Annual Report Annual

2016 ANNUAL REPORT ANNUAL

2016 ANNUAL arteche.com ©ARTECHE REPORT Moving Together

Annual report | 2016 In 2016 the Arteche Group celebrated our 70th anniversary. 70 years of history that would not be have been what they have been if not for all those who have formed and form part of the organization. Thanks to all of them, to their work and their e orts, Arteche has achieved technological leadership in the sector.

Arteche’s talent has been responsible for what it is today. The seven decades have not been ❝I would like to thank you for the e ort and commitment easy, throughout our history we have faced challenges and di culties. But our team has always of all our team, and the trust our customers, suppliers, looked to the future with optimism. and all the political, economic and technological agents we work with, place in us.❞ Always looking for excellence for the power sector through our team, innovative and committed people.

Thanks to them, we are conﬁ dent about facing the immediate future with high levels of competitiveness and responding to the challenges that continue to arise in our way. Because throughout our history we have been evolving, adapting to what the industry and society demanded of us. We will continue to do so.

Thanks to all those who have formed and form part of Arteche, today we are a small Basque multinational company with presence in more than 150 countries.

José Javier de Arteche Arteche Group Chairman 1. STRATEGY AND PROSPECTS ECONOMIC SUMMARY 2016 | 8

2. ORGANIZATION INTERNAL ORGANIZATION | 12

HISTORY | 14

ALL OVER THE WORLD | 16

3. INNOVATION PROJECTS | 20

OUTREACH | 24

ARTECHE SOLUTIONS | 26

4. CUSTOMERS AND MARKETS MILESTONES | 32

MARKETS AND BUSINESSES | 34

CERTIFICATIONS | 37

5. CORPORATE SOCIAL RESPONSIBILITY

SUSTAINABILITY, SAFETY AND HUMAN RIGHTS | 42

SOCIAL ACTION / COMMUNITY | 44

RECOGNITIONS | 46

COMPANY-WORKER RELATIONS | 47

4 Annual report | 2016 _ We make a major e ort to focus our activity on key businesses and capacities

We celebrated our 70th anniversary in and distribution grids or the sale STRATEGY a complex international context in key of our holding in GTMS, a company markets for Arteche. The contraction dedicated to the manufacture of high of the Brazilian market, the changes voltage disconnectors. generated by the reform of the power AND PROSPECTS sector in Mexico or the situation With this e ort almost completed, we of no growth in Europe have been face 2017 with an organization focused a challenge that we have partially on the key business and with a faster 1 o set by growth in new markets and and better capacity to respond to the customers in the Middle East and needs of our customers. Asia, a market with great potential for In 2017, we will continue moving our products. forward in this strategy: focusing In spite of the situation experienced in our activity on key businesses 2016, the electricity business continues and capacities, improving the to present great opportunities. The competitiveness and give a bigger growth of renewable generation, impulse to international activity and We want to be an the development of smart grids, innovation in products and solutions ❝ international benchmark for interconnections between countries for the future power grid. the major stakeholders in and obsolescence of the infrastructure With this, we hope to increase the power sector and set up in the most developed countries, are profitability again, and make our with them the transmission drivers of solid growth we want to customer base grow with new and distribution grid of take advantage of. products and new certiﬁ cations at the the future.❞ To respond to these challenges international level. The new Medium and grow in a sustainable and cost- Voltage factory in Mexico, growth in effective manner, we are making a the Middle East and Asian markets major e ort to focus our activity on and in the railway sector, or the launch our key businesses and capacities, of the new recloser range, to mention looking for solutions of alliances or only a few, are goals that should disinvestment in those we do not enable us to grow more than 15% in consider essential for the future. new orders in 2017. An ambitious goal but supported by a solid business In 2016, part of this strategy of model and, above all, by a committed concentration are the restructuring of team and by the trust of customers our activity in Brazil, the reorganization and suppliers, all based on our of the Power Grid unit, the decision to business model of a close relationship concentrate the activity of automation with the customer and ﬁ nancial rigor. and control only on transmission

_ Alexander Artetxe CEO of the Arteche Group STRATEGY AND PROSPECTS Annual report | 2016 Annual1 report | 2016 7 1 STRATEGY AND PROSPECTS 1 STRATEGY AND PROSPECTS

ECONOMIC SUMMARY SALES BY SALES BY BUSINESS UNIT MARKETS

The 2016 financial year has been characterized by an extremely complex economic environment, especially in Brazil, until now one of the Arteche Group’s major markets. 13% 11%

This situation, in spite of having a ected all the Group’s 15% units, has not prevented the international market from having represented, as in previous years, more than 85% of Arteche’s turnover.

This commitment to internationalization, as well as diversification of products, has allowed high-potential markets such as the Middle East or China to have grown strongly. 40% 36% 20% 65% KEY FIGURES 2016

Instrument Power Turnkey North America Europe / Africa / Middle East Transformers Grid Solutions South America Asia / Paciﬁ c

TOTAL EMPLOYEES

More than 1,800 people distributed in the plants in 4 continents and, together with them, more than 150 representatives throughout the world. €236 Sales Million 183 680

348

North America

South America There are 1,826 of us Europe / Africa / Middle East

Asia / Paciﬁ c

€8.7 R&D&i Million 615

Total: 1826

8 Annual report | 2016 Annual report | 2016 9 _ We are a global organization with international presence and close customer relationship

The result of our extensive Being a small multinational provides international experience, our activity us with the organizational capacity combines the global perspective to respond to the most pressing of the challenges facing the power challenges and the most demanding sector, with detailed knowledge of obstacles by combining global the local needs of each market. capacity and perspective with the support near to the markets where In the Arteche Group we strive we operate. for excellence in everything we undertake, adapting our responses Our international vision and to the circumstances, our products close customer relationship, our and services to the needs, and our consolidated history and technical ❝We seek internal excellence organization to the context. To and technological training enable to project it to our customers, encourage this, we have created us to address the major challenges, suppliers and the rest of Business Excellence and Management and make us a solid organization the stakeholders.❞ Quality teams, which act across the for the future, stable against market organization, stimulating, training, swings but flexible to adapt to facilitating the development of the specific needs of the most continuous improvement and quality demanding customers. in all our actions.

