Chinese investors eye German offshore market

GLOBAL: Major Chinese companies are showing increasing interest in the western European offshore wind sector, with Germany seemingly the most favoured location.

The key Chinese investment into Germany's offshore sector so far has been by the Jiangsu Hantong Group, which set up the Jade Werke company in early 2012 to assemble offshore turbine foundations.

The Chinese firm confirmed last month that it expected to sign a ground-lease contract before the end of the year for a 120,000 square-metre site for an assembly plant at the German North Sea port of Wilhelmshaven.

Meanwhile Chinese manufacturing giant XEMC's Dutch subsidiary, XEMC-Darwind, is reportedly in discussions to acquire all or part of the financially-troubled German Bard Offshore wind group. As XEMC-Darwind is already developing a 5MW offshore turbine, there is speculation that XEMC could be interested in Bard's factory and logistics facilities in Emden and Cuxhaven, and its offshore wind project pipeline, rather than in Bard's 5MW offshore turbine technology.

A prototype of XEMC-Darwind 5MW machine was installed at the ECN onshore test field in the Netherlands last year and another at a near-shore site in China in June. Turbine production has yet to start, but the first ten machines have been pre-sold to construction company Strabag for the Albatros 1 offshore wind farm in the German North Sea, said an XEMC-Darwind spokesman.

Ready to go

"Production could start tomorrow," the spokesman added. "We don't need large premises and this could be anywhere, perhaps also in the Netherlands. But exactly when production will start depends largely on when a cable connection to shore for Albatros 1 can be built by Tennet, the responsible transmission system operator."

Further Chinese involvement could come from turbine major Sinovel, which contracted German certification company Tuv Nord in July 2012 to carry out an internationally recognised certification for its 6MW offshore turbine with rotor diameter of 128 metres.

"There are many Chinese companies broadly interested in the German and European offshore wind market, and at least a handful of Chinese enterprises that are seriously looking at becoming involved in the offshore markets in Germany, the UK or Denmark," said Esther Frey, manager for Renewable Energies and Resources at economic development agency Germany Trade and Invest.

Chinese approach

In the wind energy sector as a whole, Chinese companies are more interested in mergers and acquisitions than in building factories, she said. Jade Werke's planned investment in a foundation assembly works is more of an exception, while Goldwind's acquisition of a 70% share in small German onshore turbine manufacturer Vensys in 2008 is more typical.

The Chinese companies are, however, watching political developments affecting offshore wind very closely. Rival markets such as the UK could risk making itself less attractive than Germany to Chinese investors thanks to market reform upheaval and a lack of clarity in the UK for support for offshore wind beyond 2017.

UK mission

This was denied by development agency UK Trade & Investment, which is promoting a week-long mission during 11-17 November, coinciding with the China Wind conference and exhibition in Beijing. It aims to promote the UK's offshore wind capability in China.

"The UK has the most open energy market in the world and we actively encourage inward investment in the offshore wind sector," said a UK Trade & Investment spokesman. "Many international businesses are either operating in or are interested in the UK offshore wind sector, including Chinese companies."

In Germany, current discussions about the Renewable Energy Act are also being followed attentively. "The federal conservative-liberal government has not called offshore wind into question and, in Germany's favour, no matter how the federal elections in autumn 2013 may result, there is certainty that the new governing party or coalition will continue to support offshore wind energy," said Frey.

She suggested that Chinese investment in offshore wind in Europe would be encouraged if there was a unity among national governments on offshore wind that would lead to a larger European market.

Another aspect in Germany's favour is its industry clusters, which are attractive to Chinese companies because they offer opportunities to swiftly make contacts with other companies in the sector, and to find partners and customers, Frey said.

Hamburg is a case in point, a city where companies active in offshore wind, such as Repower Systems and Siemens, have offices. Frey also stressed the attractiveness of Germany's well-developed supply chain for wind-turbine components, offering many possibilities for industry cooperation.

5MW - Rating of both XEMC-Darwind's offshore turbine and that of Bard, which it is rumoured to be acquiring

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