Germany

Germany

Repowering potential for SGRE in Senvion deal

Senvion's service contracts and the opportunities they present for forging future repowering deals are likely to be among the embattled manufacturer's most attractive assets, as competitor Siemens Gamesa pursues a deal, according to an industry analyst.

Siemens Gamesa is in talks to acquire some of Senvion's European assets
Siemens Gamesa is in talks to acquire some of Senvion's European assets

Google Translate

Following a unanimous creditors assembly vote last week, the two companies entered an exclusivity agreement allowing Siemens Gamesa Renewable Energy (SGRE) to pursue negotiations for a purchase of "selected services and onshore assets" from Senvion.

Senvion launched a "transformation programme" in February and then declared insolvency in April, and has been struggling to stay afloat ever since.

The manufacturer confirmed in August that it had received several advanced offers for various core parts of its business, but none for its entire turbine business unit.

SGRE has now emerged as the number one contender to pick the parts from the German manufacturer.

Splitting up

Philip Totaro, CEO of industry advisory company IntelStor, told Windpower Monthly the company being split up was inevitable given its dire financial straits.

Senvion is yet to publish its annual financial reports for 2018, and looks unlikely to do so.

It had made a €66.2 million loss from €2.2 billion revenue in 2016, followed by a €93.3 million loss from €1.86 billion revenue in 2017.

"I think the reason that somebody couldn’t look at the entirety of Senvion is because the entire package is not sustainable given the market," Totaro explained.

"It’s a money-losing business."

Totaro believes Senvion has three core assets that would interest SGRE: its service contracts for installed projects; its pipeline of approximately 3.1GW in international orders that have yet not started construction; and its patent portfolio.

Totaro speculated that Senvion’s patents are likely to be included along with other assets in any potential deal with Siemens Gamesa, however he remains unconvinced by its standalone value.

"If companies thought that it was incredibly valuable, then there would be more companies bidding, but there doesn’t appear to be," he explained.

Similarly, Senvion’s turbine portfolio — made up of doubly-fed induction generator, three-speed geared turbines — is "well established at this point". Rival manufacturers have their own technology.

However, the manufacturer’s O&M contracts for wind farms, and the opportunity that it offers to SGRE to run its data analytics tools over a rival’s turbines is especially promising.

"I certainly wouldn’t see them analysing the Senvion fleet and coming up with a whole raft of product improvements — like they would do from analysing their own turbines," Totaro explained.

"However, I would expect them to identify the underperforming Senvion assets and make a case for early repowering, and then repower them with their own turbines."

"SGRE is not just buying scale, they are also buying relationships with that developer.

"If it leads to a repowering, they have secured that by doing this transaction," he added. 

Offshore and abroad

SGRE and Senvion’s negotiations focus on onshore assets, and so exclude Senvion’s installed base offshore — about 1.2GW, according to Windpower Intelligence, the research and data division of Windpower Monthly.

Totaro suggested that some project owners could take control of Senvion services personnel and technology for specific wind farms, as was the case with Bard Engineering.

Offshore Wind Solutions took over Bard’s premises and ships, around 300 employees and other resources when the engineering company went out of business in 2014.

Negotiations are also focussed on "selected" Senvion assets in Europe, and so exclude about 3.1GW of unfulfilled international orders in other markets, Totaro added. 

He expects for almost all projects for which components have not yet been shipped, developers will replace the German manufacturer as turbine supplier.

This offers rivals opportunities for supply contracts in markets such as Argentina, Peru and Chile.

Senvion has already untethered its Indian business, allowing it to operate as a standalone unit.

However, the manufacturer's other non-European assets are also likely to be abandoned and factories sold off after the company is carved up, however, Totaro said.

"Sales offices are essentially redundant if they’re not selling Senvion turbines any more," he added.

Have you registered with us yet?

Register now to enjoy more articles
and free email bulletins.

Sign up now
Already registered?
Sign in