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Denmark

Denmark

Owners must pay for gearbox failures -- Competing retrofits on offer

More than 130 Danish owners of 750 kW wind turbines gathered to discuss problems with gearboxes in their machines, all of which were bought from NEG Micon before its takeover by Vestas. Once the turbines are out of their warranty periods, the owners face bills of up to EUR 67,000 per machine for repairs or replacement. The purpose of the meeting was to provide information on the problems. Vestas was invited along to talk about its new offer for a solution to the problem.

"We are not proud of the situation," admitted Vestas' North European manager Tom Pedersen in mid-May. He was speaking to 135 Danish owners of 750 kW wind turbines gathered to discuss problems with gearboxes in their machines, all of which were bought from NEG Micon before its takeover by Vestas. Once the turbines are out of their warranty periods, the owners face bills of up to DKK 500,000 (EUR 67,000) per machine for repairs or a replacement gearbox. About 80% of turbines are no longer under warranty, according to the German gearbox supplier, Jahnel-Kestermann.

The purpose of the meeting, organised by Denmark's wind turbine owners association, was to provide information on the problems associated with NEG Micon 750 kW turbines equipped with Jahnel-Kestermann gear units with type-approval JaKe PSC 1000. Vestas was invited along to talk about its new offer for a solution to the problem, which so far has resulted in more than 40% of the gearboxes being replaced, says the association's technical consultant, Strange Skriver.

Vestas' offer only applies to the around 190, 750 kW turbines in Denmark. Service manager Jesper Greth says he does not know the exact number of 750 kW turbines exported, but that gearbox replacement is being offered to overseas customers. The offer will vary from country to country. According to Skriver, about the same number of turbines are affected overseas as in Denmark. He presents a detailed overview of the failure of Jahnel-Kestermann gear units in the current issue of WindStats, a sister publication to Windpower Monthly.

At the meeting several owners complained to Vestas that they had bought wind turbines which should have run for 20 years according to the sales prospectus. Now they were faced with having to replace a major component shortly after the turbine warranty period expired. Greth explained that the turbines were developed based on the technology at the time. With regard to the 20 year life span, he said that owners should have asked themselves: "Can that really be true?" Furthermore, a wind turbine is an investment and "with any form of investment there is a risk."

One owner said he had researched the ex-factory cost of a new gearbox and believed Vestas to be profiteering from correction of problems the turbines were delivered with. He asked why owners of turbines with JaKe PSC 1000 gearboxes were not offered the same free replacement of the failed component as provided in the 1990s to the owners of 1200 NEG Micon turbines equipped with gearboxes from Flender. Greth said the Flender problem was the result of a design failure in the gearbox. This is not the case with the Jahnel-Kestermann gearbox.

Changing hands

Meantime, private equity firm Arques Industries has acquired 89% of Jahnel-Kestermann, rescuing the company after it ran into trouble, partly over the failed gearboxes. The remaining 11% stays with the owner family "for the time being."

Jahnel-Kestermann's problems apparently took a turn for the worse after Vestas cancelled a gearbox upgrade deal the German company had agreed with NEG Micon. At the peak of its performance in 2003, Jahnel-Kestermann's turnover was EUR 44.9 million, with about half of that in the wind business. In 2004, turnover dropped to EUR 35 million and it has shed one-third of its 300 employees.

Vestas and Jahnel-Kestermann are now locked fast over replacement of the faulty gearboxes, which number more than 250. The German company is competing with Vestas to bring the gearboxes up to scratch. Jahnel-Kestermann initially made an offer to operators, valid to the end of March 2005, to upgrade their existing gearboxes for EUR 33,000 ex works, including a three year warranty. While some operators signed up, Jahnel-Kestermann discovered at the Danish owners meeting that a package that also included installation of the gearbox would be more attractive.

This package offers a saving of around EUR 10,000-15,000 compared with Vestas, says Jahnel-Kestermann's sales manager, Frank Hoffmann. Operators would have only a three year warranty, but would not be bound to Vestas' maintenance contract for eight years.

Jahnel-Kestermann now hopes to build up its wind business to an annual EUR 35 million within the next few years, with a customer base that currently includes Suzlon, GE Energy, Nordex, and Fuhrländer. It believes that turbine makers who until now have bought Flender gearboxes from Winergy, a subsidiary of German Flender, may seek another supplier. Siemens, a competing wind turbine company after its acquisition of Danish Bonus, recently took over Flender (Windpower Monthly, May 2005). Vestas has a long-standing relationship with Flender.

Arques says it takes over enterprises like Jahnel-Kestermann and reorganises them with its own management and a "task force" of specialised consultants. Arques aims to hold onto medium sized companies like Jahnel-Kestermann for three to eight years with the main goal of putting them onto a sound footing. Arques Industries, founded in 2003, is owned 39.5% by the company's management, 13.2% by Buchanan Holdings, and 47.3% of the shares are in free float.

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