This week European regulators signed off on the massive $13.4
billion deal between General Electric (GE) and France-based Alstom. The
principal driver of the deal is GE’s acquisition of Alstom’s power generation business.
The wind power aspect is small with regards to the broader deal, but it
represents one of the more significant shake-ups in the wind sector in
quite some time.
GE will fully acquire Alstom’s onshore wind business, taking over
Alstom’s wind turbine assets, which currently are comprised of three
turbine models: the ECO 100, 110, and 122,
all of which are rated at 3 MW (and one 2.7 MW variant of the ECO 122).
Tall hub heights at 119 meters and 139 meters are available for the ECO
122 turbine using hybrid concrete and steel designs. The turbines use
DFIG high-speed geared drivetrains, the most common drivetrain design
globally. This is also used by most of GE’s turbines, which is likely to open up some supply chain efficiencies post-acquisition.
Alstom’s offshore wind business will not be fully acquired by GE.
Instead, a 50/50 offshore joint venture (JV) will be created between
Alstom and GE. Alstom’s primary asset in this area is its 6 MW direct drive Haliade wind turbine. This is the turbine of choice for close to 1,500 MW of awarded French offshore wind tenders, which provides a very promising pipeline. The Haliade is also the turbine of choice for Deepwater Wind’s 30 MW Block Island wind project, the first offshore wind plant in the U.S., currently under construction off Rhode Island.
It is important to put the scale of the two wind businesses into
perspective. In 2014, GE installed 4,624 MW of wind capacity while
Alstom installed 286 MW, according to Navigant’s internal research. This put their annual global market shares at 3rd and 24th,
respectively. So GE is not acquiring an enormous new wind business.
GE’s wind division and its supply chain are optimized for its own wind
business which is focused on the U.S. market, followed by Canada and
Brazil. The acquisition will give GE a small market share increase in
Europe where so far it has had limited success, mostly in Germany.
Brazil is one market where GE and Alstom have notable overlap. Based on Navigant’s figures for wind turbines installed in 2014
in Brazil, GE secured 22.2% market share while Alstom secured 13.5%.
This is likely to be the first market where supply chain consolidations
and efficiencies are enacted and the combined venture becomes a market
leader. One clear benefit to GE’s wind business is that the more market
share GE can pick up in markets outside of the U.S., the better it can
cushion the impacts of the tendency for the U.S. market to face on and
off again wind policies, resulting in booms and busts.
Offshore
GE is not active in offshore wind and has stated it is because of
offshore wind’s high cost, risk, and reliance on subsidies. Expect that
tune to change since entering into the JV is an implicit acceptance and
de facto entry into offshore wind. Part of what has been behind GE’s reservations for offshore is a
reluctance to compete in a capital intensive sector where it would face
stiff competition exacerbated by brand loyalty to the European companies
such as Siemens and Vestas.
That Alstom’s offshore turbines are in this JV should continue to give
the turbines an edge in France and in Europe more broadly.
The JV allows GE to enter the offshore wind sector without
committing its own R&D to bring a commercialized turbine to market.
GE will do exhaustive analysis of the Alstom turbines and their
operational performance. If the turbines measure up, and there are
markets for offshore wind, GE will likely discover a still cautious but
newfound interest in the sector.
http://blog.renewableenergyworld.com/ugc/blogs/2015/09/wind_energy_implicat.html
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