Spanish giant moves into North America -- Gamesa joins with Navitas and plans US production line

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Spanish wind giant Gamesa has announced a deal with Minnesota wind project company Navitas Energy to jointly develop 1000 MW of wind power on sites already selected. The agreement envisages Gamesa controlling 75% of the joint venture. The Spanish group also says that its turbine manufacturing wing, Gamesa Eólica, expects to put up a production facility in north central US by the end of 2003.

"There is a strategic fit between the two companies," says Navitas boss Greg Jaunich. "Together we have the potential to grow Navitas-Gamesa into the largest developer in the US." In terms of size, he says Navitas wants to be on a par with PacifiCorp Power Marketing or FPL Energy, two of America's most active wind stations developers. He says the first 1000 MW will be built over the next couple of years and he hopes that will be by the end of 2003.

"We're in the US market anyway, but not in a big way. This changes our abilities." Previously, Navitas took a project through development and then had to look for financing and turbines. "Now we are vertically integrated. This takes the financing element out of the equation." Jaunich predicts the integrated structure will bring costs down and make Navitas more competitive.

Shortened timescale

The deal has come out of the blue for most industry insiders and is a sign of boosted wind power activity in the US following this year's extension of wind's production tax credit (PTC) up to 2003. Less than two months ago Gamesa CEO, Iñaki Gandasegui, was talking about putting up a facility in the US "within the next three or four years." With last month's announcement, the group's minimum time scales have suddenly been more than halved.

Gamesa Eólica now expects the US factory to be its first production facility outside Spain. If so, it will also mark the first solid step in Gamesa's bid for world turbine market domination since its split with technological partner Vestas of Denmark in November 2001 (Windpower Monthly, December 2001). With Gamesa Eólica exports long since limited to 17 MW in France and 7.2 MW in China, the US could also become the stage of the first commercial showdown with its former partner. And with Gamesa claiming a turbine order portfolio in excess of 3500 MW -- far from all of which can be for the home market -- somewhere has to be first, and soon.

Jaunich says Navitas is helping Gamesa find a site for its turbine factory, and favours Minnesota. For its part, Gamesa, too, considers Minnesota to be the obvious choice, not only because it is Navitas' home base, but also because of the location of sites earmarked for development. These are in an 11-state area, says Jaunich, mostly in the Midwest, but also west to Montana and Wyoming, and south to Texas.

Last year Gamesa Eólica sold 1041 wind turbines totalling 735 MW, giving it fifth position in world turbine sales, according to BTM Consult, a consultancy firm in Denmark, in its most recent market report. Despite a 3% growth in sales in 2001, this represented a drop from second place in 2000. The company has two years left before its rights to use Vestas technology expire and it is now pinning its long term future on developing its own machines. The medium term is covered by a transfer agreement with Germany's REpower for its MD 1500 kW turbine. According to Jaunich, Gamesa offers turbines ranging from 600 kW to 2 MW in size and these are the machines that will be used -- and potentially made -- in the United States.

The Spanish group is evidently pleased with its US partner, describing Navitas as "a team recognised for its broad knowledge and experience in wind power development in the United States." Over the past ten years Navitas and Northern Alternative Energy (from which Navitas evolved) have developed or secured contracts for 101 MW of wind power and Navitas has a further 500-600 MW in various stages of development.

Gamesa is now confident of rapid action and says it will export machines from Spain if project licenses come before its US production line is ready. The group cites what it sees as a likely PTC extension up to 2006 as another major confidence booster. Gamesa is also excited by Vice President Dick Cheney's indications that wind could make up for 6% of the mix by 2020 -- enough to meet the needs of 25 million households according to the American Wind Energy Association.

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