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United States

Emerging secondary market for turbines -- Machines available from developers who went long on purchases

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Despite longstanding anecdotal evidence to the contrary, Everpower Renewables -- a relative newcomer to the American market -- is finding no shortage of wind turbines. The New York-based developer's experience offers a glimpse into a quietly forming secondary market for turbines being sold by developers with excess units.

"I was really sceptical of the whole wind turbine shortage," says Everpower's Jim Spencer, who came over to wind from the gas turbine industry. "There are turbines going unused. If you speak to the manufacturers, yes, there are no turbines available.

"But the fact of the matter remains that there's a significant amount of turbines available through the secondary market. From time to time we're approached by people who have them," says Spencer, who cites Edison Mission and Invenergy as two examples. Edison has more than 1000 MW of turbines on order in a mix of Mitsubishi and Suzlon technology (Windpower Monthly, July 2007), while Invenergy has been building even larger stocks of GE Energy hardware (page 38).

The turbine availability comes from developers that have gone long on turbine purchases, says Spencer. "We don't have the capability or the desire to really go long on turbines. Some companies have chosen to go that route. They've raised substantial equity and chosen to take their position on turbines. But from our perspective the focus has been on acquiring and permitting sites. It's our preference to be long on approved sites and short on turbines."

Less pressure

It is a strategy that suits Everpower, he believes. Being a private company, it is under less pressure to get megawatts in the ground than listed competitors. "We create tremendous value just by expanding our land position and pushing the projects forward from an approval point of view. Our feeling is that if turbines are available within a reasonable window of when our projects will be approved, we'll buy turbines."

Everpower, established as a wind developer in 2002, plans to build the first half of a 125 MW project in Pennsylvania this year, followed next year by the second Pennsylvania phase, a 65 MW project in New York and the first 100 MW phase of a 300 MW project in Ohio.

Nordex not Clipper

Despite the turbine options from the secondary market, Everpower has bought 65 MW of 2.5 MW turbines directly from Nordex, the German turbine maker that announced its re-entry into the US market with a sale to BP late last year, for delivery in the summer. Everpower would like to fill out its entire Pennsylvania project, in Cambria County, with the same Nordex 2.5 MW machines. "We were in discussions with Clipper," Spencer says. "But we felt that Nordex had strong incentive to begin developing relationships in the US and they worked with us. They were very responsive and we were able to come to commercial terms with them."

Everpower is just now beginning to build out its first wind sites. The company is in the market for turbines to fill out its New York project in Steuben County and its Ohio project, near Columbus in Champaign County. Spencer says his company is keenly interested in the low speed version of the Nordex 2.5 MW, but that machine will not be introduced into the US until 2010, so he looking at other options. He notes that in the space-constrained Northeast, turbines upwards of 2 MW are the logical choice.

Spencer believes that foreign manufacturers will eventually need to build turbines in the US in order to be competitive. Nordex, for one, is currently scouting locations. Companies have to move the supply side here and get beyond the European-based manufacturing scenario, says Spencer. "I think Nordex has recognised that and some of the other manufacturers haven't recognised that."

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