatively quick turnaround, even if it doesn’t feel like it.
That willingness by all parties to do things quickly is one indicator that this deal really matters.
For Centrica, which will take over the gas and electricity supply business as well as one gas-fired power planet, the deal is about old-fashioned growth. It is not able to increase existing margins in the UK market, and so this Irish opportunity is a smart play ahead of expected expansion into the US.
For Icon Infrastructure, the UK-based asset management firm that will buy Northern Irish gas supply and distribution business Firmus Energy, the deal adds further weight to its existing infrastructure investments. This means Icon can break into Northern Ireland; and the deal also represents a stable long-term investment opportunity in its increasingly diverse portfolio.
Which just leaves Brookfield Renewable — or, to use its full name, Brookfield Renewable Energy Partners.
The company has a strong track record in North American hydropower, with the profits to prove it, and an expansion of its existing onshore wind energy assets certainly makes sense. The firm has already stated that it expects to grow the portfolio by up to 500MW by 2015, raising its value to €700m.
This is a strong statement by Brookfield, and shows how North American institutional investors - including Brookfield's Canadian counterpart Northland Power - are looking to Europe for stable returns and solid portfolio growth.
These firms may not benefit from the double-digit year-on-year European growth of bygone days, but that has never been their true motivator. They want a reliable investment and a foothold in the European market.
Understanding this motivation holds the key to success for European wind developers over the medium- to long-term.
Wind Watch
Brookfield Renewable has one of the largest publicly-traded pure play power portfolios in the Americas. It’s natural that it should look further afield.
As such, confirmation last week of the Canadian investment fund’s purchase of the 321MW portfolio of wind farms from Ireland’s Bord Gais comes as no surprise. It was selected as preferred bidder in December, and has been quick to use the opportunity to make its international expansion plans clear.
The sale is part of a wider €1.1bn privatisation plan that involves state-backed Bord Gais offloading the whole of it energy business to three firms: Centrica, Icon Infrastructure and, of course, Brookfield Renewable.
In Dublin, the sale is bittersweet.
The city has come under significant pressure from international lenders to sell state assets to pay down debt and fund a jobs stimulus plan, and 18 months ago it put public assets worth €3bn on the block. That’s quite the garage sale.
Against that backdrop, it’s no surprise to learn that the paperwork for all three parties has been finalised with the deal due to complete in the second quarter. That’s a relatively quick turnaround, even if it doesn’t feel like it.
That willingness by all parties to do things quickly is one indicator that this deal really matters.
For Centrica, which will take over the gas and electricity supply business as well as one gas-fired power planet, the deal is about old-fashioned growth. It is not able to increase existing margins in the UK market, and so this Irish opportunity is a smart play ahead of expected expansion into the US.
For Icon Infrastructure, the UK-based asset management firm that will buy Northern Irish gas supply and distribution business Firmus Energy, the deal adds further weight to its existing infrastructure investments. This means Icon can break into Northern Ireland; and the deal also represents a stable long-term investment opportunity in its increasingly diverse portfolio.
Which just leaves Brookfield Renewable — or, to use its full name, Brookfield Renewable Energy Partners.
The company has a strong track record in North American hydropower, with the profits to prove it, and an expansion of its existing onshore wind energy assets certainly makes sense. The firm has already stated that it expects to grow the portfolio by up to 500MW by 2015, raising its value to €700m.
This is a strong statement by Brookfield, and shows how North American institutional investors - including Brookfield's Canadian counterpart Northland Power - are looking to Europe for stable returns and solid portfolio growth.
These firms may not benefit from the double-digit year-on-year European growth of bygone days, but that has never been their true motivator. They want a reliable investment and a foothold in the European market.
Understanding this motivation holds the key to success for European wind developers over the medium- to long-term.
Is it time to grow up? The industry certainly thinks so. And so do some of those ambitious thirty-somethings working within it.
Typically, these individuals started their career ten or more years ago in a fledgling firm in the then-fledgling wind industry. They have spent the time since then experiencing impressive growth.
Over that period, companies have rapidly been built up around them and, as business has flourished, so too have the projects that they’ve played a key part in bringing to bear. That growth - both personal and corporate - remains hugely infectious.