In this way, continuous improvement is a daily modus operandi in our activity, a method that allows us to progress together with our customers and the society in which we do our work.

_ César Fernández de Velasco Arteche Group General Manager

2ORGANIZATION ORGANIZATION Annual report | 2016 Annual2 report | 2016 11 2 ORGANIZATION 2 ORGANIZATION

INTERNAL ORGANIZATION Arteche has formed an alliance New Medium Voltage plant with Ormazabal and Tecnalia in Mexico to create BELA, Basque The Arteche Group launches New internal organization of The High Voltage area will occupy the a plan in search of Excellence Arteche Power Grid Electrical Laboratories Alliance space left free by the move to increase its The alliance, supported by the Provincial productive capacity The organization begins a process of We reorganize the organization to make Council of Bizkaia, allows us to compete in transformation of its management model progress in competitiveness and service Arteche TyT’s Medium Voltage area in Mexico has decided the market of electrical laboratories at the and business plan to move to new facilities over the year, where it can cover Arteche Power Grid’s structure has been reorganized over global level all the needs of its customers. The Arteche Group has launched a plan to achieve the year, which develops equipment, devices and solutions Arteche has partnered with Ormazabal and Tecnalia to The space occupied until now by the Medium Voltage excellence in all areas of its activity, a change of culture to optimize the operational management of transmission create BELA, Basque Electrical Laboratories Alliance, to area will be absorbed by the High Voltage area. This will that allows us to meet the needs of all our stakeholders and distribution power grids, power generation systems operate our test infrastructure under a common brand. increase its production capacity to meet the growing and be recognized internationally for the quality and and industrial environments, to focus its activity around a demand for its products in markets such as the USA and service we provide to our customers. core concept: the customer. This new company will provide global services to the Mexico to improve, in addition, the service it o ers to its The new structure will allow the unit to learn ﬁ rst-hand the international market for assessing the conformity of In this process of transformation, we stress the business customers. concerns and needs of the customer all over the world, electrical equipment for transmission and distribution grids. plan and its management model providing value, adapting and assist it with proximity and e ectiveness. the best operational practices from a shared vision. Arteche participates in this initiative with its Ultra- Innovation plays a fundamental role in this new structure, High Voltage Laboratory, the largest in Spain of This plan will allow the organization to be recognized always looking for the satisfaction of our customers, these characteristics, which allows testing instrument internationally for quality and the services in all its developing products and solutions that are more e cient transformers up to 1,200 kV. products and solutions, underlining our leadership in the and cost-effective for the energy sector, to develop power sector. markets and offer unique value propositions for our customers to make progress. A new department has been created for this purpose, the Business Excellence Unit, that working together with the rest of the people will train everyone in Arteche to improve New o ces in Madrid processes and operations that are carried out. A four-year road map has been deﬁ ned for this, which will be used Arteche’s new location in Madrid measures to implement major improvement projects in all areas of 2,000 m2 the organization. SAC, Sistemas Avanzados de Control, the Arteche Group’s Various improvement projects have already been started company in Madrid that develops services and systems for up in the Group’s key processes, and activities have automation and control of Electric Systems, has christened been launched to promote and lead the improvement its new o ces this year, where the o ces and workshop from the Management creating positive impacts on are in the same building. the organization. Architectural barriers and the number of o ces have been In this way, Arteche seeks to establish a management reduced to improve internal communication and agility for model sustainable by and for people, based on a shared resolving problems between the o ces and the workshop. vision and a common language which all members of the This move will have a positive impact on our customers, Group feel at ease with. who will see their problems resolved more quickly and transparently, maintaining our e ectiveness.

> ArtPhoto II: Zubi-Zuri Bridge -Eduardo López Arceo.

12 Annual report | 2016 Annual report | 2016 13 2 ORGANIZATION 2 ORGANIZATION

HISTORY Display of images on the evolution Arteche in its 70-year history.

70 years in milestones

IT PG TS 1946 1946 ARTECHE Instrument foundation Transformers

1961 Auxiliary Relays

1976 Protection Relays 1968 Ikaslan Technology Center

1973 1973 Technological First independence export

1979 1981 South Instrument America Transformers 765 kV

1990 Electronic Instrument 1993 Transformers North America 1994 ISO 9001

1997 2003 th ARTECHE Group We celebrated our 70 anniversary Protections, Meters Holding and Solutions in Automation and Arteche’s long history is due to the e orts of its team and the trust of 2003 Distribution ISO 14001 2004 2005 its customers Asia 2005 Complete solutions for Power Quality substation construction The Group has celebrated in 2016 its years. Having their support over seven sector in which we have played an Solutions 70th anniversary, many years full of decades is our greatest success. important role. 2006 2011 successes thanks to the work and 2010 “Turnkey” projects New organization 2010 Between the time that Aurelio Celebrating the 70th anniversary of for wind farms e orts of everyone who has formed, of the Group Oceania Voltage Arteche returned from exile to found the Arteche Group only makes sense Transformers and 2012 and forms, part of the company. the company, until today, with the if this means looking at the future and 2014 optical current Protection and Control 2013 transformers for ISO 26000 for advanced systems The history of the Arteche Group Arteche Group actively participating moving forward together, together GIS Photovoltaic inverters 2016 would not have been what it is if in the main international electrical with our customers, our team, our 70 years not for the trust the customers from organizations, such as the IEC, suppliers and our environment. over 150 countries have placed in our the IEEE, CIGRE or CIRED, there equipment and solutions over the have been great advances in the

