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Spain

Spain

HEADING FOR THE OPEN MARKET

Spanish utility Endesa's subsidiary, Made SA, is steadily gaining recognition in the world of wind power. The company has projects on the Canary Islands, in Galicia, Morocco, Portugal, and India. In South America it has launched campaigns to capture possible wind turbine customers. The aim of the company is to become an independent wind power company. In a recent European wind turbine catalogue, Made's AE 30 starred as one of the cheapest in its category. Made says it wants to compete in a free and open market and deplores protectionist attitudes.

In his cramped office on the twelfth floor of the Bronze Building in northern Madrid, Manuel Ramallo barks instructions into the phone with the dizzying velocity of an anemometer in a force ten gale. "I want the best man on the job for the impact assessment. Marbled teal [a breed water fowl] are pretty, but plain stupid when they fly off out of the water. Got it?" he snaps and then spots his interviewer over the heap of paperwork on the desk. "Oh, hi. Ever tried teal? They're delicious. Take a seat."

Before even reaching the proffered seat, Ramallo*, project manager at, Made SA, the Spanish company that is slowly but surely gaining recognition in the world of wind power, is off again, discussing power curves, Weibull distributions and sound emission levels -- the gastronomic delights of teal already forgotten. The hectic, albeit erratic activity at Made, a subsidiary of national electric utility Endesa, is a sign of the times. It was only a couple of decades ago that Made SA was exclusively dedicated to the construction of power pylons, stringing together the massive gridwork of Spain's electrical system from one end of the country to another. When it moved into alternative energy systems, it earned itself a reputation as an over cautious pioneer in a fast developing field. Today, "energia eolica" has changed Made's outlook completely.

The company has some 35 MW of wind power connected to the grid in projects stretching from the Canary Islands of the Mediterranean, to Galicia in the north. Another 70-odd are in the works and the company has secured footholds in Portugal and Morocco, where it has presented tenders for several projects. In South America it has launched campaigns to capture possible wind turbine customers, and although initially disappointing, Made's efforts could lead to huge development of the area in coming years. Meantime, one of the most promising ventures could arise from a deal in India, a country being targeted by wind power companies all over the world.

"We have grown from a company that simply built wind turbines into a company that is now not only designing and developing new models, but taking a role as a promoter as well. We want to be involved in the wind market all the way from A to Z," says Made's managing director, Fernando Pastor Gonzalez.*

Dynamic new approach

To do this, Made, founded in 1940, has had to revise and draw up new statutes giving it more autonomy from its mother company, Spain's huge conglomerate, Endesa, one of the country's few profit-making state-run companies incorporated in the National Institute of Industry, or INI. As a result, Made has shaken off its image as the slow coach of wind power; it now has an independent budget, the authority to make its own decisions, and the capacity to invest where and how it likes with minimum supervision from Endesa -- three ingredients essential for the development of wind power at a time when speed is essential.

"Our target is to become an independently operating wind power company with no interference from anyone, bar none. And that goes for the conglomerate, too. We don't want our sister companies of the power sector to tell us where to put our wind turbines. We aim to tell them where we want them," says an emphatic Pastor.

In line with this dynamic new strategy, Made has thrown itself into developing a multi-pronged approach, encompassing financial, technological and marketing strategies to place the company on a par with the biggest wind industry members in the world. One of the most tangible results of this policy -- proving just how big wind power has become in Spain -- is Made's short but apparently successful history as a major player in the research and development of competitive prototypes. It has built several turbines and is now ready to unveil a new 500 kW model to compete with those already on the market. The 500 kW is of an entirely new design, while the company's 330 kW workhorse is a scaled up model of its 180 kW turbine, both of which Made says have been very successful.

"We are, in fact, building two completely different prototypes of the 500 kW," says Pastor. "This is because we want to have what is the most economically and technically perfect machine on the market." Once fully developed, the Made 500 kW will go into production at the company's sprawling ESP 60 million factory at Medina del Campo in Valladolid, where the 330 kW is currently made. The factory is capable of producing 16 turbines a month, more than enough to meet Made's self-set target of adding 60 MW a year to its installed output in Spain, without counting the exports it expects to be shipping, too.

On the marketing front, Made is also prepared to shake off its reputation as a slow starter. Indeed, foreign companies with years of experience flogging their turbines overseas could well be in for a shock. In the most recent European Wind Turbine catalogue, Made's AE 30 (330 kW) starred as one of the cheapest in its category, at ECU 224,000 with several extras included. The recent devaluation of the peseta is also bound to make its machines more attractive.

Sights on international development

But this intense activity at Made is just the tip of the iceberg. Its surprisingly small but highly efficient team of expert executives has made it a policy to seek commercial opportunities as a project developer beyond Spain's borders. Already, Made is moving into Portugal and Morocco, two of Spain's traditional trading partners. The Moroccan government has shortlisted the Spanish company for a 30-50 MW farm in the north of the country and a Portuguese wind farm tender could well be snapped up by the Spaniards.

Further afield, Made has its sights on Latin America where ties are also very strong. There, according to Pastor, it's just a matter of waiting for economic and, in some cases, political stability before a major boom in wind power could spark off a race among European and American suppliers.

