WIND ENERGY

The market for wind turbines is booming. Private investors can share the risks and the profits.The sector is divided into listed and unlisted enterprises, together with subsidiaries of conglomerates.

Somewhere in , far from the coast: these inland areas are still very important for the German and Danish wind energy industry. Photo:

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Bonus Energy A/S of Denmark and its Germany partner company AN Windenergie GmbH together accounted for some 4,000 MW at the start of 2003. Both firms develop wind farms on their own account. A special position is occupied by EHN of Spain. While the other companies essentially earn their money with the manufacture of plants and engage in the profitable project sector at a rela- tively low level,EHN is primarily engaged in the pro- ject development and operation of regenerative- energy power plants. In November 2003 the group owned its own generating capacity of 740 MW,most of this being in wind farms. On the basis of many years of experience in maintaining and operating wind turbines owned by other parties,the company decided to produce its own 1.3 MW machine;in the meantime this has been further developed into a 1.5 MW unit.In May 2003 EHN opened a factory with an annual production capacity of 250 of these turbines and indicated it had possibilities for expanding pro- duction. EHN aims to achieve public flotation, and here can be little doubt as the recently announced takeover of 50% of the EHN to accelerated growth of shares by a strategic investor can be seen in this light. wind power exploitation. One of the parties to give up shares in this deal was TOptimistic studies such as Iberdrola S/A,one of the biggest publicly listed elec- the report of the European Wind Ener- tricity suppliers in the world. gy Association (EWEA) expect no less than At the moment small companies with innovative a ten-fold increase in the market by 2020.Ac- developments are attempting to establish them- cording to this study,from 2020 onwards the selves on the market. These include Vensys Ener- wind industry will have a global annual volume giesysteme, Zephyros and the cableway manufac- of _ 75 billion. If this is correct then the manu- turer Leitner, each of which have assembled a pro- facturers of wind turbines can look forward to gol- totype.In November 2003 Prokon Nord,a project de- den times. velopment and operator of regenerative power plants,took over the rights to the 5 MW technology Unlisted companies of Pfleiderer Wind Energy GmbH.Prokon aims to set up the first prototype in Bremerhaven by mid-2004. The shares of the unlisted companies (Table 1) are As far as is known, none of these four companies not publicly traded;bank analysts show virtually no have production facilities of their own yet. interest in them and the private investor has few Other manufacturers with their own production possibilities for participation.Indirect participations facilities have given up.This includes the pioneering are sometimes possible: the stock-exchange-listed Dutch company Lagerwey, which according to its WindWelt AG,for instance,holds 16.2% of the Fuhr- founder Henk Lagerweij had been suffering from a länder shares. capital shortage for years.Following a claim for dam- The German company GmbH (public ages originating in the chances of attracting limited company under German law) is one of the an investor vanished for good.The company regis- major global players.In Germany,currently the most tered for bankruptcy and was bought up by Emegia important market, Enercon occupies the position Wind Technology BV (EWT,see page 73).No informa- of market leader.Globally,in February 2004 Enercon tion about further plans is currently available. Until turbines were generating a total installed capacity going broke Lagerwey had sold over 1,000 wind of 5,800 MW. turbines with a total capacity of almost 300 MW.

Table 1: Profiles of the Company Address Homepage WTG MW update unlisted companies Bonus Energy A/S DK-7330 Brande www.bonus.dk 5,974 3,864 5/2003 *a (WTG = number of in- EHN Group ES-31002 Pamplona www.ehn.es 23 30 5/2003 stalled Enercon GmbH D-26605 Aurich www.enercon.de 6,721 5,800 2/2004 generators, Fuhrländer AG D-56477 Waigandshain www.fuhrlaender.de 259 180 3/2003 MW = installed capacitiy Lagerwey BV NL-3771 Barneveld – 1,077 274 2/2003 *b in megawatts) Leitner AG I-39049 Sterzing www.leitwind.com 1 1 1/2004 *a including AN Windenergie Prokon Nord GmbH D-26789 Leer www.prokonnord.de 0 0 1/2004 GmbH (D-28217 Bremen, www.anwind.de) Vensys GmbH & Co. KG D-66115 Saarbrücken – 1 1 1/2004 *b belongs now to EWT Zephyros BV NL-1213 NS Hilversum www.zephyros.com 1 2 1/2004