14 Annual report | 2016 Annual report | 2016 15 WORLDWIDE

UNITED KINGDOM

USA CHINA

SPAIN

INDIA

MEXICO THE UNITED ARAB THAILAND EMIRATES

GROUP COMPANIES AUSTRALIA PARTICIPATING COMPANIES BRAZIL

CORPORATE OFFICES SOUTH AFRICA ARGENTINA

CHILE SPAIN UNITED KINGDOM USA Mungia

ARTECHE GROUP London Miami ELECTROTÉCNICA ARTECHE HNOS. ELMYA ARTECHE THAILAND ARTECHE USA ELECTROTÉCNICA ARTECHE SMART GRID Bangkok ARTECHE CENTRO DE TECNOLOGÍA SOUTH AFRICA CHILE MEXICO Johannesburg Santiago de Chile Madrid CHINA Tepeji del Río SAC ARTECHE TRANSFORMADORES Y BRAZIL Dalian TECNOLOGÍA THE UNITED ARAB EMIRATES ARTECHE DYH ARGENTINA Vitoria-Gasteiz México DF Curitiba ARTECHE MIDDLE EAST JLT INELAP Córdoba ARTECHE EDC ARTECHE GAS INSULATED INSTRUMENT TRANSFORMERS AUSTRALIA AMYT AIT ARTECHE STK INDIA ARTECHE ACP Madrid Sydney

ARTECHE MÉXICO TURNKEY SOLUTIONS Buenos Aires São Paulo Seville ARTECHE SMARTGRID INDIA PVT ARTECHE SMART DIGITAL OPTIC

16 Annual report | 2016 Annual report | 2016 17 _ We o er solutions and products with high added value for a very demanding and competitive market

In a global context in which both But these activities are also essential business opportunities and the to respond to the challenges arising competition are multiplied, we from the new modes of exploitation understand that investment in of an electrical system in which research and development is one of increasingly decentralized generation the keys we must rely on to meet resources and renewable energy the demands of our customers and sources such as solar or wind power provide new products that will drive are being incorporated. our growth. We still face, however, many With 70 years of existence, we challenges due to the impact of the ❝The Ultra High Voltage have been developing our own progressive expansion of electric Laboratory located in Mungia equipment and solutions with a high mobility, storage in rechargeable is a facility where we can technological component for the batteries and active demand that test equipment with a rated power sector since 1973. More than will transform the consumption of voltage of up to one million 40 years of experience and innovation electricity. We will have to design two hundred thousand volts, behind us back our history. new equipment and solutions to and it is among the most ensure the safe and reliable operation exclusive of its kind in the Our activities in R&D&i are key to of power grids. These devices will international scene.❞ developing the value proposal we be determined by concepts such o er the market, and to maintaining as digitalization, sensorization, high levels of competitiveness in connectivity, and all services related products recognized for their level to these products. of quality and to strengthening our leadership position in specific The answer to all our challenges product lines. will require the talents of all our researchers, and the resources of this company, used to operating in a global and demanding market.

_ Santiago Rementería Arteche Group Innovation Director

3INNOVATION INNOVATION Annual report | 2016 3Annual report | 2016 19 3 INNOVATION 3 INNOVATION

Tests in an UG-550 gas transformer in Arteche’s Ultra High Voltage > ArtPhoto II: Sunset at Guggenheim -Urko Markaida Romero-. laboratory in Mungia. PROJECTS

Arteche has developed its ﬁ rst auxiliary services transformers that reach 550 kV and 100 kVA

The transformers will be installed in the ﬁ rst interconnection project between two electric systems in Chile, a grid with 500 kV and a length of 600 km

Arteche has supplied 6 Auxiliary Services transformers of 550 kV and with a power of 100 kVA, the highest levels of voltage and power achieved by a device of these characteristics by the Arteche Group. These transformers will be installed in the first interconnection project in Chile, in a line with 500 kV of voltage with a length of 600 km that will join two of the main electric systems of the country, the Central Interconnected System and the Interconnected System of Norte Grande, serving large cities, such as Antofagasta, Iquique or Puerto Montt.

Red Eléctrica Chile, a Red Eléctrica Internacional subsidiary, and E-CL, an ENGIE subsidiary, have signed an agreement to build and operate the Mejillones-Cardones transmission line. This new electrical axis, with Arteche transformers that do not require maintenance during their long service life, will allow powering mining operations in the north of the country through hydropower and renewable energy generated in outlying regions. The main challenge of the Chilean electrical system will be answered in this way, guaranteeing the safety of supply and reducing the price of the energy. 85,000 transformation centers have been automated in With an investment of more than $780 million (more than 720 million euros), the project is already in the construction Iberdrola’s STAR project to create a smart grid phase and its commissioning is scheduled for the second half of 2017. Iberdrola has placed its trust in Arteche’s capacity, as an expert for 70 years in the measurement of electrical parameters, to develop a complex and innovative solution

