Positioning for global growth

Spain's turbine manufacturing co-operative Ecotècnia is one of the country's oldest wind industry players, yet its massive overseas expansion program suggests it is still blessed with the youthful vitality with which it was born

Ecotècnia's frenetic activity over the past two years has led many to believe that 2001, the company's 20th year in the wind industry, was going to mark much more than just a birthday celebration. Having grasped the attention of the entire wind industry with the announcement of a ESP 6.185 million (EUR 37 million) business investment plan for 2001-2004, Ecotècnia aims to double its total sales to ESP 16,700 million. Most of the investment will go towards extending hardware production capacity, new offices and bolstering research and development. A considerable sum will also go towards priming foreign markets, which are expected to account for 23% of turnover by the end of the plan's period, reveals director Antoni Martínez.

The investment plan is already taking shape. Ecotècnia has started building a tower manufacturing facility in the Zamora province of Castile and León region. The towers form part of a turnkey contract for 133, 750 kW machines clinched with Spanish developer Enerfin for the 100 MW Párramo de Poza development. The project was granted permits earlier this year (Windpower Monthly, October 2001) and marks Ecotècnia's first foray into the region. The facility comes just one year after Ecotècnia inaugurated its second turbine factory in Tudela, Navarra. Furthermore, Ecotècnia's first major facility in Somozas, Galicia, is working full pelt to supply turbines to fulfil a 200 MW business plan for the region developed by partner Energias Ambientales SA (EASA).

In all, last year's production made Ecotècnia the Spanish market's second largest supplier in 2000 -- after Gamesa Eólica -- having installed 214 new turbines totalling 150 MW. In the same year Ecotècnia also ranked as Europe's eighth largest supplier in BTM Consult's World Market Update, an annual survey published by the Danish consultancy. BTM reports that Ecotècnia's world market share was 3.9% for 2000. Indeed, Martínez's turnover projection for this year of ESP 16,700 million compares with just ESP 2000 million in 1997. For a co-operative founded in 1981 with barely any capital backing to speak of, Ecotècnia has come a long way.

The beginning

Eight engineers fresh from university, united by an unwavering belief in the viability of renewables, was the beginning of Ecotècnia. Back then, a progressive vitality was pervading Spanish society at large. General Franco was just six years in his grave and the country's democratic constitution was only three years old. With all eyes set firmly on the future -- and backs turned solidly on its recent past -- Spain was fertile ground for new ideas.

It was not easy, however. "At that time there was practically no market at all for renewable energies in Spain," says Martínez, who joined the crew in 1983. What Ecotècnia lacked in backing it made up for in conviction, much of it based on watching developments in the wind pioneering grounds of Denmark and California. It was enough to convince the founding fathers they were on to a winner, if only they could find the finance. "Right from the start Ecotècnia established a key strategy," explains Martínez: "This was to inform and convince the administration and society at large of the need to support renewables."

Given the prevailing political climate, the strategy managed to win public sector funding. But the private sector took well over a decade to respond and progress was slow. Ecotècnia, together with fellow wind pioneers Made and Abengoa, did not set up Spain's first commercially viable wind power station until 1992, the so-called E3 Tarifa plant. Private sector reluctance lay in the fact that until 1997 there was no guaranteed payback system for renewables. Although the wind power tariff was ESP 10.4/kWh (EUR 0.06/kWh) in 1992 (the same figure paid throughout 2001) legally that could change at the drop of a hat. Furthermore, by 1992 Spain had become Europe's fastest growing economy and there were plenty of other low-risk mainstream businesses wooing investors with the promise of high returns.

A decade to grow

Nevertheless, the initial plodding pace was perhaps a blessing in disguise as it gave the company more than a decade to get to grips with the technological challenges of wind and to establish a sound business foundation prior to Spain's wind boom in the late 1990s. If it had had less time to prepare, the co-operative might well have been trampled out of existence by the fierce competition that ensued among wind turbine suppliers after Spain legally introduced fixed payback for renewables in 1997. As it was, a series of special research and development loans from the public sector -- especially via the state run energy efficiency agency IDAE -- enabled Ecotècnia to design progressively larger capacity machines, starting with a 20 kW prototype which went on-line in 1984.

