Siemens to Invest $264 Million in British Wind Turbine Project

Source: By STANLEY REED, New York Times • Posted: Friday, March 28, 2014

LONDON — Siemens, the German power and industrial giant, said on Tuesday that it would build facilities for offshore wind turbines on the east coast of England, as Britain rapidly expands into wind power.

Siemens plans to invest about 160 million pounds, or about $264 million, in the production and installation facilities. Its partner, the port operator Associated British Ports, which is owned by a group of investors including Goldman Sachs, will contribute about £150 million.

The investment decision recognizes Britain’s position as the leading market for offshore wind, a sector that is now sufficiently large to attract major companies.

The rosy prospects for the offshore energy market in Britain, bolstered by continuing government subsidies, led Siemens to favor major operations in the country over servicing British wind farms from Denmark, where Siemens now manufactures turbines, Markus Tacke, chief executive of Siemens’s wind energy unit, said by telephone.

The company has two factories in Denmark, where it acquired an offshore wind plant about a decade ago, as well as service businesses in Germany.

Mr. Tacke said that the company had chosen the Hull area on the east coast of England because it is close to other large offshore projects planned in Britain in coming years.

The new plant, in Paull, England, is expected to begin producing turbine rotor blades in 2016. The plant and the associated service center, in Green Port Hull nearby, will employ about 1,000 people, an employment announcement that was celebrated by political leaders on Tuesday.

The facilities will mainly serve the British market, where the amount of electricity that major power producers generate from wind grew by about 38 percent last year, representing about 6 percent of electricity, government figures show. There are also plans to increase Britain’s wind-generating capacity at least threefold by 2020, to 14 gigawatts, Siemens has said.

Green Port Hull will become the main harbor for the offshore wind industry in Britain, which does not currently have a specialized port, people in the offshore business say. Associated British Ports will build a dock measuring 600 meters, or 2,000 feet, to accommodate blades that are nearly 80 meters long, comparable to the wingspan of an Airbus 380.

Siemens is already one of the biggest players in the British market for renewable energy. The company provided the turbines and other equipment for the London Array, an offshore wind farm inaugurated last year that cost almost $3 billion. Siemens says it has provided the equipment for about half of Britain’s wind power.

Siemens has decided to focus on the offshore wind market, which the company expects to grow at double digit rates for the next few years. That is much faster than the onshore wind market, where there is much more competition.

Last year Siemens was the leading supplier of offshore wind turbines, with 69 percent of the European offshore market, according to the European Wind Energy Association, an industry group.

At the same time energy policy in Germany seems to be moving in a direction that is less favorable for Siemens than it is for Britain. Berlin is scaling back its investments in offshore wind, which is viewed as too expensive and more challenging to integrate into the grid. Amid a push to bring down the cost of the transformation of the energy sector, which is focusing more on renewables, the country plans to expand the number of wind turbines on land, coupled with large-scale solar farms.

Northern European countries, which have ample coastlines and generous subsidies, have rapidly built up their offshore wind capacity. Britain is the leader, with 3.6 gigawatts of installed capacity — comparable to that of a modern nuclear power plant. Denmark, Belgium, Germany and the Netherlands also have sizable capacities, although they are dwarfed by Britain’s.