An extraordinary overseas adventure

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Vergnet's almost exclusive focus on providing wind turbines for far flung areas of the developing world has given the French wind turbine maker a niche market with very few competitors. The satisfaction of truly making a difference in local communities, however, is not yet matched by equally rewarding economic results

"My beautiful baby," said a proud Marc Vergnet, founder of the eponymous French turbine manufacturer, as he presented his new 1 MW machine at France's annual renewable energy conference last year. He was on stage to receive the latest in a long line of trophies, this time from foreign trade minister Anne-Marie Idrac on behalf of the French Renewable Energy Syndicate (SER), a lobby group. As trade minister, she was an appropriate choice. Vergnet recently won a turnkey engineer, procure and construct (EPC) contract to build a 120 MW wind power plant in Ethiopia. Not only will it be sub-Saharan Africa's biggest wind farm to date, but it is also the largest contract ever signed between France and Ethiopia -- and the largest ever inked by Vergnet (Windpower Monthly, January 2009).

The contract also represents a strong endorsement of Vergnet's business strategy. Though based in France, the company is focused on the largely untapped overseas market it calls "farwind" -- countries with a good wind resource and a real energy need but little or no infrastructure and often difficult terrain. In other words, places not suited to conventional wind turbines.

According to Vergnet, the farwind market encompasses 134 countries and 1.5 billion people, whose electricity consumption is rising rapidly. The demand for wind power in these countries requires at least 3 GW, Vergnet estimates, while the wind power potential in Africa alone could be as much as 23 GW. Better still, it is a market in which Vergnet has few other competitors, for the time being at least.

Marc Vergnet started out as an agronomist and water engineer, two skills which he hoped would take him back to the country of his birth, Algeria. Instead, in the early 1970s he ended up on the other side of the Sahara in West Africa's Burkina Faso. The region was in the midst of a prolonged drought. In response, Vergnet invented a new type of water pump that could be manufactured locally and was easy to use and maintain. Today we would call it sustainable development. It was the start of what he describes as "an extraordinary adventure."

Having discovered his inventive streak, Vergnet started looking at wind power as the next most mature renewables technology after hydro. But in the late 1970s nuclear power generation was on the rise in France and to talk of wind energy was heresy. So once again, Vergnet decided his future was overseas.

As with the water pump, his motivation was as much ethical as economic. Vergnet wanted to provide secure, relatively cheap electricity where it was needed most, helping to reduce energy dependency in developing countries that rely on imported fossil fuel for electricity generation. Not only are developing countries particularly vulnerable to rising oil prices, but the fuel also has to be paid for using scarce foreign exchange reserves. In such circumstances, "one kilowatt hour [of wind power] is worth relatively far more than it is in a developed economy," Vergnet explains. Wind power "provides a real motor for economic growth."

Vergnet's first market was in French overseas territories such as Guadeloupe in the Caribbean, New Caledonia in the South Pacific and Réunion in the Indian Ocean, all of which benefit from strong ocean winds. The problem is that they are also prone to cyclones. So Vergnet set about designing a turbine capable of withstanding hurricane-force winds as well as high humidity and salinity and are capable of supporting weak and unreliable grids. The machine had to be easy to transport and erect, even in mountainous terrain with a rudimentary road network and no large cranes available, and be simple to maintain.

All terrain turbine

The first step toward this goal was the taking over of fellow pioneering French turbine manufacturer Aérowatt, which previously focused on 2 kW to 25 kW rated machines. Vergnet adapted the Aérowatt turbine to create his robust and cyclone-friendly GEV, which first saw the light of day in 1982 as a 10 kW unit erected at a test site at Château Lastours in the Aude département of southern France. The rated power increased to 60 kW in 1997 and 275 kW in 2000, which is the model available today (the GEV MP), but the basic design remains the same.

The GEV MP is a light, two-blade turbine with a teetering hub, hydraulic pitch control and a guyed mast. When a cyclone threatens it can be lowered to the ground by means of an integrated hydraulic winch -- the process takes two men less than an hour. The mechanism has been put to the test on numerous occasions, most dramatically in September 2008, when hurricanes Gustave and Ike lashed Cuba with winds up to 350 kilometres an hour, or 97 m/s. Vergnet's six 275 kW turbines on Isla de la Juventud were all safely battened down and came through unscathed. The winch also means no crane is needed to erect the turbine. It is assembled on the ground and then pulled upright. Likewise, it can be lowered to the ground for maintenance, which also reduces costs. The guyed mast means the GEV MP is exceptionally light and the foundations require only 15 cubic metres of concrete, 80% less than a conventional machine of equivalent power. At only 20 tonnes for a height of 55 metres, Vergnet says the turbine gives unequalled performance for its weight.

Everything has been done to make the GEV MP as reliable and robust as possible. The tower and all exposed parts are protected against dust, humidity and salinity. The generator will work in temperatures from minus 10¼C to plus 50¼C and will withstand up to 365 power outages a year, far in excess of normal requirements, but not unusual in farwind countries. It is also eminently adaptable (see box). "We've developed a lot of tricks and techniques over the years," Vergnet says. Customers have not been in short supply. The company has installed 339 GEV MPs and derivatives commercially worldwide since 2000. The overall availability rate is 97%.


Meantime, the Aérowatt name was reborn as Vergnet's development arm, focusing on the French overseas territories. This arrangement continued to 2002, when Aérowatt once again became an independent company, this time as a developer, although still one of Vergnet's "first-class" customers. Vergnet now no longer develops projects on its own account, but can support local developers by providing services such as wind assessment, grid connection and helping to secure finance. The company also takes on EPC contracts when required, such as for the recent Ethiopia contract.

