A sign of the times
Danish wind turbine manufacturer Vestas reported a 19% surge in revenue in the second quarter to one billion euros. It shipped 629 turbines in the quarter with a combined output of about 1000MW. It has a backlog of orders for about 4500 MW. Imagine if we had invested in a wind industry 20 years ago.
An interesting aspect is that despite all the expansion they are closing their Australian factory making turbine blades because it is too small and because demand in Australia is insufficient. It seems Howard’s longstanding hostility to renewable energy has undermined Australia’s chance to be part of the global expansion in wind technology.
Another interesting angle is that they are warning about the costs of warranties being exercised. From what I’ve heard this is certainly the case in Manawatu with a number of the turbines having their gearboxes replaced because the wind is pretty strong up that way and causing trouble for the Vestas.
August 24th, 2007 at 11:31 am
We are investing in wind turbines in NZ, with Windflow Technology being listed on the NZX. The turbines made by windflow, after an extended trial at Gebbies pass, are being commercially deployed by NZ windfarms’ new development at Te Rere Hau. The medium sized 2 bladed turbines, unlike those made by companies such as Vestas, do not require connection to a grid to provide frequency support to the highly variable power output of conventional turbines, because of a revolutionary gearbox. In the event of the success of the development at Te Rere Hau, there are exciting prospects for the technology. King Country Energy is one company looking to add to a portfolio of small scale diversified renewable generation assets.
August 24th, 2007 at 1:51 pm
If they are having regular gearbox problems then how reliable is wind power?
August 24th, 2007 at 2:13 pm
Pretty reliable as long as it is in the form of wind. Which probably wasn’t your real question
The parliament is in session bit is too old to even bother with.
Using some twee danske gearbox in our winds is asking for trouble. The Windflow (Kiwi design) isn’t a rock-crusher, it is smart enough to let go a little when the wind pumps past the generator’s limits.
The Vesta doesn’t try to be smarter it tries to be stronger, and in the mechanical realm in which it is operating it is at a disadvantage. Fatigue and gear loading both get out of its reliable operating range too easily in winds that can regularly gust past hurricane force. They could put smaller wheels on the beasts but then they’d not get full power in lighter winds.
Smarter is better here.
respectfully
BJ
August 24th, 2007 at 11:13 pm
This is what Vestas’ had to say about the warranty problem:
“Other than the above, the most important risk factors include additional warranty provisions due to sub-standard quality, increasing raw materials prices and transport costs, disruptions in production and in relation to wind turbine installation and movements in the USD/EUR exchange rate.
Vestas continues to make warranty provisions of 3-5 per cent of revenue, a total of approx EUR 200m in 2007. In Q2 2007, warranty provisions amounted to 5 per cent, or EUR 54m. Vestas charges all costs associated with turbine repairs to the profit and loss account, and any possible reimbursement from subcontractors is not offset. Warranty provisions cover possible costs for remedy and other costs in accordance with specific agreements. The warranty provisions are based on estimates, and therefore actual warranty costs may deviate substantially from such estimates as many solutions are dependent on supplies of components from an industry which is already under pressure. As components are often a scarce resource, it might be necessary to use components which otherwise would have been used in new turbines for warranty work. In these cases, the repair works’ effect on EBIT will exceed the actual costs.”
http://www.vestas.com/NR/rdonlyres/145F6A6B-F409-4263-81C3-AC8F1BDE203 6/0/2007_Q2_UK.pdf
August 27th, 2007 at 12:37 pm
Enercon make turbines up to 5 MW: does anyone know of any proposals for offshore turbines in NZ’s waters?
August 27th, 2007 at 8:56 pm
It seems to me then, that Windflow’s long-term prospects should be pretty good, given that they are “geared” to local conditions… the problem being that the rapid ramp-up of NZ wind generation is tending to saturate the market with well proven yet inappropriate models like the Vestas, rather than revolutionary and relatively new technology. Kiwi ingenuity, meed Kiwi capitalism!
