ANALYSIS: MHI plays the long game
The new 50/50 offshore wind joint venture between Vestas and Japanese conglomerate Mitsubishi Heavy Industries (MHI) caused a stir in Europe but made fewer headlines in Japan
Joining with the might of Mitsubishi was clearly a game-changer for Vestas, but to a unit of one of Japan’s biggest corporations the alliance was smaller fry.
MHI’s Power Systems segment as a whole accounted for 35% of its 2.8 trillion yen ($28bn) of sales in 2012, with wind comprising a very small portion of the unit’s activities.
And Mitsubishi’s earlier forays into wind have not been the happiest, mainly because of the bruising legal battle over patents with GE that have afflicted its efforts to become a player in the US onshore market.
Despite all that MHI stayed the distance through the year-long negotiating process needed to do the deal. It clearly saw a Vestas alliance, and a potential bigger foothold in the European offshore wind sector, as prizes worth having.
With the JV finally in place, Tokyo-based analysts say that MHI will be keen to exercise its option to raise its stake to 51% in April 2016.
The Vestas tie-up leaves on the table the possibility of integrating Mitsubishi’s hydraulic DDT technology – currently being deployed in a prototype of its 7MW Sea Angel turbine – into the 8MW platform.
“They especially want to expand penetration in the European market with their (DDT technologies),” says Yukihiro Kumagai, equity analyst at Jefferies in Tokyo. “That’s their broad vision for turbines.”
For now that vision will be firmly on Europe and the markets unfolding in the UK and Germany, via the Vestas JV and the ongoing SeaAngel project in Scotland.
But by March 2015, it is set to finish installing two of the 7MW machines at a floating offshore site the Japanese government is spearheading off the coast of Fukushima prefecture.
Analysts say that by 2016, when offshore wind in Japan is expected to begin showing its own potential, MHI's manoeuvrings may have left it well-placed to take a leading role at home.