Spain

Spain

Determined focus on becoming number one -- Gamesa strengthens vertical integration for globalisation

Gamesa of Spain is forging ahead with its international expansion strategy. Last month it confirmed that Gamesa Eólica, its manufacturing division, has secured new deals across four countries totalling 153 MW, while 122 MW was commissioned by developer Gamesa Energía in projects in Portugal and Italy.

Gamesa of Spain, one of the few to successfully combine wind turbine manufacturing with project development and the darling of wind investors on the stock markets, is forging ahead with its international expansion strategy. Last month it confirmed that Gamesa Eólica, its manufacturing division, has secured new deals across four countries totalling 153 MW, while 122 MW was commissioned by developer Gamesa Energía in projects in Portugal and Italy.

The new sales deals, for 60 MW each in Morocco and Portugal, 29 MW in China, and 14 MW in Germany, bring the company's export agreements announced this year up to at least 561 MW -- 100 MW shy of its 660 MW export target for the whole of 2005.

With exports seen as key in its bid to leap from second to first place in world turbine sales, the news pumped up Gamesa's share price, which had suffered a noticeable dip following the exit of its second largest shareholder, Nefinsa, after it sold its 21% stake in the company two months ago.

Gamesa's Alex Otaegui says the company expects to reach its export target, noting it has already secured sales contracts totalling 850 MW over 2005, although he declines to confirm exactly how much of this is for abroad. Gamesa Energía says it has orders for more than 5173 MW at an "advanced" stage of development spread across 15 countries. The extent and speed at which they are realised will determine if Gamesa is successful in its aim to knock Vestas into second place.

Centralisation

Gamesa is busy divesting non-wind related activities, including thermal and nuclear plant servicing, while retaining wind O&M. To aid the "internationalisation of sales" of Gamesa Eólica, the company is creating an international logistics centre to centralise the management and control of "all materials and components for nacelle assembly." The EUR 10 million Centro Logístico Internacional de Gestión de Materiales is to be "strategically" located in the region of Navarra on the border with France so it can "attend to Gamesa Eólica's needs on a global scale."

In fact, the new facility will sit next to one of several Gamesa Eólica blade factories in Spain -- a production plant acquired from the failed Spanish venture of one-time German blade maker NOI to produce carbon-fibre reinforced blades for 2 MW machines at a rate of 261 units a year, enough for 174 MW. The logistics centre is expected to come into operation before the end of 2006, when it will employ 36 people.

In its first year of operation, the centre will handle EUR 450 million of goods and run a fleet of 100 trucks, says Gamesa. It will also assemble groups of nacelle components, for subsequent export and full assembly in Gamesa facilities abroad including in China and Pennsylvania in the US, a key market for the company. Gamesa Energía already has agreements sell power from 600 MW of wind plant to Pennsylvanian electricity companies alone and is in the process of building a blade factory in the state, to go into production early in 2006.

In Portugal

Gamesa Eólica's EUR 46 million deal for 30, 2 MW machines with Lisbon developer Tecneira will bring the company's online total in Portugal to over 160 MW, up from zero capacity 18 months ago. The order comes on the heels of the commissioning of the 80 MW Terras Altas do Fafe wind farm -- Portugal's biggest wind plant to date -- developed by Gamesa Energía using Gamesa Eólica 2 MW machines.

Gamesa Energía says it has a further 240 MW of projects in the country scheduled to go online by 2007. With the Portuguese government calling for 1700 MW of new wind capacity, Spanish utility Iberdrola, also Gamesa's biggest single shareholder and a developing partner in Portugal, says it will apply to build a factory in the country. Few doubt that Gamesa Eólica will be its chosen technology partner.

The deal in Morocco is the company's first in Africa. The EUR 63 million contract, the winning bid in an international call for tenders issued by the country's central government, is for the supply and installation of 71, 850 kW turbines and includes operation and maintenance. Morocco is "a country with strong energy potential which, in the next few years, expects a five-times increase its installed wind capacity," says Gamesa.

And China

Meanwhile, the company's latest Chinese contract is for 34, 850 kW turbines for two projects, both being developed by Liaoning Jinshan Wind Power, for the north-eastern province of Liaoning. Combined Gamesa turbine sales in China this year now reach 225 MW. Gamesa was China's top turbine supplier in 2004, delivering 71 MW and sees the country as a market with "huge potential" thanks to the introduction of the national renewable energy law in February 2005 and its 20 GW by 2010 wind target. Gamesa still has no industrial facility agreement in the country, unlike its key foreign competitors Vestas and Nordex of Germany, or even its smaller Spanish competitor Ingetur, owned by EHN Acciona.

In Germany, the 13.9 MW announced is across five deals, the largest of which is for nine 850 kW machines for the Straguth project in Magdeburg being developed by WPD GmbH & CO KG. The rest goes to developers Zopf Umweltgerechte Energieprojekte and EMA Energie Management Agentur.

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