There must be considerable scope for Windflow internationally, but they will need a bigger domestic installed base in order to reach out to it. A scaling up of the Oz market might do the trick…
August 28th, 2007 at 1:12 am
I wonder why the government bought Whisper Tech last year but has been avoiding Windflow like it has the plague.
http://www.whispergen.com/content/library/DC_Genovator_Sept_06.pdf
August 28th, 2007 at 11:04 am
Alistair
There is a philosophical difference between the major powercos and Windflow in terms of the best option for turbines. Windflow believes smaller turbines in small groupings are the way to go, whereas say Meridian believe large MW capacity turbines in large arrays are the most financially viable. Wind can;t compete economically at present anyway.
August 28th, 2007 at 4:59 pm
Um, I think we do have to accept that there are problems with wind power, e.g. this photoset of things going wrong with wind turbines:
http://www.spiegel.de/fotostrecke/0,5538,24219,00.html
However, this is only anecdotal evidence. Things go wrong with thermal power stations, and owners of thermal power stations may need to wait ages for replacement parts as well. The question is has anyone done a scientific study comparing the problems of wind turbines vs the problems of thermal power stations - which one is most likely to fail?
August 28th, 2007 at 9:53 pm
Kevyn, the government isn’t the benchmark for investor confidence in NZ. Windflow (WTL:NZAX) have performed well on the sharemarket, which is generally the best indication of smart money. Just because some government tentacle invested in a vastly different technology doesn’t mean that one who didn’t receive investment is “being avoided like the plague.”
Insider, not so much an ideological difference, but rather that windflow is going for a bit of a niche: 500kw is small compared to an Enercon, Siemens or Vestas 4.5MW, but in the NZ energy context is a relatively large unit size. Windflow’s turbines are not just designed for large wind farms with lots of turbines, but because of the stable current frequency are suitable for remote deployment where grid frequency support is not necessary- the cost of a larger turbine would be prohibitive for such applications.
Stuey, you do answer your own rather silly question, but of course turbines can be damaged if they are installed in a situation which doesn’t suit their design, or if the quality of the turbine is not very high, but such is the case for any piece of machinery. Everything needs to be well considered and checked out, but thats the case for anything.
August 29th, 2007 at 1:31 am
Ahuahu,
“some government tentacle” is Meridian. I knew that Meridian had puchased Orion’s shares in Whisper Tech (which sells a highly efficient distributed generation technology). I was curious why Meridian hadn’t also purchased Orion’s shares in Windflow since that is also a highly efficient distributed generation technology. Your response to insider provides most of the answer. At least as far as Meridian is concerned.
August 29th, 2007 at 9:11 am
Kevyn,
maybe Orion doesn’t want to sell their windflow stake, and Meridian doesn’t want it enough at this point to pursue it, or buy some shares in a higly illiquid stock on the NZAX. I don’t see many synergies for Meridian by purchasing a windflow stake. Also if they did like the business for it to be useful they would want to buy the whole company, and that would require a full public takeover, which wouldn’t be likely to proceed unless at a high price because of loyal cornerstone shareholders. This process differs vastly from a clever startup like Whisper Tech: As I understand it Whisper Tech is not distributed generation, but from the link you provided it seems to be developing some sort of clever ultra efficient heat exchanger.
August 29th, 2007 at 9:12 am
Meant to say: “this process differs vastly [from buying] a clever startup like Whisper Tech”
August 29th, 2007 at 9:23 am
kevyn,
sorry, the link you provided to the newsletter didn’t actually state very well what they did, but the link from the orion site is much better: I see that Whisper Tech is a power generation method. Nonetheless, it is hardly comparable with Windflow: each turbine unit would have a power rating hundreds of times that of the Whispergen, totally different energy sector, both clever. Orion sold to Meridian because A they probably got a good price and B they thought that meridian has the corporate clout to market it.
