IN DEPTH: The new global colossus
The merger between renowned certification and advisory companies DNV and Germanischer Lloyd (GL) has created a global colossus able to offer the renewables business much-needed benefits in terms of knowledge, risk management and reducing industry costs.
The sheer scale of the new company, DNV GL, has caused some industry watchers to voice concern that it has too much market share in several areas.
For instance, DNV and GL had previously been the two main competitors in onshore wind verification — last year the pair took 42% of the market for wind turbine certification in Europe, and most expect that position to strengthen in the years ahead. Some analysts even expressed surprise that competition authorities in Europe and the US had passed the merger with so little apparent difficulty.
But its new size is a huge benefit for DNV GL.
“As DNV GL is active along the whole energy value chain and operates globally in more than 30 countries, we are able to think beyond borders and boundaries, share our expertise from the various regions in the world and transfer these best practices to other customers in the regions,” says David Walker, chief executive of DNV GL-Energy, one of four business areas of the new group.
“Where we differ from the others is that we combine business knowledge with technical expertise. Strategists and government officials can work out great strategies, but if it doesn’t work from a technical standpoint, their strategies will fail.”
DNV GL-Energy can now offer a wider range of services to the clean-energy sector than rival certification organisations such as Lloyd’s Register and the American Bureau of Shipping. It now has expertise in almost every aspect of the renewables industry, from wind forecasting and floating offshore platforms to energy storage and supergrid interconnectors — a fortuitous result of merger and acquisition activity by DNV and GL.
In 2009, Hamburg-based GL merged with Britain’s Garrad Hassan, the world’s largest renewables consultancy, while Oslo’s DNV took a controlling stake in Dutch energy consultancy and certification body Kema in February 2012, adding 1,800 employees to the 500 at DNV who had already been working in clean energy. DNV acquired US engineering and technology consultant Global Energy Concepts in 2008, and US renewables consultancy Behnke, Erdman & Whitaker in 2010, while Kema bought Czech high-power lab ZKU and Dutch gas consultancy GET from Gasunie in 2009.
“We have ended up with this powerhouse in energy and renewables,” says Walker, the former boss of DNV Kema.
The new energy division — headquartered in Arnhem, the Netherlands, with about 3,000 employees globally — is itself split into four distinct units:
- Power Tic, based in Arnhem, which does power testing, inspection and certification. This new division will test and certify heavy-duty equipment for the grid — an area where Kema was particularly strong.
- Renewables Certification, headquartered in Hamburg, but with significant capability in Copenhagen.
- Renewables Advisory, based in Bristol, England, a global consulting organisation supporting developers, financiers and operators of wind farms and solar arrays. This includes the Garrad Hassan unit.
- Energy Advisor, based in Burlington, US, which addresses the whole power value chain, will look at energy regulations, the grid and the integration of renewables, as well as storage and energy efficiency.
It is expected to take a year to fully merge the DNV GL Group, which also provides services to the maritime and oil and gas sectors and many other industries.
“What we have tended to run in the past is a number of joint industry projects where we think there are areas where standards could be applied. And one of the outcomes of that would maybe be a new guidance or recommended practice, or indeed a standard that can be certified against.”
Walker admits he has concerns about major renewables markets such as the UK, Germany and the US, where politicians are slowing the rate of growth, but says: “We have confidence that the joint DNV GL company will be able to capture market share. Even if it’s tougher in the US and Western Europe, being a global company means we can look to other parts of the world, which is certainly one of the big pluses of our new capability.
“DNV GL will tend towards taking the longer-term view, as we firmly believe renewables will be a significant part of the energy mix, and [we] will be supporting that going forward.”
Walker seems to believe that his company can make a positive difference to the wider world. “Our purpose is safeguarding life, property and the environment. And our vision is to make a global impact for a safe and sustainable future.”
The group currently spends about 5% of its total revenues on research off its own back, in areas where it sees the need for innovation — such as floating offshore wind, rooftop solar, offshore grid integration, wind turbine sensors, energy storage and high-voltage interconnectors. It is spending €70m ($95m) on expanding its Arnhem laboratories to allow the testing of AC supergrid equipment.
He continues: “We are very customer-led, but we also like to monitor the target-setting of governments and supernational organisations.
“So we are interested in what the EU or Washington is thinking, or what the long-term plans of China, India and other places look like.
“It is because we are involved in the whole value chain that we can talk to manufacturers, utilities, transmission and distribution operators, banks and insurance companies — in the process doing different jobs for each customer.”
Walker sees a big rise of interest in renewables coming from independent banks, pension funds and private equity coming into the market to help finance individual projects.
“However, they want to know for sure that this wind park or that solar array is going to deliver what they have promised, because it is their cash flow and how they get their financial returns.
“It is this independent role done by our technical experts that DNV GL can provide.”