MHI Vestas CEO Sees U.K. Factory Growth as Market Expands

MHI Vestas Offshore Wind plans to expand its manufacturing facilities in the U.K. as the market for offshore wind turbines grows, Chief Executive Officer Jens Tommerup said.

Blades for the manufacturer’s first order will be made in the Isle of Wight after the venture was established in March by Vestas Wind Systems A/S and Mitsubishi Heavy Industries Ltd., Tommerup said today in a phone interview. As MHI Vestas gains orders from more U.K. projects, it may expand manufacturing to components such as the nacelle, Tommerup said.

“We have made our supply chain plan for U.K., which is gradually building up in steps to be a full-fledged local content manufacturer,” Tommerup said. “If the market develops with a critical mass, we will have full manufacturing capabilities in the U.K.”

The U.K. is pushing development of offshore wind power to help meet its European Union target of getting 15 percent of all energy from renewables by 2020. The island nation already has more installed wind turbines at sea than the rest of the world put together, and the government has increasingly focused on attracting manufacturers to set up factories domestically.

Three days ago, MHI Vestas said Dong Energy A/S decided to build its 258-megawatt Burbo Bank Extension project, converting a possible order into an unconditional one, and marking the first sale of the 8-megawatt V164 turbine, the company’s biggest model.

Tommerup said all 96 blades for Burbo Bank will “most probably” be made at the company’s existing research and development site on the Isle of Wight, which it is now expanding to become a full manufacturing facility.

Japan

“We have the people, the managers and the procedures and we have already started to upgrade the facility to be able to meet the demand from Burbo,” Tommerup said.

The company has identified three phases in its development, according to Tommerup. They are winning market access, claiming the position and expanding the reach. Now the company has gained access to the offshore wind market, it’ll spend the next few years trying to establish a share of the European market, before seeking to expand to other countries, including Japan, home of one of its parents, he said.

In the meantime, the venture can tap partnerships with Japanese companies to help finance projects in Europe and to explore new technologies, Tommerup said. The main challenge in coming years is getting the regulatory certainty that ensures a steady pipeline of projects is in development, he said.

“The hurdles are that we all need to be able to plan three, four or five years ahead,” Tommerup said. “Regulators can do that by giving visibility of the pipeline.”

Market ‘Cliff’

The European offshore wind market is heading toward a “cliff” in 2016 as the U.K. shifts assistance from one subsidy program to another, Make Consulting said three days ago. European annual installations are set to grow to 2,651 megawatts next year from 1,808 megawatts this year, before plunging to 1,022 megawatts in 2016, according to Make. The Danish advisory firm sees a recovery to 3,131 megawatts in 2017.

“We are a little bit concerned about a start-stop market in relation to bringing down the cost of energy,” Tommerup said. “We cannot do it as quickly as if we have transparency for the next years of exactly what to produce, when to produce and what to deliver.”

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