Weekly Intelligence Brief: March 12 -19

This week’s Wind Energy Update news brief includes Alstom; E.ON; Dong Energy; Dominion Virginia Power, ABB Power Systems Consulting, Bureau of Ocean Energy Management; Trianel, Areva; Dong Energy; Gamesa, Algonquin Power & Utilities.

Alstom’s 6MW turbine inaugurated

Alstom has inaugurated its 6MW offshore wind turbine at Carnet in the Loire-Atlantique.

The 6 MW Haliade 150 wind turbine was developed in response to a call for tenders launched by the French government in July 2011 that aims to install 3 GW of wind power off the French coast by 2015.

The first Haliade 150 will undergo a series of year-long tests on land at the Carnet site, before a second turbine is placed in the sea off the Belgian coast in autumn 2012. Pre-series production is planned for 2013 with production in series due to start in 2014.

Alstom is the exclusive supplier to the consortium led by EDF Energies Nouvelles which includes Dong Energy, the Danish energy specialist and world leader in offshore wind farms, as well as the developers Nass & Wind and wpd Offshore.

The consortium’s agreement with Alstom offers a unique opportunity to develop a wind turbine based on French technology, built and assembled in France, employing a substantial number of local industrial contractors and benefiting from technological partnerships with various bodies.

If the consortium’s response to the tender is successful, Alstom plans to establish up to 4 factories to produce and assemble components for the 6MW offshore wind turbines, in the port areas of Saint-Nazaire (Loire-Atlantique) for the nacelles and alternators, and in Cherbourg (Manche) for the blades and towers.

These French sites will be the first Alstom sites in the world entirely dedicated to offshore wind power and will permit the creation of 5,000 permanent qualified jobs, including 1,000 direct jobs.

In addition, the consortium plans to establish up to eight sites in the ports of Saint-Nazaire, Brest, Cherbourg and Le Havre, for the fabrication foundations, as well as four operation-maintenance centres in the nearby ports of La Turballe, Saint-Quay-Portrieux, Caen-Ouistreham and Fécamp. The entire project is estimated to create a total of roughly 7,500 jobs.

US: Production tax credit gets renewed support

A measure rejected last week by the U.S. Senate that included tax credits for energy produced by commercial wind turbines has been given a new lease of life.

A bipartisan group of US senators have proposed legislation that would extend the US production tax credit for a further two years.

The production tax credit (PTC), which is due to expire at the end of 2012, provides 2.2 cents credit per kilowatt-hour of energy produced in the first 10 years of a wind-energy facility's operation. Wind-energy developers say this is crucial to their industry.

The new measure, introduced last Thursday, separates the production tax credit from an investment tax credit and the US loan guarantee program.

Earlier in the week, on Tuesday, two opposing PTC-related amendments—one that included a one-year PTC extension with numerous other energy provisions and another that would have ended the credit immediately, retroactive to the start of 2012—did not receive enough votes to be included in the transportation bill.

Proposing the two-year extension were Senators Chuck Grassley (R-Iowa), Mark Udall (D-Colo.), Scott Brown (R-Mass.), Tom Harkin (D-Iowa), Dean Heller (R-Nev.), Ron Wyden (D-Ore.), and Michael Bennet (D-Colo.).

In response to the introduction of the legislation, AWEA CEO Denise Bode said in a statement that an extension of the PTC is critical in order to save 37,000 U.S. wind manufacturing jobs that will otherwise be lost.

"Advancements in wind technology have resulted in a steady decline of the cost of electricity from wind, and we've been clear that we don't need the PTC forever. We are just asking to finish the job. One of America's fastest growing new manufacturing sectors would be lost if the PTC is not extended."

E.ON underscores comittment to renewables

E.ON CEO Johannes Teyssen has reiterated the group’s plan to invest €7 billion in renewables over the next five years, of which just over €2 billion will go towards new offshore wind farms in Germany, the UK, and Sweden. Mr Teyssen made the announcement during E.ON’s annual results for 2011.

Mr Teyssen emphasised that E.ON generates a significant portion of its earnings in very stable businesses. The overall share of regulated as well as quasi-regulated and long-term contracted business amounted to about 50% of EBITDA in 2011.

These stable earnings streams give E.ON a strong foundation for running its business soundly even in difficult times, for meeting current and future challenges, and for tapping new, profitable growth business, he said. E.ON’s EBITDA was €9.3 billion, down by 30%.

E.ON’s sales for 2011 rose by 22% year-on-year, to about €113 billion. Its underlying net income declined by nearly 50% year-on-year to about €2.5 billion.

The Renewables unit grew its EBITDA by 21% to around €1.5 billion, mainly due to an increase in installed wind and solar capacity.

Dong Energy focuses on offshore wind

Renewable energy accounted for 31% of Danish utility Dong Energy’s total electricity generation capacity in 2011. Generation from wind and hydro represented 22% of the Group’s overall electricity generation in 2011 compared with 20% in 2010.

Dong Energy has been working on plans to develop and install offshore wind farms in an assembly line concept and to enhance efficiency in all stages of the offshore wind farm value chain.

In its annual report, the company highlighted that it works concertedly to select and develop new offshore wind turbine projects. Dong believes it is essential to have a large pipeline to enable it to meet its objective of continuously increasing the proportion of electricity generation from renewable energy sources.

