The new joint venture between Gamesa and Siemens has now finally placed a bid for Areva's half of Adwen. Under the terms of this bid, Areva has until September to find an alternative buyer — not only for its half of the company, but for the whole of Adwen. GE showed early interest and it now appears that Senvion may be joining the fray.

Even before this latest round of turbine M&A activity, the once-overblown list of more than 25 wind turbine suppliers seeking to play in European offshore wind had shrank to five by last year: Adwen, GE, MHI Vestas, Senvion and Siemens. The consolidation has been driven by a combination of M&A activity (for example involving Alstom and GE; Mitsubishi Heavy Industries and Vestas) and market retreats (by the likes of Nordex and Samsung).

My view is that to retain competition while facilitating investment in next generation technology, four viable players are needed in the market, which is a squeeze for the size of market we are expecting.

The two key assets that Adwen has are the AD 8-180 turbine (8MW, 180-metre rotor diameter) and its pipeline of 1.5GW of French projects by 2025. The AD 8-180 is expected to be prototyped later this year and production could start in two years. The design has room for further expansion and looks to be the machine size and shape of choice for a few years to come.

A successful Gamesa-Siemens bid would surely raise interest within the European Commission’s competition authorities. If it were to go through, then Siemens would win another significant pipeline and a footprint in another market, even though the establishment of French manufacturing facilities wouldn’t seem to fit well with its existing investments in Denmark, Germany and the UK.

Likewise, although the original AD 8 turbine concept developed by Areva has been reshaped and validated by Gamesa, a geared turbine would not sit well with Siemens’ loudly-articulated story about the simplicity of direct-drive technology. It is in need of a larger rotor for its workhorse model (6-8MW, 154-metre rotor diameter), but an in-house solution fits much more comfortably than one using LM’s recently announced 88.4-metre blade for Adwen.

The most obvious choice is for GE to scoop up supply to every French offshore wind project awarded by absorbing Adwen into its portfolio (through its acquisition of Alstom, GE has already won French offshore turbine supply deals for more than 1.4GW).

A GE purchase of Adwen would also solve the US giant’s overdue need for a turbine larger than Alstom’s Haliade (6MW, 150-metre rotor diameter).

However, this would leave it with the dilemma of two different drivetrain concepts in its stable (low-speed, direct-drive generator and medium-speed geared generator) along with its own onshore turbines based on the third drivetrain concept in the market (high-speed geared generator).

A bid would also consolidate its supply chain in France, with LM Wind Power, for example, using its Cherbourg facility, which is well set to make blades for both turbines.

MHI Vestas would gain little from a purchase, apart from taking a competitor out of the market, as it already has its own V164-8MW (8MW, 164-rotor-diameter) with similar drivetrain technology. So Vestas’ declaration that it is not interested in buying Adwen makes sense.

A Senvion bid presents the most interesting possibility. Along with its owner, Centerbridge, it faces ever an ever-tougher challenge selling into the market. When first launched, its 6M turbine was by far the largest available.

Now, its offering looks small (6.2MW, 152-metre rotor diameter) and is the only offshore turbine with the “old” high-speed, geared generator concept. Having stretched this turbine probably as much as it can, it has the challenge of setting off with limited resource and market share on the very long and costly journey developing a new product.

Or it could shorten this journey by buying the AD 8-180 and incorporate the design team, located close by in Niedersachsen, into its own workforce. To me, this seems its best route to staying in the market. Without it, we’re likely to end up with only three players — GE, MHI Vestas and Siemens, with Adwen absorbed by one of these three. This would leave the industry short on competition.

There is time for other bidders to emerge. The outsiders in the race include Far Eastern players seeking to enter the European offshore market.

But there doesn’t seem to be a strong appetite from turbine manufacturers to start the long journey to European acceptance, despite a series of Chinese investments in offshore wind projects.

The ability to take the AD 8 turbine back to the Chinese market may provide a more compelling motive. We don’t see industrial players or financial investors having the courage to enter the battle against some pretty big hitters.

By September, we will see Adwen leave the field, but who will emerge with the spoils is far from certain.

Bruce Valpy is the founder and managing director of wind and marine energy consultancy BVG Associates

Wind

'With Senvion tipped to join the fray, a battle royal for Adwen looms'