David joins a market of Goliaths -- German turbines for America

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German wind turbine manufacturer Fuhrländer AG will enter the North American market by making its newly developed 2.5 MW model near Butte, Montana. The company is expected to break ground on a $25 million factory this fall and begin production with 150 employees the following spring, producing 20 turbines a month when at full capacity. Fuhrländer is a relatively small family owned business, but its machines have been in operation for years, mainly in its home country.

Fuhrländer has scouted a variety of US locations, both in and out of Montana, in recent months. It chose Montana in large part because of the state's "clean and green" initiative, a 2007 law that provides tax incentives for the manufacture of renewable energy equipment, according to Evan Barrett, chief business development officer for the State of Montana. "There's a whole cafeteria of tax breaks," Barrett says, explaining that all equipment used in a wind turbine manufacturing plant receives a 50% tax break during construction and during the first 15 years of production. Fuhrländer will also be eligible for loans from the state board of investments, along with job training money from the state commerce department.

Another key to the deal with Montana is Butte's available workforce and a pair of colleges, says Barrett. Montana Tech is a four-year institution with graduate degree programs, while an associated two-year college of technology provides related workforce training. Fuhrländer's Daniela Weimer adds that the potential for large projects of more than 100 MW in the region was also a deciding factor.

To swing the deal, Fuhrländer partnered with Texas businessman Jon Chafin and formed Chafin-Fuhrländer, a limited liability company registered in January 2008. Barrett says Chafin is a wind developer well connected in the wind industry. "He brings an American presence and, for a German company, it's important for them to have an American understanding," says Barrett. Chafin will have a "participation" in Fuhrländer Manufacturing, as the factory will be known, "as he promised to bring all his projects into the production," says Weimer.

Manufacturing licences

Fuhrländer has its sights set beyond the Montana borders. "Domestic manufacturing opens the door to many markets for Fuhrländer," Barrett says. "The market is probably between here and the West Coast and here and the Midwest. I don't see it going farther east than that." So large is the North American market in Fuhrländer's eyes that it is also intending to grant licences to third party companies in the US to manufacture and sell its turbines. "We will share the US market in a fair co-operation with our licensees," says Weimer. According to Henry du Pont from Lorax Energy Systems, Fuhrländer's North American distributor, two or three entities are close to signing licence agreements to make the 2.5 MW turbine.

Fuhrländer has already decided to add a nearby blade manufacturing plant in Butte that would create 600 more jobs. Barrett says local interests offered Fuhrländer a large industrial site with ready availability to two interstate highways going both directions and two intercontinental railroads.

Fuhrländer has two manufacturing facilities in Germany and hopes to build more throughout the world, including in Brazil. It has been increasing revenues through licensing deals and has secured a partnership for its turbines to be built in China (Windpower Monthly, March 2008). It offers seven turbine models ranging in size from 30 kW to 2.5 MW. Aside from in Europe and China, the company says it also has wind turbines operating in the US, Japan, and India.

"There's a huge wind opportunity in our region of the country which is relatively untapped and is going to show significant growth," Barrett says. "But one of the constraints on that growth has been the availability of turbines."

In 2005 Montana passed a law requiring the state to get 15% its electricity from renewables by 2015. But despite high winds which rank the state fifth in US wind potential, Montana has only seen 9 MW come online in the past two years, to bring the total to 145 MW. The electricity interconnection queue, however, provides some promise. Roughly 50 wind power projects with a combined capacity of 4 GW are in line for potential network connection.

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