August 2011

Offshore Wind Advances in Europe

Offshore wind installations have the advantage of higher more predictable wind speeds. Working against this advantage is the higher cost of installation and maintenance. Europe has moved forward at good pace. In the United States progress in this area has been very slow. As a European pointed out to us a few years ago the U.S. has a lot of wide open spaces for wind turbines. Europe is not so lucky. Several items on offshore wind from McIlvaine Renewable Energy Update follow.

ABB, the leading power and automation technology group, has won an order worth around $1 billion from the Dutch-German transmission grid operator TenneT to supply a power link connecting offshore North Sea wind farms to the German mainland grid.

This is the largest power transmission order in ABB's history. It will deploy the world’s largest offshore HVDC (high-voltage direct current) system with a rating of over 900 megawatts (MW), keeping electrical losses to less than 1 percent per converter station. The completed link will be capable of supplying more than 1.5 million households with clean wind-generated electricity.

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China Ming Yang Wind Power Group Limited a leading wind turbine manufacturer in China announced that it signed a strategic cooperative agreement with China Three Gorges New Energy Corp. ("CTGNE"), a fully-owned subsidiary of China Three Gorges Corporation ("CTGPC") to foster closer cooperation in both domestic and international wind power development. CTGPC is a wholly state-owned enterprise which is responsible for building and operating China's Three Gorges Dam Project.

"Establishing a closer working relationship with CTGNE helps to reaffirm Ming Yang's leading position and forming of the special alliance in the development of offshore wind power in Guangdong, as well as its competitive advantage in offering innovative EPC wind power solutions in China," said Chuanwei Zhang, Chairman and Chief Executive Officer of Ming Yang. Ming Yang's key customers include the five largest state-owned power producers in China, with an aggregate installed capacity accounting for more than 50% of China's newly installed capacity in 2010.

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WindMW GmbH a company majority owned by funds managed by Blackstone has completed the financing for “Meerwind,” the largest German offshore wind farm to complete its full financing process. Meerwind is also the first German wind farm to be fully financed by private investors. The 80 turbine wind farm will be situated approximately 50 km off the German coast in the North Sea. Construction of the 288MW offshore wind farm will be completed in 2013.

The investment funds the installation of 80 substructures (monopile foundations) with Siemens 3.6MW-120 wind turbines, the laying of infield cables, as well as the installation of the offshore high voltage substation. Connection to the main grid, as per German law, will be undertaken by the grid operator Tennet TSO GmbH.

“The German government has demonstrated tremendous leadership in supporting private offshore wind development and we are pleased that Meerwind is the first project to reach financial close under the visionary KfW programme. With the development of Meerwind, we are able to support Germany in meeting its green energy targets,” said Peter Giller, WindMW Board Member.

As part of Blackstone’s long-term commitment to investing in the German offshore wind industry, Blackstone also announced the acquisition of a permit to construct the Nördlicher Grund wind farm. The 64 turbine wind farm with an estimated construction cost of €1.3 billion will be situated approximately 100 km off the German coast in the North Sea. Construction is expected to commence in 2013 with completion in 2016.

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EDF Energies Nouvelles, DONG Energy, Nass&Wind Offshore, Poweo ENR, wpd offshore and Alstom are pooling their expertise and their investment capacity within a consortium created to respond to the “offshore wind energy” call for tenders launched on July 11 by the French government. These partnerships illustrate a shared commitment to create, in a team spirit, projects of excellence that are: technologically innovative, financially and technically sound, devised locally, mastered and ambitious for France’s industrial plan.

Initiator of the overall project and founder of the consortium, EDF Energies Nouvelles organizes and federates the partnerships, manages the future entity and coordinates the responses to the call for tenders.

With over 20 years' experience in the Northern European offshore wind market, DONG Energy will bring its expertise as a specialist and pioneer in this sector. As a key player in the renewable energy industry, the Danish group is the utility company that has built and operates to date the most offshore wind farms in the world.

The consortium brings together three partners that are well-known and experienced developers: Nass&Wind Offshore, Poweo ENR and wpd offshore. Developers of very advanced projects in maritime regions selected by the French government, they will continue the development, conduct environmental impact studies and build local support. The five projects presented by the consortium will be held by five dedicated companies, in which the parent company will hold a majority stake beside the strategic developing partners.

Cornerstone of the overall project, the exclusive agreement between Alstom and the consortium, for the supply of new generation offshore wind turbines, is a major decision that lays the foundations for the creation of a French industrial field. The launch in 2014 of new, innovative equipment with unmatched performances will provide a unique opportunity to design a wind turbine using French technology, completely manufactured and assembled in France. If the consortium wins sufficient volumes, Alstom plans to build an industrial and technological hub in France comprised of manufacturing units for generators, blades and nacelles. This would be the centre of a vast economic and scientific ecosystem that would call on numerous French industrial subcontractors and create technological partnerships with several entities. Almost 200 providers from the offshore wind energy sector are committed in this project.

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