Iberdrola, one of the largest electric companies globally, Iberdrola placed its trust on Arteche’s capacity, as an has placed its trust in Arteche as the main supplier of expert for 70 years in the measurement of electrical Arteche strengthens its o er of devices for digital substations Medium Voltage monitoring devices, voltage and current parameters, to develop a complex solution. sensors and PLC couplers for the STAR project, which has Arteche devices are among the fi rst on the market to adapt to the new international automated 85,000 transformation centers. Arteche’s active involvement in the project allows us to standard IEC 61869-9 position ourselves at the forefront of a market with a great Over 21,000 PLC couplers, over 17,000 measurement future, developing an entire range of products designed In the context of the R&D e ort the Arteche Group has Arteche devices are among the fi rst on the market to sensors and over 5,000 electronic monitoring devices for automating distribution, acquiring vast knowledge on devoted in recent years to the development of digital adapt to the new international standard IEC 61869-9, form part of the innovated smart grid started up with this the needs of our customers and developing the production measurement solutions, it has updated its range of Merging incorporating PTP synchronization according to IEC 61588 project, a pioneer in the world due to its extension, mass means necessary for the large-scale industrialization of Units incorporating features that are fi rst-rate technology and PRP and HSR network redundancy. In addition, a new deployment and ambition. We have also collaborated these devices. solutions. redundant measurement solution has been developed that closely with MESA supplying them with electronic devices allows o ering more competitive confi gurations. for the automation of their cubicles, and controllers for The automation of the grid developed by the STAR project, These units or terminal modules are the digital interface, their Grid Cut-O Devices. an initiative of Iberdrola to carry out the technological according to the data model of the protocol IEC 61850, These permanent developments and advances in the transformation in the smart grid fi eld, increases the added between current and voltage transducers and secondary technology of optical measurement of current, allow Both the sensors and the monitoring devices have value of the services that consumers perceive, improves protection and measurement devices. They can also be Arteche to position itself at the highest level in the o er been specifi cally designed and developed to meet the the performance of the grid, reducing maintenance costs used to integrate conventional analog transformers in a of digital measurement solutions, the demand for which is demanding parameters required by the project: precision, and increasing e ciency. digital environment. growing in the main international market. reliability and adaptability.

20 Annual report | 2016 Annual report | 2016 21 3 INNOVATION 3 INNOVATION

New base for relays with Spring front connection > ArtPhoto II: Optical transformer installation -Aritz Sánchez-. Arteche’s new bases do not require maintenance and o er the user a faster and easier connection, reducing the time needed for wiring and replacement, while maintaining the reliability of all components

Arteche has launched onto the world These new bases are an add-on These new bases, and those to market the Bases with Spring front associated with auxiliary four-contact come, are the result of the value the connection product line, a component relays in all its ranges, the best Arteche Group attaches to R&D&i, in the solution of products geared to accessory in terms of reliability and in which it invests approximately the rail sector which was presented resistance. 3% of its income. They also respond at InnoTrans, the world’s largest trade to Arteche’s Strategic Plan, which fair for the sector. The bases with Spring front connection includes extending its o er focused do not require maintenance and on the rail sector, a sector in which This new product is the result of offer the user a faster and easier it has already taken part in ﬂ agship one year of intense work on their connection, reducing the time projects such as the high-speed train development, and is established as needed for wiring and replacement, from Medina to Mecca. the ﬁ rst element of a broader range while maintaining the reliability of all of bases focused on the rail sector the components. that Arteche is already working one.

These new bases developed by Arteche do not use screws for ﬁ xing the wiring, but rather pressure, which make them ideal for use in critical applications, such as railways, as they are smaller and more reliable.

Arteche is developing a diagnostic system of instrument transformers in real-time

This real-time monitoring system allows smart asset management and risk reduction for users

Arteche has developed a system for grids, facilitates scheduling the Arteche’s companies in North fault diagnosis and prevention in devices’ maintenance. America with major Research real-time, which allows precise and Centers and Higher Education comprehensive evaluation of devices The development of Arteche, which Institutions in Mexico, such as the during their operation. This allows positions us as pioneers in the National Polytechnic Institute, the minimizing conventional periodic online monitoring market, asset Autonomous Metropolitan University tests, which involve de-energizing management and prevention of and the Center for Engineering and the devices, and therefore lower incidents in power grids, allows Industrial Development. maintenance costs, while increasing predicting possible faults or damage the accuracy of testing. to the equipment and, therefore, Thanks to its undeniable usefulness predicting their service life, in addition and technological value, the project The smart, inclusive and open to having historical information on has received for the third consecutive platform of monitoring, supervision the analyzed devices. year a major fund from the 2016 and predictive maintenance systems Incentives to Innovation Program of of equipment and systems that form This project is based on the the CONACYT. part of transmission and distribution technological synergy between

The range of bases for relays with a di erent number of contacts will be extended shortly.

22 Annual report | 2016 Annual report | 2016 23 3 INNOVATION 3 INNOVATION

OUTREACH

Arteche takes part in the most important electrical forums of the world

In CIRED 2017 it has presented four papers, all the ones it presented to the organization

Arteche, as every year, has participated in the most important forums of the power transmission and distribution sector.

In the 46th edition of CIGRE (International Council on Large Electric Systems), the largest global forum on electric transmission grids, it has submitted two technical papers.

It has done the same in the congress organized by the Brazilian Association of CIGRE, where it presented the Among other capacitive voltage transformer diagnosis technique, or in functions, ARWtr, the leading international congress in Spain, where Arteche’s stand it presented a paper on auxiliary services transformers. at the Hanover Fair 2016 served The dynamics remain unchanged, and in 2017 Arteche has presented four papers during the celebration of the as a stage for upcoming CIRED, one of the most important congress a thorough globally to be held from 12 to 15 June in Glasgow. All presentation of the proposals submitted by Power Grid have been approved, group to 4 Energy and represent a quarter of the Spanish papers. Clusters. This important presence of the Group in the most important and prestigious forums in the world demonstrates Arteche’s reputation in such a demanding sector as the power sector.

Oihana Mimentza and Sonia Gonzalez in Arteche’s stand in the last edition of the Hanover fair.

24 Annual report | 2016 Annual report | 2016 25 3 INNOVATION 3 INNOVATION

ARTECHE SOLUTIONS

Instrument Asset Monitoring Digital Automation Power Quality Turnkey Transformers and Management Substation and Control of Solutions and Solutions Power Grids quality of the supply

Global Leader, with a full New solutions for At the forefront of Experts in operational Vast experience o ering Integral turnkey solutions for range of up to 800 kV preventive maintenance measurement, optical and management of power grids the e ciency that our renewable generation and installed in more than digital technology customers demand substations mainly in Brazil 150 countries and Mexico

› High voltage › Online monitoring of › Optical current transformer. › Automation of Substations. › Energy quality. › Substations. instrument transformers. service transformers. › Stand Alone Merging Units. › Automation of the Distribution. › Reclosers. › Renewable Energy. › Transformers for › Diagnosis of › Protection, Control › Equipment for power control › Operation and Maintenance. Auxiliary Services. instrument transformers. and Measurement. and distribution. › Medium and low voltage › Fault detection in mixed high › Auxiliary Relays. instrument transformers. voltage lines. › Test Blocks of › Sensors for measurement secondary injection. in distribution. › Transformers for GIS substations.

