Gamesa goes alone on offshore without Bard tie-up

SPAIN: Gamesa, a global player in onshore turbines, remains undeterred in its offshore ambitions despite the breakdown of negotiations on a joint venture with German offshore start-up Bard in July.

BARD installing one of its offshore turbines
BARD installing one of its offshore turbines

"The aspirations with Bard were just the tip of the iceberg of Gamesa's offshore bid," the company says.

Gamesa does not yet have any offshore technology but, following the breakdown of the Bard negotiations, it has given more details of its strategy.

Gamesa president and CEO Jorge Calvet says the company is developing offshore turbines with rated capacity of 5MW and 6-7MW. The first working models are planned for 2012 and 2014, respectively, and the pre-series models for 2013 and 2015.

Calvet also confirmed the continuation of negotiations announced earlier this year to build an offshore turbine facility in the UK, with five sites now shortlisted. Gamesa has dedicated EUR40 million a year for research and development (R&D) and set-up costs.

Since starting negotiations with Bard in February, Gamesa had hoped to sign a deal to establish itself as a distributor or manufacturer under licence of Bard technology. That would have accelerated its move offshore. Calvet had hoped such a deal would spur turbine sales deals as early as 2011.

"But due diligence is there to make sure you do not jump into investments you will later regret," says Calvet. After six months' assessment, the company concluded that the valuation of the deal and the amount of investment required could not create the value necessary for shareholders.

Calvet also points out that both companies, not just Gamesa, had expressed "significant discrepancies" during the negotiations. Gamesa declines to go into further detail of its assessment of Bard, saying it would be "bad form". Industry commentators close to Gamesa have echoed reports that Bard is negotiating an alternative joint venture. Bard has declined to comment about the talks.

Meanwhile, Gamesa claims its offshore range - currently under development mainly at its R&D centre in Aarhus, Denmark - is of optimum size in terms of efficiency, as well as onshore and offshore logistics. Calvet admits larger turbines are now in the market, but says some of the logistics will be land based and it remains to be seen how they will work.

Gamesa had already decided on its power target range when it made its decision to go offshore in 2009. That decision was made despite Gamesa pulling out of Ceowind - an offshore joint venture with a 4GW pipeline - in 2007. At that point, Gamesa described the offshore segment as a mere niche.

But now, Gamesa's biggest customer and biggest shareholder, Iberdrola Renovables - which is also the world's largest wind developer - has pinned a large part of its future on offshore. Earlier this year, Iberdrola Renovables landed joint prospecting rights for the 7.5GW Norfolk Array in the UK as part of the UK's Round 3 offshore programme, aimed at topping 30GW by 2025.

"Our clients are going offshore and so are we," says Calvet. To avoid missing the Round 3 boat, he reckons Gamesa needs to have established its offshore industrial base by the end of 2012. The UK, with its five shortlisted sites, is the obvious choice, he says, adding: "But it's not the only one, as we are also looking in northern European countries."

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