By Bernd Radowitz, Berlin & Darius Snieckus, Bristol
Wednesday, March 26 2014
Updated: Friday, March 28 2014
The decision by Siemens to spend €190m ($263m) on offshore wind production facilities and a service centre in Hull, northeast England, has outraged German industry bodies just as much as it was hailed by UK groups.
Siemens – while cautious not to upset the government in Berlin – still makes it clear that the long-awaited certainty about the UK’s electricity market reform, as well as a bigger market size there, were key to its decision to start blade manufacturing for its 6MW offshore model, nacelle assembly and a service centre at Green Port Hull from 2016 onwards.
“History has shown that investments had the tendency, whether it is in wind or other industries, to take place where there are reliable markets,” Michael Hannibal, chief executive for offshore wind at Siemens Wind Power, tells Recharge.
Predictability of a country’s support regime and market size is a big part of business decisions like this one, Hannibal says, but adds that Siemens continues to invest in its blade factory in Denmark and doesn’t rule out building manufacturing facilities elsewhere at some point in the future, like in Germany.
“We are constantly evaluating where to have factories, and looking at markets and developing markets,” he says.
Wind energy agency WAB, a German offshore wind lobby group, blames a constant political meddling with framework conditions for offshore wind in Germany for the company’s decision to favour Hull over a location in Siemens’ home country.
“The decision of Siemens to build its rotor blade manufacturing in Great Britain is the direct and noticeable consequence of a short-sighted energy policy of the (German) federal government. Investors need to be able to rely on assurance from politics, otherwise they are unsettled and turn to other markets,” WAB managing director Ronny Meyer says.
“Many regions in Germany would love to have a new plant of that size.”
After delays in offshore grid connections had held back Germany’s ambitious offshore plans for years, the new government in late 2013 decided to scale down the country’s offshore ambitions to a 2020 target of 6.5GW instead of the 10GW earlier planned.
Berlin caused further annoyance in the sector when first announcing to extend for two more years its current “compression model” that grants higher feed-in tariffs during the early years of offshore developments, but then later saying that despite prolonging the model, it will lower initial FITs for offshore projects later in the decade.
“With that, the federal government doesn’t stick to its own promises and – as the example of Siemens shows – is endangering Germany as an investment location,” Meyer complained.
Some 2,000 jobs were lost in Germany’s offshore sector last year, while 18,000 still work in it, he added. Companies such as Areva and Senvion have announced job cuts at manufacturing facilities in Bremerhaven and other German ports due to a current lull in offshore orders from Germany.
Green lobby group RenewableUK, meanwhile, hailed Siemens investment decision as a “major coup for the British wind industry,” which it called a “game changer” that will lead to a cascade of further investment across the offshore wind supply chain, such as hi-tech blades, turbine towers, cables and offshore substations.
“Major developments like today’s announcement from Siemens will help us to retain the UK’s global lead in offshore wind, as we already have more capacity installed than the rest of the world put together,” said RenewableUK’s chief executive Maria McCaffery.
“The rest of the world is eyeing us enviously, wanting a slice of the action.”
Siemens' Hannibal seems to agree.
The transition from the UK’s renewable obligation certificate system to the Contract for Difference regime “looks like something that could stabilise the market and attract investors to such a market,” he believes.
Siemens declined to give an estimate for future sales of its 6MW offshore turbine, but Hannibal stresses that the company has secured a good backlog for the machines already. The new factory and Hull’s location could be supporting factors to ink orders for many of the UK's Round 3 projects, he adds.
Amended Plans for Hull
Plans announced yesterday differ dramatically from those on the drawingboard in late 2012, when Siemens decided to push back a final decision on the Green Port Hull (GPH) site until “early [in 2013]”, writes Darius Snieckus.
The new blade manufacturing facility in Paull, on one of two sites Siemens will operate on GPH acreage, will cover an area of 250,000 square meters (25 hectares) with a production hall of a size “still open to discussion” at its heart, laying up as many as 300 blades a year.
Its 540,000 square metre Alexandra Dock site will be home to the nacelle assembly, project construction port and service.
Original sketches for the GPH site were for a 20,000 sq metre nacelle factory with a 636-metre berth from which to ship some 500 SWT-6.0-154 direct-drive nacelles a year – needing 1,500 blades – for wind farms in the North Sea area, including the Hornsea and Dogger Bank zone mega-developments.
What the two visions share is the stretch of the Humber Estuary on which the complex would be built, which has an 11.5-metre draught and a tidal range of 3-8 metres, making it well-suited to the largest turbine and cable installation vessels.
The blade hall will house a “multi-mould” fabrication set-up for Siemens’ 75-metre-long B75 Quantum design, the “swept shape” glass fiber-reinforced epoxy resin and balsa wood model unwrapped in late 2012 for its 6MW offshore wind turbine, prototypes of which are now turning in Scotland and Denmark.
“We have seen very good performance from the blades on the prototype at Østerild [at Denmark’s national testing centre] so far and we have now also erected the Hunterston turbine [at SSE’s prototype site in the north of Scotland],” states Michael Hannibal. “We are constantly testing and these [machines] add to that.”
Fabrication will be based on the company’s IntegralBlade fabrication process, which lays out each blade in a single, fully enclosed mould rather than gluing it together from spars and shells, carving out 25-50% of the weight of a same-size blade produced using traditional technology.
The Hull blade plant will be run hand-in-hand with Siemens’ Aalborg facility, which will have a near 500-metre-long fabrication hall and, potentially, a high-end test rig, for “production and development” of blades for the 6MW machine, as well as its Brande factory for nacelle manufacture.
“We are very much looking at producing for projects in the context of the global market,” says Hannibal. “We continue to invest in the Aalborg factory too. The blades will come from the factory where it makes sense.”
Hull is seen has having greater future development potential by Siemens, with acreage open for tower and jacket fabrication sites, as well as for a nacelle factory, as in the earlier version of the development.
“There is land available,” says Hannibal. “And you could imagine something of that scale taking shape in the future.”
Time has nonetheless been lost. Originally the manufacturing complex was to be up and running by 2014-15. Siemens now expect first fabrication in 2016 at the Hull site, with delivery of the blades for the 35 turbines on the orderbook for Dong’s €1bn ($1.36bn) 210MW Westermost Rough wind farm in the UK North Sea supplied out of Aalborg.
Read the full background to Siemens' investment in Hull below.