26 Annual report | 2016 Annual report | 2016 27 3 INNOVATION 3 INNOVATION

28 Annual report | 2016 Annual report | 2016 29 _ Moving forward together is not just a slogan, it is a goal

We have been acting in the electricity Thanks to this proximity with our market for 70 years, spearheading customers, we can demonstrate CUSTOMERS the evolution of the sector. 70 years our potential as a company focused of experience, of accumulated on innovation, a benchmark for the knowledge. Seven decades sector that year to year demonstrates accompanying our valued customers its desire for self-improvement. AND MARKETS in the conﬁ guration of the grids of the future. Our global deployment allows us to anticipate the concerns of markets ❝If we look back, Arteche 4 As the result of our history, we have and adapt our solutions, because we has progressed continuously developed a wide range of top quality want to accompany our customers throughout its history. Even products, services and solutions that along their way. in the bad years we adapt to respond to the needs and concerns the needs of our customers, of the main stakeholders in the traveling together on electricity market. their way.❞ We are proud of the trust the leading companies place in us, entrusting large projects at the global level, emblematic milestones that have deﬁ ned the evolution of transmission and distribution power grids in over 150 countries.

_ Mikel Aranguren Arteche Group Marketing Director

> ArtPhoto II: Bird observing the energy of the wind -Iraia Oribe García.

CUSTOMERSCUSTOMERS ANDAND MARKETS Annual report | 2016 4Annual report4 | 2016 31 4 CUSTOMERS AND MARKETS 4 CUSTOMERS AND MARKETS

MILESTONES The new Test Blocks are already installed in projects in 3 continents

Frontera Energy Center Combined Cycle Power Station and substation. In its ﬁ rst year of marketing over 1,700 units have been sold worldwide

After only one year of marketing more than 1,700 test of secondary injection tests in any substation blocks and combs have been sold in automation system. countries of 3 continents. The high performance of the saTECH TSB, which The simplicity and maximum safety guarantee an excellent performance in in the operation for both the user all types of applications, explain their and the facility, combined with the great acceptance on the market. versatility and ﬂ exibility to adapt to the needs of all customers, make Arteche’s new Test Blocks, associated our test blocks an indispensable with protection, control, measurement and and trusted element within an communication devices, simplify the development electrical system.

Arteche supplies instrument transformers for the largest wind farm in the world

This wind farm will provide service to almost half a million British homes

Arteche supplies instrument transformers to Walney farm, located approximately 20 kilometers from the British Extension, the world’s largest wind farm with a capacity coast, in the Irish Sea, to the grid. of 660 MW, which will provide service to 460,000 British homes, the construction of which is scheduled to be This new farm, near the current Walney O shore Wind completed in 2019. Farm, will have up to 90 turbines of 190 and 222 meters high, and will occupy an area of 145 km2. Arteche will supply the instrument transformers of 145 and 420 kV for the substations that will connect to the

Arteche delivers to RTE the ﬁ rst CFD systems

The ﬁ rst CFD systems have been Arteche carries out a bi-national interconnection between delivered based on fully passive optical Mexico and the US for power supply current transformers

This is one of the fi rst binational interconnections in the wholesale market of electric power RTE, the French electricity operator, has successfully installed the fi rst CFD (Cable Fault Detector) systems in Mexico, which supplies the CFE grid with a total generating capacity of 540 MW based on Arteche fully passive optical current transformers in the town of Gavet, near the city of Grenoble. Arteche has executed the under the EPC modality, has included In Mexico, Arteche has expanded two interconnection project between the activities in both countries. CFE (Comisión Federal de Electricidad CFD Systems are designed for the detection of cable Frontera Energy Center Combined - Federal Electricity Commission) faults in mixed High Voltage lines, those lines that A new electrical substation has been Cycle, located in the south of Texas, to transformation centers, with actions combine overhead sections with underground sections, built in the USA. To increase the the Mexican power grid. This is one of on voltages of 400/230/138 kV where which makes it di cult to know in which section the fault voltage of the Generation positions the fi rst binational interconnections expansion and strengthening works has occurred. in the wholesale market of electric of the Combined Cycle Plant. In were made on the power grid in the energy in Mexico, and with a total addition to this new substation, north of the country, including the This technology offers significant advantages. Fault generating capacity of 540 MW with voltages of 138/230 kV and construction of transformer banks. detection is based on an algorithm and, therefore, it is it supplies power to industrial a capacity of 600 MVA, a new Two transmission lines of 230 and 100% reliable. No type of maintenance is required either. consumers of known reputation. dedicated transmission line has 138 kV have also been built that allow also been built with two 230 kV interconnection with the USA. In addition, it is very easy to install and does not require The turnkey project, implemented transmission lines from the plant opening the line or preparing the ground or carrying out by Arteche as the main contractor to Mexico. any civil works.