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Growing bigger and Subsidiaries of conglomerates bigger: 2 MW could be- come standard power The second group comprises the subsidiaries of con- output in Germany this glomerates, not all of which however are publicly year.The picture shows listed (Table 2). Anyone can buy the shares of the the Repower MM82 listed companies. The annual reports are open to prototype. public inspection, large banking houses monitor Photo: Repower and rate both the companies and the share prices. But one must remember that only a fraction of the turnover of these industrial conglomerates is derived from the wind energy sector. The Company, one of the most powerful market players with 4,000 MW sold to date, is active in the wind turbine sector through its sub- sidiary GE Wind Energy, which forms part of the GE Power Systems division. The situation is similar with Mitsubishi,where the wind turbines are produced by the subsidiary Mit- subishi Heavy Industries Ltd, which in turn forms part of the Mitsubishi Power Systems division. FKI plc took over the German company Dewind GmbH, was on sale for a long time. In an initial de- AG in May 2002 and in the process became a manu- velopment,in November 2003 the offshore activities facturer of wind power plants.The Lübeck-based De- were passed to Prokon Nord Energiesysteme GmbH wind was transformed into a GmbH and now be- which is now manufacturing the 5 MW prototype longs to FKI Energy Technology Group. FKI Chief commenced by Pfleiderer and aims to bring this Executive Paul Heiden stresses that wind turbine technology to market maturity.Then at the end of production will remain a corporate activity follow- January 2004 the creation of a joint venture with ing the end of the current restructuring process. Fuhrländer AG to handle the remaining onshore ac- Jeumont Framatome ANP is a subsidiary of the tivities was announced. Fuhrländer holds a majori- Table 2: Profiles of the French supplier of atomic energy installations Fra- ty in the new Fuhrländer-Pfleiderer GmbH & Co.KG. unlisted companies matome ANP, which in turn is a jointly owned sub- In addition to the aforementioned listed com- (WTG = number of installed sidiary of (, 66%) and Siemens (Ger- panies there are a number of non-listed companies wind turbine generators, many, 34%). that also manufacture wind turbine generator sys- MW = installed capacitiy Pfleiderer AG initially grew in the wind energy sec- tems.In Spain these include the M.Torres Diseños In- in megawatts) tor from being a tower subcontractor to a supplier dustriales SA conglomerate and Ecotècnia, which *a only self projected wind farms of complete wind turbines. Nonetheless the wind- belongs to the financially powerful Mondragón Cor- *b becomes part of the Fuhrlän- sector business,clustered in Pfleiderer Wind Energy poración Cooperativa (MCC) conglomerate. der-Pfleiderer GmbH & Co. KG

Company Address Homepage WTG MW update belongs to Dewind GmbH D-23569 Lübeck www..de 500 350 11/2003 FKI plc Ecotècnia E-08005 Barcelona www.ecotecnia.com 680 336 *a 12/2001 Mondragón Corporación Gamesa Eólica E-01510 Miñano www.gamesa.es 4,146 2,955 3/2003 Gamesa Corporación Tecnológica GE Wind Energy Tehachapi CA 93561, USA www.gewind.com 6,100 4,000 12/2003 General Electric Company Jeumont Framatome ANP F-59573 Jeumont Cedex www.jeumont-framatome.com 16 12 2002 Framatome ANP M.Torres Diseños Industriales SA E-31119 Torres de Elorz www.mtorres.es 6 10 2002 (industrial group) Mitsubishi Heavy Industries Ltd (MHI) Minato-ku,Tokyo, Japan www.mhi.co.jp 1,652 1,000 7/2003 Mitsubishi AB S-18325 Täby www.nwp.se 4 4 9/2003 Parsons Peebles Holdings Ltd Parsons Peebles Machines Ltd Rosyth Fife KY11 2BZ, UK www.parsons-peebles.com 0 0 1/2004 BSC Group Pfleiderer Wind Energy GmbH *b D-92318 Neumarkt www.pfleiderer-wind.com 42 ... 1/2004 Pfleiderer AG RES Systems Ltd. St Albans, England, UK www.res-ltd.com ...... Sir Robert McAlpine Group Energy Ltd Pune, Indien www.suzlon.com ... 480 9/2003 Suzlon Group Winwind Oy SF-90570 Oulu www..fi 6 6 1/2004 (consortium)

Table 3: Profiles of the list- Company Address Homepage WTG MW update turnover ed »pure« wind energy companies (WTG = number NEG Micon A/S DK-8900 Randers www.neg-micon.dk 13,000 6,400 12/2003 708 of installed wind turbine Nordex AG D-22848 Norderstedt www.nordex-online.com 2,407 2,200 12/2003 196 generators, MW = installed Repower Systems AG D-22335 Hamburg www.repower.de 1003 910 12/2003 286 capacitiy in megawatts, Wind Systems A/S DK-6950 Ringkøbing www.vestas.com 8,000 8,400 12/2003 1,653 turnover in million _)

