Alstom Gets EU1 Billion Order for German Offshore Grid System

Alstom SA (ALO), the French maker of power-equipment, got an order worth more than 1 billion euros ($1.3 billion) from network operator TenneT Holding BV to connect five offshore wind farms to the German electricity grid.

The record order for Alstom’s grid business will be booked this quarter, Gregoire Poux-Guillaume, the head of Alstom’s power-transmission division, said in conference call with journalists.

“This project is based on reasonable schedule and costs” for this “technological challenge,” Poux-Guillaume said.

The order marks Alstom’s first foray in offshore high- voltage direct-current transmission projects that have prompted Munich-based Siemens AG (SIE) to book almost 600 million euros of charges in the past five quarters because of execution delays and spiraling costs. Switzerland’s ABB Ltd. (ABBN) has also booked charges on power-transmission projects in the North Sea.

“These projects are slipping mainly because of timetable problems,” Poux-Guillaume said. “They had been sold with very short delays” and on “quite tight budgets.”

Alstom, which had so far worked on onshore high-voltage direct current and offshore alternative current projects, previously chose not to participate in offshore HVDC projects, preferring to “observe and learn,” the Alstom Grid chief said. The “very sharp” HVDC technology is required to minimize power loss in transmission of more than 50 kilometers, he said.

Underground Cables

Alstom will work with Nordic Yards and Prysmian SpA (PRY) to build the DolWin3 project connecting North Sea wind farms to the mainland with onshore and offshore converter stations and 162 kilometers of sea and underground cables. Nordic Yards and Prysmian have the experience of similar projects, Poux-Guillaume said.

Milan-based Prysmian said today it got an order worth more than 350 million euros for the cable connection. Alstom’s order doesn’t include the cables, meaning that the total investment is about 1.4 billion euros, Poux-Guillaume said.

The global onshore and offshore HVDC market is worth about 3 billion euros per year and is growing faster than the rest of the power-transmission market, Poux-Guillaume said. The HVDC market may total about 50 billion euros from now to 2020, the Alstom Grid chief said.

Together with the turnkey order for DolWin3, Alstom has been awarded a five-year service contract worth “tens of million euros,” Poux-Guillaume said.

The project with a capacity of 900 megawatts will be completed in 2017, according to a statement. Including DolWin3, TenneT said it will be able to supply more than 6,000 megawatts of clean energy from the North Sea.

Germany, which is investing in clean energy after announcing it will phase out nuclear power by 2022, wants to add 25,000 megawatts of sea-based wind turbines by 2030.

To contact the reporter on this story: Francois de Beaupuy in Paris at fdebeaupuy@bloomberg.net

To contact the editor responsible for this story: Simon Thiel at sthiel1@bloomberg.net

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