Turbine maker goes nuclear -- Atomic lifeline grabbed

German wind turbine manufacturer Repower, currently pinning hopes for survival on a restructuring program, has a new shareholder -- French nuclear giant Areva. The news of the 21% share capital acquisition, for an undisclosed sum, saw Repower's share price rise by more than 10%.

"Areva brings us not only financial strength to finance large scale projects but also offers us access to international markets," says Repower's Fritz Vahrenholt. Areva appears equally convinced of the merits of marrying nuclear and wind, which "complement each other in a balanced energy mix," it says. One supplies competitive energy as a basic product and the other additional energy depending on climate conditions, according to Areva.

Second largest

Areva becomes the second largest shareholder in Repower behind Portuguese steel and metal construction company Martifer Construcoes Metalomecanicas, which holds a 29.7% stake. How long Martifer keeps its stake is unclear. Together with Repower Portugal it is bidding for contracts under a 1500 MW call for tenders issued by the Portuguese government. The tenders are due by January 30, 2006.

Government-owned Areva has already dabbled in wind power through its Jeumont subsidiary, which at one time made and marketed a direct drive 750 kW machine. Jeumont dropped the wind turbine in favour of building and developing turbines of 2 MW and above with a foreign partner (Windpower Monthly, March 2005). The Repower acquisition allows it to follow this strategy, says Areva, reinforcing its strategic position in carbon dioxide free generation.

Sales and industrial synergies are also available to Repower in Areva's expertise in transmission and distribution, it says, noting they represent a considerable share of wind energy investment and can amount to almost 25% of offshore project costs.

Restructuring program

Repower's delight at the lifeline offered by Areva is explained in the company's tumultuous progress of the past year or so. In 2004, it posted a loss of EUR 9.3 million on revenues of EUR 301 million and losses were running at EUR 8.5 million in the first half of 2005, even though turnover was up to EUR 121.5 million compared with EUR 65.7 million for the first six months of 2004. The restructuring program includes cuts in wages and increases in working hours for its 558 employees. "We expect to achieve at least a positive break-even in 2006," says the company's Daniela Puttenat.

Repower clearly has few qualms about getting into bed with the nuclear industry. It has close ties with Germany's Brunsbüttel nuclear power station, where Repower's prototype 5 MW turbine is sited, and contributes material to the station's information centre.

Greenpeace, however, calls the Brunsbüttel plant the most problematic atomic reactor in Germany. Since commissioning in 1976 the reactor has suffered shutdowns totalling six-and-a-half years, including an explosion in 2001. If the explosion had destroyed pipeline just three to four metres closer to the reactor, loss of reactor coolant would have occurred, says Greenpeace.

Repower chairman Fritz Vahrenholt, an influential former politician, does not support Germany's law to phase out nuclear power plant and argues for it to be overturned. He says nuclear power stations should be allowed longer life spans to take the pressure from the need to rapidly develop renewable energy technology. In return, he says, the cost of transmission cables for Germany's offshore wind power program should be borne by the whole country and not just the wind sector.

In buying into Repower, Areva acquired the entire 13.2% share of the company held by board chairman Klaus-Detlef Wulf and 7.9% of shares in a free-float. In 2004 Areva reported sales of EUR 11.1 billion and an operating profit of more than EUR 613 million. Its total assets are worth more than EUR 24 billion and it has approximately 70,000 employees in more than 100 countries.

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