More surprisingly, Made, is already making inroads in the Asian market. Following an approach by the Indian group Baron Enterprises, negotiations could lead to long term involvement in the subcontinent, beginning with a 15 MW project, followed by a deal involving the technological transfer of its AE 30 330 kW turbine. "But we are open to any form of co-operation at the moment," says Ramallo. "It's a hungry market. There is a huge energy deficit which the government is trying to cover by offering incentives to companies which produce their own power. And more and more companies are turning to alternative energy systems." Regarding the 15 MW farm, Ramallo says the Indian company is keen to bring negotiations to fruition as soon as possible "given the expiry date on certain government initiatives which would affect the project."

On the home front, Made is very much in control of the market, despite competition from several small domestic firms and a growing number of foreign companies which have been fighting, quite successfully in some cases, to get a toehold in Spain. According to wind farm project development manager, Jeronimo Llompart, Made has put 35 MW of turbines in the ground, is negotiating another 70 MW and plans to add another 60 MW to the grid every year up to 1999. It would seem that Made's slow but methodological approach is turning up trumps. "At this stage," says Pastor, "we are not afraid of competitors."

Understandably, competitors -- both at home and abroad -- are not so ecstatic, especially the three or four domestic companies. They accuse Made of relying heavily and unfairly on its mother company, Endesa. This huge company has a finger in every pie, in and outside the power sector, and it has considerable clout overseas, too, where it plans to invest some ESP 26,000 million over the next two years, mainly in electricity. It already has a 25% share of France's giant, nuclear dominated national utility, EDF, and a 2% share in German utility, RWE.

Inter-company nepotism

The extent to which Made has found support in Endesa was well illustrated two years ago when another of its subsidiaries, the Unelco power company of the Canary Islands, helped scupper plans by an independent Spanish developer and turbine manufacturer, ACSA, to build a wind farm in the Canaries. Unelco hampered access to the grid, forcing ACSA out of the picture. Today the 10.28 MW Cañada de la Barca wind farm, the second biggest in Spain, is made up entirely of Made 180 kW and 330 kW turbines. The collapse of that deal forced ACSA and its Danish partner, Vestas, to agree on a parting of the ways.

Further evidence of nepotism among the Endesa brood is tangible in the Moroccan deal for a 30-50 MW wind farm near Tetuan, on the north coast of Africa, opposite Gibraltar. There, winds are considered to be ideal, better in fact than the meteorological conditions at the wind farms at Tarifa on the other side of the straits. Observers suspect that Endesa is leaning on the Moroccan government to award the tender to Made by tying the deal to a multi-million contract the Spanish giant is negotiating with Morocco for the construction of a thermo electric plant. As a result, the other competitors shortlisted for the wind farm tender -- Vestas, Mitsubishi of Japan and American Kenetech -- could very well be left out in the cold.

To be fair, the company is well aware of its privileged position as an Endesa subsidiary. It is also conscious of the degree to which it has depended on subsidiaries and the advantages afforded it in a nation which has adopted a protectionist attitude towards renewables. Indeed, few, if any, of Made's wind power projects have been executed without European Union or Spanish subsidies. The company, though, sees itself soon competing in a free and open market once the golden days of subsides are over. And, strangely for a public company, its directors deplore the protectionist attitudes of other state companies that have been fighting tooth and nail to halt the intrusion of foreign companies in the Spanish wind market. "Nothing good has ever come of having a closed or sheltered market," says Pastor. "One has to be competitive."

A new view on subsidies

The company has some innovative ideas about premium prices, too. Made believes premium prices for purchase of wind power should be based on a wind farm's availability. "You have got a situation where all wind plants, no matter where they are located, are receiving the same prices per kWh produced. Surely it would make more sense to pay higher prices to those farms in less privileged positions which are producing less electricity," says Pastor. It is this thinking which prevails in Germany, where capital subsidies are now only available to projects in areas of low winds (Windpower Monthly, March 1995). From the viewpoint of independent companies this may sound like a bid to pull the carpet from under the feet of the newcomers, but Made's top folk are adamant: they firmly believe that to survive, wind power must eventually pay its own way to become a viable ancillary to conventional forms of power production.

Overall, Made's success as a wind power developer would seem to be guaranteed. It is well-entrenched in Spain -- it is currently concentrating efforts here in the vast expanses of Galicia in the north west -- and is embarking on several overseas projects. It has the backing of one of the biggest power companies in Europe and has benefited considerably from subsidies and also the recent change in Spain's electricity law which has hiked premium prices for renewables considerably (Windpower Monthly, February 1995). How well it will survive in a free market is matter for debate, but judging from the optimism expressed by its directors, the company has not that much to worry about.

* Since this article was written, both Fernando Pastor and Manuel Ramallo have been appointed to other companies within state-run organisations. Ramallo is now with the Ministry of Industry and Energy's energy conservation and new technologies department and Pastor is now managing director of Incasur, one of Endesa's fossil fuel concerns. The new managing director of Made is Enrique Fernandez, who comes from another department within Endesa.

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