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United States: Offshore potential - GE Energy takes interest in ScanWind

American turbine giant GE Energy has bought Norwegian offshore wind turbine manufacturer Scanwind for EUR15 million, leading to speculation that GE is plotting re-entry into the offshore wind market and may do so with a departure from its current wind turbine technology.

GE acquired 81.55% of the Scanwind shares from Morphic Technologies and 18.45% from Nord-Trondelag Elektrisitetsverk Holding (NTE). The sale is expected to be complete by this month. Scanwind is little known outside Norway, where it has installed two 3 MW units and 13, 3.5 MW units, all of them onshore at NTE's Hundhammerfjellet wind plant in Norway and all using Scanwind's direct-drive technology.

The turbine design does away with a gearbox, a component in traditional turbines that can be troublesome in relation to longevity and maintenance. The trade-off is typically a higher per-unit cost and larger components. However, the higher costs and larger components may be outweighed by lower maintenance costs. Servicing costs can be high for offshore facilities.

"Direct-drive has a lot of potential and there are companies like Enercon that are doing it well," says Chris Elkinton, who specialises in offshore wind for industry consultancy Garrad Hassan. "It eliminates one of the major sources of downtime, which is the gearbox - that's definitely a plus."

GE has been absent from offshore wind since 2003, when it built the 25 MW Arklow Bank farm in the Irish Sea using seven GE 3.6 MW turbines.

Since then the company chose to focus on its onshore markets, including development of a new 2.5 MW onshore turbine for Europe and cementing the continuing success of its 1.5 MW turbine for the American onshore market, where it currently holds around 43% market share.

Elkinton says: "That's hard to beat, but globally, they are probably looking to get back into the offshore market because the offshore market is really doing quite well in Europe." Germany and the United Kingdom are the most promising markets, he adds.

Looking out to sea

Victor Abate, vice president of renewable energy at GE, says the company is looking out to sea again. "This acquisition will give GE the ability to provide a direct-drive, offshore wind turbine offering as an option to our customers," he says. "Scanwind represents the next strategic fit for our wind turbine line and we look forward to further developing their proven technology."

Further development is the key term, says Elkinton, adding: "I don't know what GE intends to do with Scanwind. I don't think it's fair to say GE has bought a ready made, off-the-shelf option for offshore, but they might like enough of what they see and like the direct-drive. But exactly what they're looking for is up in the air."

Scanwind is a small company with around 45 employees and the turbines have not yet been tested offshore. The acquisition does not include Scanwind's operating wind turbines, according to Danish renewables consultancy Make. The consultancy says that the buyout is both technology and market-driven. Make echoes that direct-drive is costlier but more reliable and adds that GE is following in the footsteps of another top turbine manufacturer.

"GE follows Siemens in pursuing a potential technology shift from conventional drive train towards direct-drive," says Make. Siemens has been field-testing two direct-drive units that it designed in-house and called direct-drive in general a "potential game changer" (Windpower Monthly, September 2008).

Make adds: "With the acquisition of Scanwind, GE is expected to re-enter the offshore market and will most likely start marketing wind turbine generators for the European offshore market by the end of 2010."

GE may also have found a good value in its entry into direct-drive, even if it takes years to commercialise. The EUR15 million that GE paid for all the shares of Scanwind is around half of what the shares were valued at a year ago when Morphic Technologies bought its 80% stake in Scanwind for EUR23.5.

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