MHI Vestas' Kavafyan on staying on top

DENMARK: When Philippe Kavafyan took over from Jens Tommerup as MHI Vestas CEO earlier this year, his predecessor told him to 'learn to say no'. Windpower Monthly spoke to the former Adwen chairman about how he is picking his battles and where he plans to take the firm over the next four years.

(pic: Tristan Stedman/MHI Vestas)

MHI Vestas’ V164 turbine has played a role in two recent world records in offshore wind. Forty of the machines, rated at 8.25MW, are deployed at the 659MW Walney Extension in the UK, now the largest operational wind farm in the world. An even more powerful version, uprated to 8.8MW, has been installed at Vattenfall’s Aberdeen Bay demonstrator — a project Kavafyan describes as a "technological playground"— to become the world’s most powerful turbine operating in a commercial setting.

The Danish-Japanese OEM, therefore, currently enjoys a technological advantage with the latest incarnation of its V164 model.

But with larger, more powerful machines on the horizon — GE announced its 12MW Haliade-X earlier this year, while Siemens Gamesa and Senvion are also known to be exploring 10MW-plus turbines — is MHI Vestas’ claim as the supplier with the highest-rated turbine under threat?

Philippe Kavafyan, who officially took over as CEO on 1 April, argues that by the time MHI Vestas’ rivals unleash larger turbines, his company will have superior experience and a proven track record of delivering on budget and on time.

"Our turbines are considered the best technology you can find in the world today," he says. "If you look at the experience: we started with Burbo Bank (in December 2016) and just recently, at Borkum Riffgrund 2 and Walney, we were able to install in record times.

"I think when the 10MW and 12MW turbines arrive, the question for investors will be: ‘Who has the best technology and who has the best experience?’ When you have a bigger turbine and not enough experience, it will take time to get the trust of the investment community," he adds.

Nevertheless, if needed, the V164 platform can be extended to keep pace with the technological innovations of MHI Vestas’ rivals, Kavafyan insists.

First unveiled with a 7MW power rating in 2011, the V164 has been steadily upgraded to 8MW and beyond. Next year, the manufacturer plans to install 23 models with a 9.5MW rating at Parkwind’s Northwester 2 off the coast of Belgium.

"We have a young platform that has a lot of growth in it," Kavafyan says. "We can grow the rotor, reinforce the torque, and upgrade in incremental steps to keep up with the standards we see in the competition. Our platform is capable of going to double digits. I really like the flexibility in our system." (See footnote)

Europe and beyond

So far, MHI Vestas has installed its V164 platform off the coasts of the UK and Germany. It has also received orders for projects in Portuguese, Belgian, Dutch and Taiwanese waters.

Kavafyan explains that while the company wants to be a part of offshore wind’s expansion into new regions, it also wants to consolidate and expand its footprint in traditional markets.

"We’re not losing sight of Europe," he says. "Belgium and the Netherlands have been reinforcing their project-development pipelines; Germany, we want to come back to, following its grid and transmission issues; Denmark and Poland are still to come.

"And last, but not least, the UK remains the backbone of our development. We have 50% of our installed base in the UK, and we want to maintain that."

He adds: "The UK is not just about projects. It is also a significant part of our industrial footprint. We already produce blades on the Isle of Wight and we want another pre-assembly site."

Kavafyan highlights Poland as a particularly interesting emerging market for MHI Vestas. Polish transmission system operator PSE has suggested 4GW could be built in the country’s waters by 2027, fuelling optimism in Poland’s offshore wind sector.

The country also has a sizeable supply chain, an extensive port system, less salty waters — making the environment less corrosive than, for example, the North Sea ­— and is near MHI Vestas’ factories in the east of Denmark. "There is potential for us there," Kavafyan says.

He is also excited about the opportunities presented by the burgeoning Taiwanese offshore wind sector. MHI Vestas signed a preferred turbine-supplier agreement with Copenhagen Infrastructure Partners, which won 900MW in the Taiwan offshore wind tender in April.

In total, 5.5GW has already been auctioned in Taiwan, and Kavafyan sees the country as a potential springboard into south-east Asia, citing Vietnam and South Korea as other up-and-coming markets. "We’re very impressed with the way they are deploying their energy strategy," he says. "We see the government [delivering] and keeping to the calendar. The potential for Taiwan and beyond is real. We see Taiwan as a platform for export in south-east Asia."

When entering new markets, Kavafyan believes a balance has to be struck between leveraging your own expertise and abilities and establishing a supply chain. To this end, MHI Vestas has signed memorandums of understanding (MoU) with local engineering firms and drivetrain specialists in Taiwan, for example.

He describes governments’ requirements that foreign manufacturers and developers meet local content laws as legitimate. "The nature of the industry drives localisation," he says.

Health and safety focus

This balance must also be struck when it comes to health and safety. MHI Vestas stated it wanted to "continue to set an industry standard for safety" when it announced its results in April.

Kavafyan explains this vigour in health and safety is essentially a safeguard against complacency, especially as the manufacturer moves into new territory. "I still consider it a challenging test to install our machines at sea," he explains. "Wherever we go, we can’t assume that because people have done something before that is similar — but not exactly the same — they know what to do. We have to keep beating the drums on safety."

Kavafyan officially took the reins from Jens Tommerup on 1 April, following a short handover period. When MHI and Vestas launched the joint venture in 2014, the two companies agreed to change the CEO every four years.

He praises his predecessor, speaking of his "great respect" for Tommerup’s accomplishments over the past four years: overseeing incremental evolutions to the V164 turbine integrating Danish and Japanese cultures, growing staff numbers from fewer than 300 to more than 2,000, and creating a 2GW backlog, with an additional 2.5GW in conditional orders.

However, beyond saying he wants MHI Vestas to double its installed base and triple its production capacity, Kavafyan refuses to be drawn on what he wants his legacy to be by 2022.

"We are in a long-term industry," he explains. "A lot of what we do today will have three-or four-year consequences. Our focus is to make our very strong shareholders start seeing a balanced, sustainable path for the development of the company. We believe that the conditions are totally legitimate to continue investing in this industry, but we need to demonstrate that we can do it without the help of the parents."

At the results announcement in April, the company called 2018/19 a "watershed year" in which it expects to break even. "I’m very excited about the company. There are some very competent people and there is a lot of passion in our staff," Kavafyan concludes. "It’s difficult to find a better job to move into."

* Since this interview was published, MHI Vestas has announced that it is uprating the V164 turbine to a nameplate capacity of 10MW. Windpower Monthly has also revealed that MHI Vestas has trademarked a V174 designation for turbines of 9.0 and 9.1MW