On top of its 1,025 MW of wind capacity at the end of 2011, Dong has made final investment decisions regarding the construction of around 1,500 MW additional wind turbines, some of which are expected to be built together with partners, which reduces Dong’s share.

The company, which continues to develop offshore wind farms in Denmark, the UK and Germany, said its coal-fired power stations’ proportion of total capacity for energy production was halved to 24% at the end of 2011. It had five coal-fired power station units fewer than in 2006. At the end of 2011, gas-fired capacity accounted for 31% of total electricity generation capacity.

As per its 2011 results, Dong’s net profit was DKK 2.9 billion ($512 million) in 2011. Its revenue was up DKK 2.2 billion at DKK 56.8 billion. Its net investments were DKK 13.1 billion, related primarily to wind activities and oil and gas fields.

Blueprint for Atlantic offshore wind deployment

A new study recommends that offshore transmission infrastructure be completed in stages, via a standardized approach. The report says considerable cost savings could be achieved by doing so.

Dominion Virginia Power’s Offshore Wind Interconnection Study (completed by ABB Power Systems Consulting), indicates that one offshore substation platform with two 230,000-volt power lines is appropriate to transmit to shore every 500-700 MW of wind-generated electricity constructed off the coast of Virginia. It estimates the cost for each offshore service platform, its equipment and submarine transmission cables at approximately US$652 million.

The initiative was taken to determine the feasibility of designing, constructing, operating, and maintaining submarine cable based interconnection facilities for offshore wind resources along the Atlantic coast so that electric power generation from offshore wind farms can be developed.

As public policy is developed to support wind farms off Virginia’s coast and as leases are issued, Dominion continues to evaluate transmission options to ensure the identification of the lowest cost alternative for bringing offshore wind electricity to customers.

Dominion is planning to respond to the federal Bureau of Ocean Energy Management’s call for information for wind generation in about 113,000 acres of leasing areas approximately 24 miles off the Virginia coast.

As per the recommendations, the proposed concept with four offshore substation platforms and two 230-kV cables per platform can be developed in phases with each substation platform and associated collection and export cables representing one phase of 648 MW.

The preliminary construction cost for the 230-kV AC interconnection system was estimated for each platform. The indicative estimate for one 648 MW platform system is as follows:

  • Offshore platform (topside and offshore substation) -- $250 million
  • 230-kV cable system, 2×72 km – $389 million
  • 230-kV onshore variable shunt reactors (2 x 300 MVARs) including installation, -- $9 million
  • Two three-breaker bays in a breaker and a half scheme to terminate two cables and two shunt reactors -- $ 4 million

Thus, the total indicative estimate for one 648 MW platform and 230-kV cable installation is $652 million.

Turbines delivered for Borkum

French nuclear energy giant Areva has delivered 20 M5000 turbines, out of a total of 40, to be installed in municipal utility cooperation Trianel’s Borkum offshore wind park located in the German North Sea.

The Borkum wind farm is situated 45 km away off the northern coast of the Borkum Island.

Trianel plans the commercial operation of the Borkum wind farm for 2012/13, while installation should start in 2012.

The 20 AREVA nacelles and blades were manufactured in the group’s plants located in Bremerhaven and Stade in the North of Germany.

Dong Energy’s CEO to step down

Anders Eldrup is to resign from his role as CEO of Danish utility Dong Energy.

Last week, the company’s Board of Directors uncovered circumstances that led to a unanimous loss of confidence in Eldrup. These circumstances involved unusual employment and termination terms, agreed without the knowledge of the Board of Directors, for several key employees in Dong Energy, according to the company.

As a result, Eldrup has stepped down as CEO of Dong Energy. The company publicly stated: “We do not believe that Anders Eldrup has acted for personal gain in this case.” Eldrup is standing down by mutual consent, stated the company. A process has been set in motion to identify a new CEO.

Carsten Krogsgaard Thomsen, Dong’s current CFO, has been appointed as acting CEO.

Gamesa to sell four US wind farms

Spainish renewable energy developer Gamesa is to sell four wind farms in the US, with a combined capacity of 480 MW, to Canada’s Algonquin Power & Utilities for US$900 million.

These wind farm projects will be outfitted with 240 of Gamesa’s G9X-2.0 MW turbines and are sited in high wind resource areas: Pocahontas Prairie (80 MW) in Iowa; Sandy Ridge (50 MW) in Pennsylvania; Senate (150 MW) in Texas; and Minonk (200 MW) in Illinois.

Gamesa is developing and constructing the projects, which will be commissioned during 2012: 80 MW have been fully commissioned, while the remainder are under various stages of construction.

Furthermore, Gamesa and Algonquin have entered into a collaboration agreement to pursue additional wind power development opportunities in the US and Canada.

Gamesa chalks up installation record

Spain’s Gamesa installed a record 3,308 MW of new capacity in 2011, 27.8% more than in 2010.

According to the company, last year 87% of the new capacity installed (2,898 MW) was added outside Spain in a total of 22 countries across all five continents, up from 78% in 2010 (2,020 MW). Its 2011 figure tops the company’s former annual installation record of 3,134 MW, registered in 2008, and lifts the total installed in the last 17 years to 24,138 MW.

Gamesa’s market share worldwide rose by 1.6% in 2011 to 8%, according to an IHS-Emerging Energy Research report. Vestas, although maintaining its first place in the ranking with 5.217 MW installed, lost 2% of market share (12,7%), highlighted the company.