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Renewable Energy Systems Ltd (RES) of St Albans, takeover of NEG Micon by Vestas be successful,then England, is a company of the Sir Robert McAlpine soon there will be only three companies. It is true Group;it undertakes projects and has de- that NEG Micon,Nordex and Repower generate part veloped its own model of megawatt turbine system. of their turnover with planning and construction of A significant company in is Winwind Oy, a wind farms and other services.But the main source subsidiary of Powest Oy which in turn belongs to a of turnover for all four PLCs is the manufacture and consortium of companies.The Swedish Nordic Wind- sale of wind turbines. This therefore is the area of power AB became a majority shareholding of the commercial focus for a buyer of shares in these com- British company Parsons Peebles Holdings Ltd in Sep- panies.The shares are freely tradable and also fair- tember 2003.Parsons Peebles in turn has belonged ly liquid on the respective home stock exchanges. Special to the BSC Group investment group since the end In the 2002 financial year the Danish company reader of 2002.It is currently being assessed whether pro- Vestas Wind Systems A/S installed wind turbines with service duction capacity can be created in the Scottish ma- a total output of 1,640 MW (including the associated Like to learn chine and generator factory of Parsons Peebles Ma- Vestas RRB India Ltd,in which Vestas has a 49% share). more about the economic chines Ltd. This corresponds to a world market share of 23%. perspectives of the world- Last but not at all least:the Indian company Suz- This makes Vestas the strong world market leader, wide wind energy indu- _ lon Energy Ltd, a subsidiary of the Indian Suzlon and with an annual turnover of 1.4 billion (2002) stry? Look no further.This Group. Suzlon belongs to the top ten producers also the biggest company among the listed wind article is an abridged ver- worldwide and maintains sales offices in the USA turbine manufacturers. However, the profitability sion of a fuller text. As a 3 and construction offices in Europe. shrank noticeably. The EBIT margin sank to 5.3% special service, we offer to The category of conglomerates also contains a after having been above 10% for several years.The all readers the full version company with special status: Gamesa Eólica, a sub- Vestas management had announced an increase in of the article – including sidiary of the mechanical engineering concern Ga- the EBIT margin several times in the course of the the chapter »The view of mesa Corporación Tecnológica in Spain. In 2003 2003 financial year, but then quickly withdrew this the analysts« and nine in- Gamesa generated a total of 53% of its turnover forecast each time.Moreover,many bank analysts are formative tables.You can through the production of wind turbine generator advising caution: due to the company’s strong de- download the full version systems. A further 6% derived from project de- pendence on the US market,only limited predictions free of charge at: velopment and power generation in the field of re- 3 The EBIT margin is the EBIT divided by the total performance.The www.sunwindenergy.com. newable sources. This means that Gamesa share- EBIT is the corporate profit before consideration of interest and Keyword: Reader Service holders achieved about half of their profits or losses taxes. through wind power.In the first half of 2003 – more recent data is not yet available1 – the turnover of the two wind divisions underwent strong growth,while the other business sectors remained relatively cons- tant. This clearly makes wind power the main area of business. Gamesa is the market leader among .QRZ +RZ turbine manufacturers in Spain.With the takeover of Made Tecnologias from the Spanish energy provider Endesa (Empresa Nacional de Electricidad SA) in June 2003, Gamesa has by its own account risen to WKH :LQG %ORZV number 3 on the global market2.Long-term frame- work agreements for purchase of wind turbine ge- nerator systems have been concluded with Spain’s two biggest electricity providers, Iberdrola and En- &RPSOHWH V\VWHPV IRU desa.The fast-growing company has now also taken ‡ $FTXLVLWLRQ strategic steps towards international expansion.The Gamesa Group’s shares are quoted on the Madrid ‡ 0DQDJHPHQW Stock Exchange and are being monitored by the analysts of leading banks. ‡ 3RVWSURFHVVLQJ RI ZLQG FOLPDWH DQG Pure wind turbine manufacturers HQYLURQPHQWDO GDWD

When it comes to an investment that is liquid and  at the same time exclusively involves the develop-  ment and production of wind turbines, there are            only four companies worldwide that can be consid- ered (Table 3).Should the current negations for the

1 completion of the article: January 2004 2 According to the figures obtained by BTM Consult Gamesa sold SKRQH    LQIR#ZLOPHUVFRP 854 MW and Made sold 247 MW in 2002; this amount exceeds the ID[    ZZZZLOPHUVFRP result achieved by NEG Micon (1,033 MW). In 2002 MEG Micon was number 3 behind Vestas and Enercon

