Danish industry on the move -- Gone with the wind

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Denmark's disappearing home market is forcing the wind industry to set up production facilities abroad, primarily in thriving markets. In some instances, component suppliers have been asked by wind turbine manufacturers to follow them overseas, while others have moved abroad under their own initiative -- one group of Danish suppliers got together to offer its services directly to the wind turbine industry in Spain.

An exception to the export trend is the wind division of Siemens Power Generation. Since Siemens' acquisition of Bonus just over a year ago, the division has not only continued to produce turbines in Denmark for the global market, but in 2005 expanded both its Danish workforce and doubled production facilities. Another 700 staff have been taken on in Denmark, bringing global employment at Siemens Wind Power to 1800, while EUR 50 million has gone into expanding manufacturing facilities.

"Expansion of our capacities in Denmark is the first step in building up a worldwide manufacturing network," says Andreas Nauen, head of the division. Wind business turnover increased to EUR 375 million in the first 11 months of Siemens' ownership, from EUR 245 million in Bonus' last fiscal year. Costs of EUR 41.5 million associated with the acquisition, however, reduced the EUR 23 million profit achieved by Bonus to a EUR 21 million deficit under Siemens.

Blade expansion

Still in Denmark, Siemens has also taken over one of LM Glasfiber's abandoned blade facilities. As well as increasing its blade manufacturing capacity, Siemens aim is "to access the glassfibre manufacturing know-how and expertise available at this location," says Nauen. Other international wind companies with bases in Jutland exploiting Danish expertise are Indian turbine manufacturer Suzlon, a division of Spanish turbine manufacturer Gamesa, and global wind consultancy Garrad Hassan. Industry leader Vestas is also based in Jutland.

While the entire Danish market is now reduced to 100 MW of new turbines a year, just one of the Danish companies now involved in international wind project development expects to be ordering that volume. Global Wind Power develops projects in Germany and sells them to mainly Danish investors, many of whom are or were wind turbine owners at home.

Orders lined up

Global Wind Power's Henrik Armby says the company doubled the 31 MW it installed in Germany in 2004 to 65 MW last year. This year it has contracts for 102 MW and an option to raise another 40 MW if Vestas can deliver the turbines. It has already secured Vestas turbines for this year. Turnover in 2006 is forecast at over DKK 1 billion (EUR 134 million). He has also received inquiries from Sweden, Germany and Belgium as well as from British investment companies. German customers are no longer waiting until the end of the year to invest in turbines with the purpose of triggering tax relief -- they are placing orders now, he says.

Competing with Global Wind Power, Global Green Energy also expects orders for 100 MW this year, says director Jens Peter Andersen, the same volume as in 2005. It installed turbines last year in Estonia, where it built an 18.4 MW project of Nordex machines for Norwegian investor Vardar, and in German projects it sold to Danish investors. Global Green Energy expects to add projects in Italy, France and Sweden to its development portfolio, says Andersen and has sold a further 50 MW under development in Estonia for Vardar.

Among the project developers is a small, but nonetheless publicly listed company traded on the Copenhagen stock exchange. Greentech Energy Systems develops projects in Italy and Poland. But instead of selling projects on completion it will retain ownership and management of them. Greentech believes rising electricity prices in the coming years will make it a lucrative business model.

Behind the company is Ejvind Sandal, a former chairman of Vestas' board and now chairman of Greentech. Other Greentech board members are former Vestas' managing director Johannes Poulsen, Nordex director and Nordex co-founder Carsten Pedersen, and Jørgen Poulsen of World Wide Wind, a renewables project developer with wind business in Spain and other European countries. Also behind Greentech are a series of successful Danish businessmen, among them Erik Damgaard, who sold Navision to Microsoft and Finn Helmer who sold Giga to Intel.

Forecast profit

Massive investment in wind projects from which revenues have yet to flow means Greentech has run at a loss for several years. According to Jørgen Poulsen, however, a profit is forecast for next year. To keep the company going until then, Damgaard has recently put in DKK 200 million (EUR 26.7 million). Greentech hopes the loan will be refinanced by the Royal Bank of Scotland. Pension foundations and other institutional investors have also invested DKK 90 million (EUR 12 million) in Greentech shares in a targeted emission. Greentech's market capitalisation is DKK 1.1 billion (EUR 147.65 million). It will not ask the market for more capital until it is running in profit.

So far the company operates and owns 19 wind turbines with a value of DKK 125 million (EUR 16.7 million) in Denmark. But Denmark is not among the European countries targeted for future business, says Poulsen. This year it will complete 21 MW in Italy using Nordex turbines.

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