August 30th, 2007 at 2:15 am
Ahuahu,
A. Any price would be a good price when it helps hold down rates increases in a local body election year. Orion is owned by Christchurch City and Selwyn District councils
B. WhisperGen hardly needs Meridian’s clout when it already has e-on’s
http://www.powergen.co.uk/At-Home/Products/Technology-And-Initiatives/ WhisperGen.htm?WT.svl=8
C. Maybe Meridian is planning to emulate e-on in New Zealand?
August 30th, 2007 at 8:57 am
A. Your rates argument is fallacious (though it seems said with some irony): councils don’t sell all their assets to reduce debt etc and thus decrease rates in election years: NZers are actually quite keen on government owned assets, whether national or local govt. Fortunately the whole country is not yet run by John Banks types [watch this space].
B. e-on’s clout is considerable, but they are just a distributer of the product nonetheless- ownership is far more of a commitment than minor product distribution agreements. Being a major eneregy company in Australia and New Zealand, meridian’s ownership gives it a give reputation: it probably also helps give them clout with additional companies like e-on.
C. Meridian has done very well to market itself as a 21st century energy company in NZ, maybe their products will stack up at some point.
August 31st, 2007 at 10:28 pm
“Imagine if we had invested in a wind industry 20 years ago.”
Good grief.
Any “profits” which come out of the wind turbine industry are entirely the result of state intervention.
They simply would not exist without state coercion and thuggery forcing people to buy the product.
Saying “imagine if we had invested in a wind industry 20 years ago” is like a mafia organisation bemoaning the extorted profits others are making in the cement and hotel laundry rackets and saying “we could have had some of that.”
August 31st, 2007 at 11:22 pm
Mouldwarp,
The reason the wind industry has not been profitable (without government intervention) is because there are cheaper and more reliable ways to generate electricity (such as burning coal).
As long as we ignore the damage that burning coal is doing to the environment, I guess renewable energy will find it very hard to compete (until coal runs out, but that is still hundreds of years away).
So what are we to do about environmental issues such as global warming? Nothing? Maybe a bit of state coercion and thuggery, as you put it, is not a bad thing?
September 1st, 2007 at 2:11 am
Ahuahu,
A. Orion sold the shares for 11 million. Considerably more than original investment. The fact is Orion is a council asset and therefore so were these shares. The news of the sale of the shares was reported in the business briefs column of the Press where most ratepayers wouldn’t have seen it. It would have been a different story if the council sold Orion or Whisper Tech had been directly owned by the council. My comment wasn’t fallacious, or particularly ironic, it simply expressed my contempt for the ethics of politicians.
B. Fair points. An initial 80,000 units may be only a minor product distribution agreement in a market the size of the UK although, if successful, it could become huge.
C. Yep. Hopefully they will change their views on the suitability of Windflow’s turbines and philosophy. I can see huge potential for Windflow’s approach in India and China where the grids haven’t been fully developed and even in USA where the grid isn’t keeping abreast of changes in the areas of greatest population growth.
September 1st, 2007 at 11:00 am
Mouldward take your ignorant diatribes somewhere else. Its lefty conspiracy this, stalinist thuggery that.
20-30 years ago, the state pumped huge resources into building the 2nd wave of hydropower- the think big hydopower etc. The electricity cost of these dams, if normalised to exclude their massive state subsidy, was very large. If we had invested a proportion of such money into wind R&D we would have had a very useful contribution from wind energy much earlier in the electricity timeline. The industrial benefits of developing technologies would have also been considerable. Yes, it is cheaper for the moment to burn coal, and it has been cheaper to use natural gas, but ultimately through industrial experience and efficiency the unit cost and flexible usefulness of wind turbines will increase, while fossil fuels and fission, all drawing upon finite natural resources will encounter price inflation due to logical geological limits. I think I can see which one is the more enlightened. I’m not proposing that we stop huntly today, and southdown, and otahuhu, and stratford, and new plymouth, and all the gas dominated co-gen plants. Wind power will become viable all by itself: it already is viable. It doesn’t need hopeless lumbering socialist subsidies and bureaucracy, but with a little bit of extra freedom and impetus it will become a widely appreciated economic savior in a world which will be increasingly hampered by escalation of Oil, Coal, Gas and Uranium prices.