At the same time as Vergnet's workhorse GEV MP has evolved over the years, so too has the market and the company's ambitions. Clients were asking for machines with higher rated capacities to create wind plant of 10-50 MW. Vergnet soon realised the market for his turbines was much broader than the cyclone zones they were designed for. They are also suited to anywhere dependent on imported oil for electricity generation and where conventional turbines can not be installed for reasons of geography, logistics or an insufficient grid network.

The trick was how to adapt the basic design of the GEV MP for a taller, heavier and more complex machine. Development of the GEV HP 1 MW turbine started in the early part of this decade, financed in part with a small grant from the French national energy agency, ADEME, and an advance against sales from OSEO-Anvar, which helps fund innovative research in France. In 2006, the company started ramping up in earnest by strengthening its management team and preparing to go public.

The listing on Paris's Alternext exchange, which took place in May 2007, was more than 22 times over-subscribed and raised a healthy EUR 33.95 million. It gave Vergnet the capital to push ahead with the new machine, build a large assembly plant at Ormes, near Orléans in the Eure-et-Loir département, and recruit more staff.

The first GEV HP went up at Greneville, near Ormes, in July 2008. While some features, such as the two-blade rotor, guyed mast, light structure and minimal foundations, are retained from the smaller machine, the most innovative aspect of the GEV HP is the way it is erected. Again, Vergnet wanted a turbine that would be easy to transport and install. So the company, in association with Belgian crane specialist Sarens, came up with a specially designed tower and winch configuration that allows it to be erected using cranes smaller than 90 tonnes. Again, the nacelle can be lowered to the ground, taking two people three hours, in cyclone regions and for easy maintenance. The whole lot -- apart from the blades -- can be transported in 16-17 standard containers. And, as with its little sister, the GEV HP can be hooked up to any grid in the world, however unreliable.

Growing business

Vergnet assembles all its nacelles at its new facility at Ormes. Most of the components are widely available and well-tested industrial standards. Its main suppliers include ABB for generators, Siemens for gearboxes and control systems, Stromag for brakes and Rollix for bearings. The glass fibre blades, however, are made by Vergnet's Aéro Composite Occitane (ACO) subsidiary at the Mediterranean town of Béziers. Using vacuum infusion, the factory rolls out up to 100 blades a year. Vergnet hopes to add an extra mould this year, however, which would give a maximum output of 100 GEV HP and 100 GEV MP turbines a year in 2010.

The first commercial GEV HP turbine will be installed this year in Guadeloupe. Vergnet will also deliver ten machines to New Caledonia in 2009 and the first 30 units to Ethiopia, followed by 45 units in each of 2010 and 2011. Other contracts Vergnet has submitted bids for include 28 MW in the Cape Verde islands, off West Africa, and 10 MW at Tindouf in Algeria.

One hazard of being in such a niche market is that Vergnet is often the only company bidding in tender calls, which for this reason are sometimes cancelled. But the big manufacturers are already hard pressed supplying the mainstream market and Vergnet thinks it is unlikely they will be looking at its more specialist sector any time soon. On the other hand, Vergnet may start selling its 275 kW turbines in Europe this year. The firm is keeping a keen eye on events in Italy, where the government has introduced a mandated purchase price of EUR 0.30/kWh for machines under 200 kW (page 30).

Facing a growing market, Vergnet has been building its workforce. The company took on more than 60 staff over the past 18 months and is looking for more. The payroll now numbers around 250 people worldwide. Part of Vergnet's philosophy -- and its attraction to governments of developing countries -- is the emphasis it places on training local teams to service and maintain the turbines. Vergnet establishes a subsidiary in each country, although it still monitors every machine around the clock from its Ormes headquarters. Its "V-SCADA" system (supervisory control and data acquisition) is specially designed to work via ordinary phone lines in the most isolated locations.

Tight financials

Given the investment in the new turbine and new facilities, Vergnet made a net loss of EUR 2 million this year to June 30, 2008, an increase on the loss of EUR 0.4 million over the same period in 2007. At the same time, the operating loss was EUR 3.3 million on revenues of EUR 7.8 million in the first half of 2008; in 2007 the loss amounted to EUR 0.6 million on revenues of EUR 12.5 million.

For the whole of 2007, however, net earnings reached EUR 0.4 million on revenues of EUR 33.4 million. The wind division contributed 72% of revenues, at EUR 23.9 million. Final results for 2008 are pending, but in October, Vergnet revised its 2008 revenue forecasts down from EUR 40-42 million to EUR 28-30 million, with anticipated losses of EUR 5-6 million rather than the EUR 3.5-4.5 million previously cited. This is because ten GEV HP turbines that were to be delivered at the end of 2008 have been re-allocated to meet the first delivery date for the Ethiopian order early this year. Vergnet says the ten turbines will instead be supplied in the second half of 2009 and therefore boost this year's revenues instead.

Further bad news for the balance sheet came in December, when Vergnet announced that 20 GEV MPs would not be delivered to Nigeria as expected in 2008 because contract negotiations had been hit by the financial crisis and were taking longer. Vergnet estimates the impact on turnover for the year will be EUR 8.5 million and EUR 2 million on operating income. Nevertheless, the company remains optimistic that it will be able to close the deal quickly and book the income in 2009.

Vergnet also expects its solar-photovoltaic subsidiary, Photalia, founded in 2007, to start contributing revenues this year. As for its core wind energy arm, the company does not expect to develop turbines bigger than 1 MW. "Farwind countries are not short of space and there is no advantage in going any bigger," says Vergnet. But he still has dreams. One that he believes is close to fruition is to use Vergnet turbines to produce both electricity and desalinated drinking water. A dream perfectly in keeping with his original aim of providing water and energy where it is most needed.

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