It has made many of these people start to think really big. In doing so, it has lit a multitude of entrepreneurial fires that will, over the coming years, play a key part in the evolution of this global sector.
This brings with it fresh thinking and fresh ideas. It injects a fresh wave of enthusiasm that will soon play a key part in inching new projects over the line.
But not everyone is so enamoured with these new kids in town.
There is a small handful of individuals that view these ambitious upstarts with a growing degree of unease and doubt.
These individuals – who are often more set in their ways than most – feel that such enthusiasm is either plain naïve or, at times, dangerous. They feel that such ambition must be kept in check.
That is a dangerous mindset to have. At best, it is short-sighted job protectionism; and, at worse, it risks holding more than just the individual back. As an industry, many of our most aspiring firms have always made a point of nurturing new talent and in investing heavily in its people - from the very start.
Such forward thinking must continue to praised and encouraged. Everyone has start somewhere, and it helps the industry to have new talent coming in. If this doesn't happen then we will risk skills shortages and the withering of this currently-dynamic industry. It is in nobody's interests to get into that situation.
Therefore, as the industry matures – and as the old guard increasingly rubs shoulders with the new – let’s ensure that focus remains on positive praise.
And in short, let’s be careful not to undermine the confidence, ambition and enthusiasm that such new talent brings with it.
It's the deal everyone's talking about. It has also been three years in the making. But, this week, details of major manufacturing agreements worth £310m in Yorkshire were finally announced.
No wonder everybody's so damn pleased.
I am, of course, talking about Siemens investing in a new offshore turbine blade manufacturing facility and assembly plant, with Associated British Ports joining the development to build new port facilities. Siemens will invest £160m, and ABP will invest £150m.
The project began its gestation in 2011 but, as the European wind industry wavered in the face of inconsistent political support, it was placed on indefinite hold.
That lasted nigh on three years. Now, three years is a long time in an emerging energy market, and it is a very long time in politics.
So it is against a backdrop of waning support for offshore wind both in the UK and on the continent, particularly in Germany, that Siemens is now making this investment in what it considers to be the strongest offshore wind energy market.
Okay, the manufacturer took its time, but that's fair enough. For this is quite the commitment.
And remember, of the eight forthcoming UK North Sea initiatives, Siemens is currently only the confirmed turbine supplier for two of them.
Put bluntly, it will face no shortage of competition. Vestas is back at the top spot for turbine manufacturers, and there are new European operators that will increasingly get a look in, including in the joint venture between Gamesa and Areva.
On top of that you can add the aspirational Asian ambitions of the likes of Samsung, which is currently testing its own 7MW unit at the NAREC facility in Northumberland. The race is really heating up.
Sure, Siemens has already started to sell its 6MW units, the first of which will be installed at Westermost Rough, and its order book isn’t exactly slim. Nevertheless, there have been mutterings around the market about whether Siemens might have left the manufacturing investment decision too late.
The company clearly doesn’t think so, and it obviously has considerable faith not only in its ability to win work, but also in the ability for DONG Energy, with whom it has strong commercial ties, to keep building sites and buying turbines, too.
But it remains a big bet. Particularly given that, in the same week, SSE announced a consumer energy bill price freeze and pulled out of the Galloper and Islay offshore wind farm projects.
However, despite all of this, we see this as a bet that needs to be made.
This is a sign that multinationals feel they can still do business in the UK; and that, despite all the positive efforts to force a cost reduction on the industry, the market continues to recognises the importance of being able to dig deep and invest.
As an unnamed government official commented privately earlier in the week, it’s easy to be sceptical from the sidelines. It's far harder to actually spend.
Wind Watch
It's the deal everyone's talking about. It has also been three years in the making. But, this week, details of major manufacturing agreements worth £310m in Yorkshire were finally announced.
No wonder everybody's so damn pleased.
I am, of course, talking about Siemens investing in a new offshore turbine blade manufacturing facility and assembly plant, with Associated British Ports joining the development to build new port facilities. Siemens will invest £160m, and ABP will invest £150m.