In its attempt to create a market in Spain, IDAE also stepped in to back practically all the country's wind developments up to the mid-1990s. This was the case with Ecotècnia's first three plant in the mid 1980s which used 32 units of a revamped version of the prototype, now rated at 30 kW. Martínez considers the E3 Tarifa plant -- developed by all three Spanish turbine suppliers then active together with IDAE and utility backing -- as a major turning point for both Ecotècnia and Spain's wind industry. The production results of Ecotècnia's machines not only gave tremendous power to the company's elbow in negotiating research and development loans and investment, but it also drew attention to the now extensively developed Tarifa district as a profitable wind development area.

Moving out of Tarifa

Following E3 Tarifa, Ecotècnia made itself a foothold in some of Spain's most coveted wind regions, especially in Galicia and Navarra, which have absorbed the vast bulk of Ecotècnia turbines. Events in Navarra mark another turning point for Ecotècnia as, for the first time, the company acted solely as supplier without any share in project development. The client, Eólica Navarra -- a joint venture between Enerfin and regional agricultural business Hermanos Oliver -- has so far put up 150 MW of Ecotècnia technology in the region.

In Galicia, Ecotècnia joined up with utility Unión Fenosa and construction giant ACS to form EASA, which was granted exclusive rights to research up to 200 MW. Ecotècnia holds a 10% stake in EASA, which has now installed around 100 MW. Ecotècnia has also made a niche for itself in Catalonia where it has brought 34 MW on-line out of a regional total of 72 MW.

Having cut out its market niches Ecotècnia was well positioned for the wind boom following 1997's two payment systems for renewables, both of which offer a premium payment for wind, one as a straight fixed price tariff and the other in the form of a production incentive payment on top of a theoretical market price. While considering the price mechanisms as vital instruments to wind power and other renewables, Martínez admits that the ensuing boom barely gave Ecotècnia time to catch its breath.

At the same time as concentrating on new technology -- which since 1997 has seen the capacity of Ecotècnia machines rise from 225 kW to 1600 kW -- the company was still busy developing wind plant projects. While flourishing in some regions Ecotècnia found itself crowded out of others, most significantly Aragón, where it has only received permits for 10.5 MW. Similarly, it has found itself lagging in the queue to develop more projects in Castile La Mancha, which expects to bring 2500 MW on-line by 2010. While over 25 strategic business plans from developers have so far been approved for the region, Ecotècnia's own 200 MW plan is still being processed.

With the need to expand its base increasingly apparent, Ecotècnia made a key move in 1999 with its incorporation within Spain's eighth largest business group, Mondragón Corporacion Cooperativa (MCC), which employs 60,000 people and forecasts a turnover this year of EUR 7000 million. Martínez explains that the decision was not just based on the need for a stronger platform to back Ecotècnia's expansion at home and abroad; many other industrial groups could have offered this. The decisive factor was that Mondragón is one of the world's largest groups of co-operative companies. This meant Ecotècnia could maintain absolute autonomy and keep its status as a co-operative.

"MCC's global reach offers an excellent springboard onto the foreign market," says Martinez. Ecotècnia is currently finalising negotiations for a contract to supply 750 MW turbines to EASA's 40 MW Jogo de Bola development in the northern Coimbra region of Portugal. Japan will be next. Earlier this year Ecotècnia exported Spain's first turbine to the Japanese market. "Now our Japanese partner, Hitachi Zosen, is on the point of buying 25, 750 kW machines for developments at an advanced stage."

Meanwhile, Ecotècnia has separated its developing activities from its turbine business with the creation of Vendaval, in which Ecotècnia holds a 40% share while the rest is owned by fellow MCC members. Vendaval has inherited 1000 MW of developing projects, all separate from Ecotècnia's 2001-2004 investment plan. Apart from Spain, Portugal and Japan these also include a series of newer projects in Argentina, Turkey, the United States, Germany and France. "At worse, we expect 750 MW to come off," says Martínez. If his expectations are well founded, Ecotècnia's entry into its 21st year could well mark the company's coming of age as an industrial force.

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