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Erection of the first E-112 would create a wind turbine manufacturer with an prototype (4.5 MW): Ener- estimated 35% world market share and a turnover con is very successful with of _ 2.7 billion.The two companies estimate the syn- megawatt wind turbines, ergy potential at _ 67 million annually; this would but remains independent however first reach its full potential in 2006.The tar- – no chance for private in- get initially set for the EBIT margin is 5%, while the vestors. long-term goal is 10%. Photo: Enercon Nordex AG has its registered office in the city of Rostock in Mecklenburg,Germany, while the super- visory board is based in Norderstedt near Hamburg. The company’s world market share amounted to 7.0% (504 MW) in 2002. The financial year ends on each 30 September and not on 31 December as for the other companies.The low EBIT margin of recent years, around 4%,is due in part to the high material costs. To this can be added delays in establishing the rotor blade production in Rostock and other self-caused problems. The export business has increased from can be made for the turnover and profit development year to year:in the 2002/03 financial year this business of Vestas.The development would seem to bear out amounted to 62% of the turnover (about half of the the words of the analysts. In the quarterly informa- turbine units),with the USA playing only a minor role. tion issued by Vestas in November 2003 the turnover This did not however protect against losses.Although targets for 2003 and 2004 were lowered; the 2003 Nordex has not so far been hit by the failure of entire margin was set for just 5%.The corporate profit is also model series, the orders fell dramatically in the being reduced by a series of defects that occurred last financial year – above all in Germany. The ex- in the 2 MW machines of the V80 model in 2002. port business had not been built up quickly enough On 12 December 2003 Vestas and NEG Micon in order to compensate for the loss of domestic A/S,also a Danish company,surprisingly announced business. Even the strongly reduced expectations their plans to merge the two enterprises.The reason were not met and Nordex went deep into the red. given for this move was the financial strength need- Investment and research costs – including those ed for major upcoming projects in the hard-fought for the 5 MW offshore wind turbines – were cut wind power market.In their own estimates the two back. Nordex aims to return to profitability by the companies will complement each other well,in both 2004/05 financial year. geographical and technical terms.NEG Micon share- The company with the shortest history on the holders were offered the chance to exchange their stock exchange was in 2002 the most profitable: Better safe than sorry: shares for newly issued Vestas shares.Compared to Repower Systems AG of Hamburg sold a total of To pick up enough experi- the price on the day before the announcement of the 223 MW (3.1% world market share) and achieved ence in short time,Vestas merger plans this would represent an increase of an EBIT margin of 10.4%.At the same time the com- erected several prototypes 36% on the price of the MEG Micon shares – a bar- pany has been able to increase its market share in of the V90 (3 MW). gain offer that is certainly tempting but does not ex- Germany from year to year. However, the export Photo:Vestas ceed the bounds of the customary. In practical share is low:in 2002 just two turbines were sold out- terms NEG Micon is being bought up by Vestas;the side Germany,and in 2003 five.The development of expanded company will continue to operate under the export business is being closely observed by the name Vestas. bank analysts as this is viewed as decisive for fu- The share price of NEG Micon had undergone a ture turnover.The targets quoted by Repower at the clear drop earlier,following the publication of results start of 2003 – 30% foreign turnover in the current that showed a weak first six months of the year cou- year and start of production in Italy – could not be pled with a negative EBIT and reduced expectations met. The Hamburg company has a slimmed down for the year as a whole.In the 2002 financial year the production process, with some essential compo- Danish company delivered a capacity of 1,033 MW nents being supplied by third parties.On the other and achieved a world market share of 14.3%. For hand, the company also generates turnover with some years the EBIT margin has varied between 4 the sale of production licences (e.g. to Nordex and and 6%. In 2002 it reached 4.5%, and following the Fuhrländer). No significant failures with Repower recently published forecast it would have sunk fur- turbines have yet been reported and they are re- ther in 2003. NEG Micon had been burdened with garded as quality products.Repower too was forced significantly more costs for defective wind turbines to revise its turnover and result forecasts in 2003.Ac- than Vestas – and this had been the case since 1999, cording to preliminary information issued on 6 Ja- when a large number of gearbox failures occurred nuary 2004, however, these reduced expectations in large American wind parks and a wide-ranging, have been exceeded:instead of the announced 180 multi-year retrofit programme had to be started. turbines, a total of 188 units amounting to 291.3 Should the merger between the number 1 and the MW were installed. 4 number 3 in the world market succeed, then this Holger Kröske

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