32 Annual report | 2016 Annual report | 2016 33 4 CUSTOMERS AND MARKETS 4 CUSTOMERS AND MARKETS

MARKETS AND BUSINESSES

Arteche has supplied Arteche supplies the Power four Capacitor Banks for Quality devices for a wind compensation of reactive farm in South Africa power in the largest The Gouda wind farm belonging to the photovoltaic plant in Oakleaf Investment Holdings group, with 46 Latin America generators and a total of 138 MW of power, is the fi rst South African customer in the The Romero Solar plant, in the Atacama Energy Quality area Desert, produces energy equivalent to the consumption of 240,000 homes Arteche has supplied three capacitor banks that add up to a total of 9 MVAr connected in 12 kV to compensate the Arteche has supplied four Capacitor Banks in structure reactive power of the Gouda wind farm, in South Africa. that add up to a total of 27 MVAr connected in 33 kV to This is the Arteche’s fi rst Power Quality solution supplied compensate the reactive power of the largest photovoltaic directly to a South African customer. plant in Latin America. With an estimated annual production of 423 GWh, the With 246 MWp peak power, the El Romero Solar plant, farm produces energy equivalent to the consumption located in the Atacama Desert in Chile, produces energy of 200,000 South African households and avoids the emission of more than 400,000 tons of CO . equivalent to the consumption of about 240,000 Chilean 2 households and avoids the emission of approximately Located in Drakenstein, the wettest region of South Africa, 474,000 tons of CO . 2 located about 100 km northwest of Cape Town, it has 46 The plant has an extension of 280 hectares, 150 of which, wind turbines of 100 meters pole height and 100 meters of the equivalent to 211 football fi elds, are for solar panels. rotor diameter. Within the scope of the supply, charge fl ow, transitory Within the scope of Arteche’s supply to ensure Energy response and harmonics studies were carried out to defi ne Quality, charge fl ow, transitory response and harmonics the best solution. studies were carried out to defi ne the most satisfactory After the analysis, Arteche has designed and manufactured solution for the customer. four capacitor banks in structure, each with 6.75 MVAr. After After the analysis, Arteche has designed and manufactured their commissioning, the corresponding measurements three capacitor banks in structure, each with 3 MVAr. After have been carried out, which have verifi ed the optimal their commissioning, the corresponding measurements functioning of the solution o ered to Acciona, the owner have been carried out, which have verifi ed the optimal of the plant. functioning of the solution offered to the South With an average annual production of 493 GWh, part African Farm. of which will power Google’s data center in the Andean country, this project has posed a challenge as it is located in one of the most arid regions of the planet, a challenge that Arteche has successfully overcome.

High Voltage Banks in structure, Tamarindo substation, Mexico.

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Supply of CERTIFICATIONS instrument transformers for the We expand the range of transformers certiﬁ ed by UL HVDC connection and MC for the United States and Canada between Poland and Lithuania This certiﬁ cation allows Arteche to maintain its position as a leader in the North American market

It is a line of more than 160 km Several models of Arteche Medium Voltage Transformers UL, which validates various aspects of the devices, such with 500 MW capacity have been certifi ed in the last year by UL, the reference as their fl ammability or durability, has approved several certifi cation in electrical devices in the United States, that Arteche voltage and current transformers, for both internal Arteche supplies instrument rates both the technical and safety aspects of the devices, and external use. transformers for the connection of and by MC, the certifi cate awarded by Industry Canada, high-voltage direct current (HVDC) necessary for any metering device in that country. Measurement Canada/Measures Canadá, for its part, between Poland and Lithuania, the has certified both voltage and current and combined LitPol Link, which is part of the instrument transformers for outdoor use. European Union Initiative of the ‘Baltic Ring’.

This connection will join the 330 kV grid of Lithuania with the Polish 400 kV grid via a line of 163 km with 500 MW.

Delivery of instrument transformers for the HVDC connection of Canada

It is a line with 500 MW capacity, measuring 170 kilometers under the sea and another 350 kilometers above ground

Arteche has supplied instrument transformers for the connection of high-voltage direct current (HVDC) between the provinces of Labrador and Nova Scotia, passing through the island of Newfoundland, Canada.

The project, the construction of The TOTAL group has certifi ed the full range of auxiliary relays which began in 2014 and that will of Arteche start operation in 2017, will allow the distribution of green energy from Arteche relays can be used in all the company’s facilities, the fourth largest oil and gas the Muskrat dam, in Labrador, to company in the world continental Canada, for the Province of Nova Scotia to comply with The whole range of auxiliary relays of Arteche has passed The French multinational has approved the relays for use federal legislation on emissions of Total’s certifi cation process, the fourth largest oil and gas in all its facilities, almost 150 refi neries and petrochemical greenhouse gases. company in the world and a benchmark for the sector. facilities spread over all the continents.

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The Eivissa plant has received the BYEM award thanks to SAC’s ‘Levantamiento de cero’ (zero lifting) project

The ‘Guía monitorizada para salidas de ceros’ (Monitored guide for zero outputs) has been implemented on all the plant’s screens, allowing viewing the status of the facility after an incident

Endesa’s Eivissa plant, in Ibiza, has received the From a single screen the user can act and decide on which BYEM, Busca y Encuentra Mejoras (look for and find generation group or groups are available to lift the “zero” improvements) award, thanks to the ‘Levantamiento de as soon as possible. cero’ project that SAC has developed together with the workers at the plant. This is an Endesa in-house award that This reduces the time of action by concentrating the seeks to promote the its employees’ ideas. information and avoiding having to go to di erent screens to collect it. The ‘Guía monitorizada para salidas de ceros’ is the tool developed by the Arteche team in Madrid. Implemented Thanks to this solution the reaction times are optimized on all the plant’s screens, it allows viewing the status of and the duration of a “zero” is shortened. The same the facility after an incident and gives detailed information solution has been installed in the diesel plant of Las Salinas and guidelines to follow for returning to normal as in Fuerteventura, and is exportable to other plants. e ciently as possible.

