Tough times as Senvion moves out of Germany and into India

GERMANY: Manufacturer Senvion has been going through some tough times as it reshapes the business following the change in ownership in spring 2015. Its India strategy is not going to plan, and uncertainty in its German home market continues.

Slow progress… A year after Senvion bought Kenersys’ India factory, the takeover is still not completed
Slow progress… A year after Senvion bought Kenersys’ India factory, the takeover is still not completed

Investment firm Centerbridge Partners bought Senvion from troubled Indian firm Suzlon Energy and then took on Indian investment company Arpwood Capital as co-investor.

After an initial public offering in March 2016, 26.4% of Senvion shares are now in free-float.

Trouble in India

To revive its India business after the Suzlon ownership era, "definitive agreements" were reached in August 2016 to acquire wind-turbine nacelle production facilities in Baramati and other assets of Kenersys India from its owners, Indian industrial group Kalyani.

"For Senvion, India is very important as a production location, and for our strategic orientation in the region," a company spokesman said in September 2017.

However, asked whether the factory is running, a year after the acquisition announcement, he said the takeover of the Kenersys assets was not yet completed, so he could not divulge further details. "Kenersys' performance is not satisfying us very much, so we are in an ongoing discussion," he added.

On top of that, the "firm framework agreement with one of the large Indian independent power producers" for 220 turbines totalling more than 500MW, announced by Senvion in December 2016, "has exclusivity, but is neither a firm order nor yet a conditional order," the company said in early September.

The turbines were planned to be installed in 2017-2019, with commissioning of the first site by the end of 2017. But given the "messy transition" from feed-in-tariffs to competitive tendering that India is currently experiencing, installation expectations have changed.

Under the new system the client, which Senvion still declines to name, has to win at auction, and this now drives installation expectations. Senvion continues to work with the client, however, and the new turbines "will be supplied out of India", the company said.

Meanwhile, despite trade union and works council protests, Senvion's new owners have begun tearing up the company's German roots.

Senvion's nacelle assembly works at Husum in Schleswig-Holstein, and Trampe in Brandenburg were closed on 31 August. They will be followed by the company's Powerblades rotor-blade works in Bremerhaven on 31 January 2018, according to the local IG Metall trade union branch.

The company's in-house blade production will then be carried out at the Powerblades works in Portugal, as well as at the two small Euros works in southern Poland, acquired in November 2016, augmented by a deal with TPI for supplies beginning in the first quarter of 2018.

Senvion has only guaranteed production and employment at its nacelle factory in Bremerhaven until the end of 2019, according to IG Metall. "We can only speculate on what the company is planning for beyond that," Heiko Messerschmidt, spokesman for the regional division of trade union IG Metall, said.

In September, Senvion confirmed it was cutting nacelle production capacity by 25% to 2.7GW, leaving production ongoing at Bremerhaven in Germany (current capacity 1.1GW), Oliveira de Frades in Portugal (capacity 1GW) and Baramati in India (current capacity 0.25GW, but with potential to expand).

Senvion's production capacity will therefore be around 1GW more than the company installed in 2016 at 1.76GW.

Offshore hopes

At least Senvion remains bullish on offshore, stressing things have moved on since March 2016, when it noted future offshore business "could be at risk, should not enough new orders be signed, for example, due to our inability to locate an appropriate joint venture partner for our offshore business".

Senvion plans to strengthen its product portfolio and aim for growth in existing and new markets, the spokesman said.

In March 2017, Senvion said the feasibility study for the new offshore product — the 6.2M152 turbine with power and rotor upgrade — was complete, and product design and power curve were due in 2017, with market feedback then awaited before triggering the next investment phase.

Without divulging further details, the company confirmed in September 2017 that it is working on a 10MW platform. "In the end, it will be even bigger than 10MW."

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