Another big USframework order -- Shell picks Gamesa

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Shell Wind Energy's decision to buy 264 MW of Gamesa turbines for deployment in projects throughout the United States edges the Spanish company's American portfolio of advanced orders to 2500 MW, it says. Gamesa, the world's fourth largest turbine supplier after Vestas, GE and Enercon, is currently setting up wind turbine production facilities in Pennsylvania in the US Northeast.

The $300 million deal with Shell, for 132 wind turbines, follows an agreement with Horizon Wind Energy late last year for Gamesa to supply up to 600 MW. The company says its projects in advance stages of development are primarily in the Midwest, Southwest and Mid-Atlantic regions. Much of the portfolio is being developed by Gamesa's American project development division, Gamesa Energy.

Shell's development pipeline includes projects in Texas, Wyoming, Idaho, West Virginia, California and Hawaii. Of the 740 MW of operating wind power capacity Shell says it already has stakes in, 555 MW is in the US, with the remainder in Europe. The company entered the US wind market in 2001 when it acquired the 50 MW Rock River 1 project in Wyoming.

Both the Shell and Horizon pacts reinforce Gamesa's plunge into the US market. For more than a year, the company has been setting up shop in Pennsylvania, opening a headquarters and four manufacturing facilities, along with building the state's largest wind project in its new backyard. That development, the Allegheny Ridge Wind Farm in Cambria and Blair counties near the state's centre, is being completed in two phases. The 80 MW Phase I is on track to be online this year, while Phase II, at 70 MW, should be finished by the end of 2007.

Gamesa initially invested $40 million to locate its North American headquarters in Philadelphia and construct a Cambria County blade manufacturing facility several hours to the west. Since then the company has spent another $34 million to convert a former US Steel industrial site in Bucks County, just north of Philadelphia, into three manufacturing centres that will build towers, nacelles and more blades.

Sales to competitors

"We have Gamesa Energy for building proj-ects and Gamesa Wind for selling equipment to many other clients," says the company's Gabriel Alonso. "We plan to continue selling turbines to some of our own competitors. We consider that a very normal situation," he adds, with a nod to the company's business model in its home country.

Gamesa was initially wooed into Pennsylvania by a series of financial incentives, including about $10 million in grants, loans and tax credits for the three Bucks County facilities, along with another $9 million for its Cambria County plant. The state was motivated by its desire to boost the local economy and its commitment to reach 18% in renewables by 2020. "When we decided to move into Pennsylvania, we were already actively developing projects in the area," says Alonso. "The fact that we can supply the projects from our nearby facilities will make the projects more competitive," he adds.

Power from Phase I of the Allegheny Ridge project has already been contracted for sale to FirstEnergy of Akron, Ohio, which entered into a 23 year agreement to buy all 80 MW. "We were looking to increase our wind presence and this project is a great way to do it. There are some very good reasons to be in Pennsylvania right now," says FirstEnergy's Mark Durbin.

No more facilities

Gamesa has no other plans to build manufacturing facilities in North America, according to Alonso. "These Pennsylvania plants are major investments," he says. "We have been working hard at having them up and running as quickly as possible."

The company's blade manufacturing plant in Ebensburg will produce 300 MW of carbon-fibre blades a year, while a second manufacturing facility, in Fairless Hills will have an annual production capacity of 600 MW. The company is also set to produce 300 MW of towers a year and its nacelle assembly plant is expected to reach a yearly capacity of 1000 MW.

By the end of 2005, Gamesa had more than 7500 MW installed worldwide and a 3% market share in the US.

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