38 Annual report | 2016 Annual report | 2016 39 _ In search of shared progress CORPORATE Arteche is a project we promote, a people, with talent that can be commitment we share and a goal developed and who are determined, we pursue: that of going forward who can act as a team and prioritize SOCIAL together, Moving Together. common success and always support each other. To do that we must have competent professionals, experts in their area of Our shared commitment extends RESPONSIBILITY work, who know the sector and who beyond our customers and our appreciate its growth. We believe that team, and is also based on the the way to achieve this is to enhance environment in which we operate. 5 the capabilities of the people who We openly assume our responsibility are part of this Group, encouraging to participate actively and contribute We have a team made up our talent, identifying and stimulating to the social development and the ❝ of people from more than 15 our potential… Accompanying our preservation of the environment. professional development, learning, di erent countries, whose improving and growing in and Because in Arteche we generate commitment and capacity with confidence. Because we are value: value for the people who are are the foundation of committed not only to our project, an part of this project, the shareholders, our success.❞ attractive and sustainable project, but our customers, and value for the also to the people who carry it out. society of which we are a part.

We want to take advantage of the opportunities that are opening up in the power sector, and to do this we need to continue to increase our technological knowledge, dominating the variables that affect its future evolution. The key to doing this can be found in our professionals: innovative

_ Inazio Iribar Arteche Group Social Director

CORPORATE SOCIAL RESPONSIBILITY Annual report | 2016 5Annual report | 2016 41 5 CORPORATE SOCIAL RESPONSIBILITY 5 CORPORATE SOCIAL RESPONSIBILITY

SUSTAINABILITY, SAFETY AND HUMAN RIGHTS The Group is a member and signatory of the United Nations Global Compact

Arteche updates its Corporate Values The initiative promotes corporate social responsibility in the areas of Human Rights and

Mission: Vision: Business, labor standards, the environment and the ﬁ ght against corruption

Our mission is to be an international benchmark in the power We aspire to always be at the forefront of technological The Arteche Group is a member The ten principles Arteche has •Support the elimination of child labor. sector, with the aim of helping our customers to deliver innovation in the sector and be recognized internationally and signatory of the United Nations committed itself to promoting are •Support the elimination of maximum value to grow together in the development of for the quality and level of service in all our products and Global Compact, an international the following: discrimination in respect of the power grid of the future, as a family company with solutions for energy transmission and distribution. initiative that promotes implementing •Support and respect the protection employment and occupation. roots and corporate headquarters in Vizcaya. ten universally accepted principles of internationally proclaimed •Maintain a precautionary approach to promote corporate social Our keys are mastering the technology, increasing human rights within its sphere to environmental challenges. responsibility in different areas knowledge and the development of people within a of inﬂ uence. of businesses. •Undertake initiatives to promote sustainable, attractive and socially and environmentally •Make sure not to be complicit in greater environmental responsibility. friendly project. human rights abuses. With more than 13,000 participating •Encourage the development entities in more than 145 countries, •Uphold the freedom of association and diffusion of environmentally it is the largest voluntary corporate and the e ective recognition of the friendly technologies. social responsibility initiative in the right to collective bargaining. •Work against corruption in all world. Arteche, signatory in 2014, is •Support the elimination of all forms its forms, including extortion one of the 25 Basque companies that of forced and compulsory labor. and bribery. have signed this initiative.

The Arteche plant in China has integrated its systems of Quality, Environment and Occupational Health and Safety into the single multi-site system of Instrument Transformers

This project allows maintaining Arteche’s standards in all countries where it is present

Arteche Instrument Transformers has of the plant where they are carried applying in all plants the most incorporated into its plant in China, out, ensuring consistency in both stringent criteria applied by Arteche. ADYH, the single Quality, Environment the product that is delivered to and Occupational Health and Safety the customer, and in the treatment This integration represents a multisite system that encompasses they are given. recognition to the commitment the entire organization. of all the people who form part of In turn, this allows manufacturing Arteche Instrument Transformers to Thanks to this integrated system, a top-quality product in a safe and foster a culture of prevention and an the largest number of processes as environmentally friendly manner, incentive to continuous improvement possible are homogenized, regardless respectful with the environment, all over the world. The United Nations Global Compact responds perfectly to the labor and social practices implemented in Arteche for decades.