The project began its gestation in 2011 but, as the European wind industry wavered in the face of inconsistent political support, it was placed on indefinite hold.
That lasted nigh on three years. Now, three years is a long time in an emerging energy market, and it is a very long time in politics.
So it is against a backdrop of waning support for offshore wind both in the UK and on the continent, particularly in Germany, that Siemens is now making this investment in what it considers to be the strongest offshore wind energy market.
Okay, the manufacturer took its time, but that's fair enough. For this is quite the commitment.
And remember, of the eight forthcoming UK North Sea initiatives, Siemens is currently only the confirmed turbine supplier for two of them.
Put bluntly, it will face no shortage of competition. Vestas is back at the top spot for turbine manufacturers, and there are new European operators that will increasingly get a look in, including in the joint venture between Gamesa and Areva.
On top of that you can add the aspirational Asian ambitions of the likes of Samsung, which is currently testing its own 7MW unit at the NAREC facility in Northumberland. The race is really heating up.
Sure, Siemens has already started to sell its 6MW units, the first of which will be installed at Westermost Rough, and its order book isn’t exactly slim. Nevertheless, there have been mutterings around the market about whether Siemens might have left the manufacturing investment decision too late.
The company clearly doesn’t think so, and it obviously has considerable faith not only in its ability to win work, but also in the ability for DONG Energy, with whom it has strong commercial ties, to keep building sites and buying turbines, too.
But it remains a big bet. Particularly given that, in the same week, SSE announced a consumer energy bill price freeze and pulled out of the Galloper and Islay offshore wind farm projects.
However, despite all of this, we see this as a bet that needs to be made.
This is a sign that multinationals feel they can still do business in the UK; and that, despite all the positive efforts to force a cost reduction on the industry, the market continues to recognises the importance of being able to dig deep and invest.
As an unnamed government official commented privately earlier in the week, it’s easy to be sceptical from the sidelines. It's far harder to actually spend.
Siemens and ABP in £310m Hull spend
Siemens and Associated British Ports are to invest a combined £310m in factories on the banks of the Humber in east Yorkshire.
German manufacturer Siemens plans to invest in logistics centre Green Port Hull, and in a factory in nearby town Paull to produce blades for its 6MW turbines. Its total investment is £160m.
Meanwhile, UK port operator Associated British Ports plans to invest £150m in Green Port Hull, which is set to create 1,000 jobs. Construction on both projects is scheduled to start in late summer.
Germany's Wind Energy Agency said the Siemens decision showed that proposed reforms to renewable subsidies by the German government are driving firms away.
Brookfield buys 321MW Irish portfolio
Brookfield Renewable Energy Partners has agreed to buy a 321MW portfolio from Irish firm Bord Gais Energy for €495m.
The Canadian investor said it expected the portfolio to grow to 500MW by 2015 and be worth up to €700m. It currently comprises 17 projects across Ireland and Northern Ireland.
Alongside this deal, Centrica and Icon Infrastructure have bought Bord Gais Energy’s gas and electricity supply business. The total value of the two deals is €1.1bn.
Japan confirms offshore incentive boost
The Japanese government has increased incentives for the offshore wind sector while reducing those for solar projects.
The government has agreed to set the offshore tariff at 36 yen (35 cents) per kWh for the 20 years starting in April. It also cut the solar tariff 11% to 32 yen (31 cents) per KWh.
Its aim is to encourage growth in the offshore wind sector.
Developers net $850m for Canada's K2
Construction work has started on the 270MW scheme K2 Wind in Ontario, Canada, after the developers secured an $850m funding deal with 15 financial institutions.
Samsung, Pattern Energy and Capital Power are developing K2 Wind, which is set to include 140 turbines.
The project is scheduled to be operational by the middle of 2015.
Aldwych agrees €623m Kenya deal
Aldwych International has agreed a €623m funding package for its 300MW Lake Turkana project in northern Kenya.
The London developer said it has agreed financing with lenders including African Development Bank, the European Investment Bank, and Standard Bank of South Africa.
The Lake Turkana Wind Power Project is due to comprise 365 turbines. Aldwych expects to reach financial close on the funding “in the next few months” and start construction shortly after.