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SOCIAL ACTION / COMMUNITY Arteche participates in Arteche collaborates with projects in favor of youth the University School of More than 100 pictures have been employment in Vizcaya Engineering in Bilbao presented to the II artPhoto Photography Hazilan seeks the labor insertion of young For the second consecutive year technicians and Video Competition 2nd Arteche Photography Contest university students aged 20 to 35 and Udal from Arteche give a seminar to 2nd and 3rd Gaztedi that of young people from the year students The four categories, ‘Life and electricity’, ‘Infrastructure and region of Mungia electrical equipment’, ‘Arteche Products’ and ‘Arteche Video’ Several people in the High Voltage Technical Department have received proposals from more than 20 di erent countries The Arteche Group has participated in two projects in of the Instrument Transformers unit have given, for the nd rd favor of youth employment in Vizcaya, an example of the second year running, a training seminar to 2 and 3 A total of 109 photos and 2 videos technical and artistic quality of the organization’s involvement in favor of the environment in year students of the course on Electrical Engineering at have been presented to the Second pictures, which have come from which we operate. the University School of Industrial Technical Engineering Photography and Video Competition more than 20 di erent countries. in Bilbao. organized by Arteche, artPhoto. The The fi rst, Hazilan, is an initiative promoted by the Basque Arteche would like to congratulate participating works have captured Government and funded by the European Social Fund The goal of this training is to familiarize students with the the winners of the competition for the daily use and social impact of and Garapen, the Basque Association of Development procedures used in Arteche for design, manufacture and their magnifi cent photographs and electricity on our lives and in the Agencies, which seeks the integration of young people maintenance of instrument transformers. videos, deserving of the award, infrastructures that surround us. with higher education aged 20 to 35. and thank the rest Several medium voltage devices have been lent out, which artPhoto has proved to be a success of the contestants With this project Arteche has had a law graduate, who will remain in the facilities of the University to help students not only due to the high level of their participation has carried out her work placement in the Group’s legal to assimilate the knowledge that is taught in the school. participation, which has far exceeded in artPhoto. department, and who continues to be a part of the expectations, but also due to the With this type of interventions, Arteche strengthens its organization. “Since I started here all I have done is learn, policy of cooperation with the universities and confi rms from the fi rst day I have been treated as another member the intention to continue collaborating in di erent research of sta and I have come a long way in a short time”, and development projects. she said. Arteche met in Washington with the main energy clusters and Udal Gaztedi Mungialdea, the second initiative, is a associations of the United States program of the Provincial Council of Vizcaya and the town councils of the region of Mungia to promote youth The visits were carried out in parallel to the celebration of the Smithsonian Folklife Festival, employment. Studying the needs of di erent participating Arteche Mexico has donated in which the Basque culture was the protagonist companies, a two-module course has been carried out in the Warehouse Assistant professional competence more than 100 tons of wood Arteche, along with seven other certifi cates. companies from Vizcaya in the A total of 104 tons of wood forms a part of renewable energies and Smarts Two young people have satisfactorily completed non- the donations made by Arteche Grids sector, has participated in a labor practices of 300 hours, corresponding to the series of three sectoral meetings second module of the course, As usual, the Arteche’s companies in Mexico have made that ended in the headquarters of Arteche devotes in our warehouses, putting into over the year numerous donations to various associations the U.S. Department of Energy, in a major e ort practice all the theory learned in its environment to improve social welfare. Washington. to transmit the knowledge during the course. accumulated by A total of 104 tons of wood have been Participating in this meeting Arteche the organization donated to associations, such as the has been able to know the keys through Casa del Adulto Mayo, Telescundaria, symposiums, to the future of the energy sector Civil Protection and Fire Department conferences, and research in the United States, a guided tours of its or the Water Authority of the Tepejí market that is an international driver. facilities... It has River. even developed an “We have had many meetings at editorial line, called There have also been donations Training Booklets, various levels, in the institutional which aims to of different technical material for and regulatory context, which have solve possible students of various educational helped us to understand what are doubts about the programs to do work placements, the plans for investment and the role scientifi c standards that underpin empty drums that are reused, of the federal government, as well our products, or a consignment of toys to as trends in the di erent States in and which are celebrate Children’s Day in the San specifi c areas of the energy business”, directed at both professionals Mateo Colony. Alexander Artetxe explained to the Alexander Artetxe and Manuel Fernández attend the dinner at the Library of Congress in and engineering EFE communication agency. Washington. students.

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ACKNOWLEDGMENTS COMPANY-WORKER RELATIONS

The Arteche Group has received José Javier de Arteche, Arteche participates in the ‘Bizkaia Talentia Challenge’ program the 2016 Ingenia Award new President of the The Arteche Group is one of the fi ve companies that participates in this ambitious project to It is a recognition of the more than 140 Energy Cluster attract and retain in Vizcaya young university students with talent graduates in the Engineering School of He replaces Ignacio Martín, Chairman For four months Arteche has seven Arteche is one of the five Basque Given that in Arteche we strive for Bilbao who work in the Arteche Group of Gamesa young students affiliated with the companies chosen to take part in excellence through our human team, ‘Bizkaia Talentia Challenge’ program, the program. 175 young people in made up of determined professionals The Arteche Group, which employs more than 140 The appointment of José Javier de Arteche as the new who will face the challenge posed to their fi nal year, chosen by the Basque with talent to be developed, and that graduates of the School of Engineering of Bilbao, has president of the Basque Country Energy Cluster took place them by the Group, and develop a universities for their good academic we all assume our commitment to been awarded the 2016 Ingenia Award for its work and during its annual assembly, held in the Bizkaia Science and plan to resolve it. record, will have the opportunity to society and the environment in which experience in the fi eld of engineering. Technology Park, during which the situation of the sector, take part in the program. we act, we fully share the need for The young people will develop a as well as the most relevant activities carried out by the young university student talent to fi nd José Javier de Arteche, Chairman of the Group, received plan for the online marketing of our This initiative, promoted for over 10 entity, were presented. in the region a place for personal and the award in a ceremony presided over by the Lehendakari, auxiliary relays in the United States. years by the ‘Bizkaia Talent’ association, professional development. Iñigo Urkullu, also attended by Iñaki Gorizelaia, rector of the The Chairman of the Arteche Group, who until now was This is a real business challenge in the has already had the participation of University of the Basque Country, the Ministers of Industry a member of the Board, replaces Ignacio Martín, Head of context of the Strategic Plan. Students more than 1000 students in the last and Education of the Basque Government, Arantxa Tapia Gamesa, who has held the post for the past four years. will acquire great job experience, real eight editions. It aims to attract and and Cristina Uriarte respectively, the President of the and far removed from the lecture retain the talent of the young people Foundation School of Engineering of Bilbao, Fernando room, and provide the Company with of Vizcaya, to promote the areas of Querejeta, and the Director of the School, Enrique Amezua. all their ideas and enthusiasm, to move innovation and advanced knowledge forward together. of organizations like ours. With this distinction, the Arteche Group joins the roster of companies awarded by the Foundation of the already big names in the Basque industry as Idom, Iberinco, Sener, Panda Software, Grupo Ormazabal, ITP, Metro Bilbao and the Bilbao Bizkaia Water Board.

“Without this school, or the more than 140 Arteche professionals who have come out of it, we would not be celebrating our 70th anniversary”, José Javier de Arteche has acknowledged in his thank you speech.

José Javier de Arteche receives the Ingenia Award on behalf of the Arteche Group. On the right, Mikel Aranguren, Group Marketing Director, in one of the “Bizkaia Talentia Challenge” sessions.

46 Annual report | 2016 Annual report | 2016 47 > ArtPhoto II: Paddy Field -Rosley Majid-.

48 Annual report | 2016 Annual report | 2016 49 2016 ANNUAL REPORT ANNUAL