Banking on Thornton profitability

REpower, the third-largest German wind turbine manufacturer, has successfully installed the first of six turbines at what will be Belgium’s first offshore wind farm, and is currently installing the second and third. When completed this project will finalise the first phase in the three-phase project.

The Thornton Bank facility is being built by C-power and will consist ultimately of 60 wind turbines of 5 MW capacity located on the Thornton sandbank, 28 km off the Belgian coast, in water ranging from 12 to 25 metres deep. It is expected to produce about 1000 GWh/year, and result in a reduction of CO2 emissions equivalent to 450 000 ton/year. A 37 km 150 kV cable will connect the site to the shore substation. Electricity is due to be fed into the grid from September this year.

Gravity based foundations form the bases for the six wind turbines, their installation being the second stage of an procedure in which the major components are assembled individually. After erecting the two-part tower and the nacelle, the final stage involves lifting the rotor, already completely pre-assembled on shore, into place. This innovative method developed by REpower is also cost-saving.

The gravity foundation is a further innovative feature of the project, and its unusual phasing, starting with six machines out of a final total of 60, gave REpower and C-power the opportunity to test it for the first time.

The first machine installed was the twelfth of its type installed by REpower. Dr Martin Skiba, head of the company’s offshore business unit, considers the event a significant milestone, and commented. ‘With the installation of the first 5M for Thornton Bank, we have completed the first dozen and are thus the market leader for huge megawatt turbines, ie turbines with a rated output of more than 3.6 MW. This happened at precisely the right time. In view of concrete plans for offshore wind farms in Great Britain and the North and Baltic Seas off Germany, there is a growing market for offshore turbines such as our proven and tested 5M. We are currently engaged in intensive negotiations with further key customers for major offshore projects.’

In the harbour, the turbine components are loaded on transport platforms in accordance with the operational erection sequence and conveyed to their anchorage at sea. The installation jack-up Buzzard subsequently hoists the turbine components from the transport platforms and places them on the gravity foundations where the tower, nacelle and rotor-star – pre-assembled on shore – are bolted together.

Development

The 5M was developed by REpower’s own engineers and the prototype erected in Brunsbüttel in 2004. Two turbines of this series have been erected in a water depth of 44 m located 25 km off the Scottish coast, where they provide the Beatrice oil platform with power. A further five 5Ms are to be found in Büttel, Schleswig-Holstein, two in Cuxhaven, and another one in Bremerhaven, all in northern Germany.

The six 5M nacelles for Thornton Bank were produced in a mobile assembly facility in Büttel and shipped via the port at Brunsbüttel. In future, the manufacturer’s offshore turbines will be mass-produced in a new production facility in Bremerhaven – the first six 5Ms to be produced there are already earmarked for the first German offshore wind farm, Alpha Ventus.

Engineering construction

Construction of the foundation and tower base is by COWI Group, an international engineering firm based in Denmark. Hub height will be 94m above mean sea level. The innovative conical shell structure shown in the diagram (page 49) was devised during conceptual studies carried out by COWI in 2004 and in due course adopted by the project owner. The pre-stressed concrete foundation is composed of a cylindrical shaft on top of a conical base which transfers the shear loads from the wind turbine directly to the base slab. At its deepest location the structure extends from 27.5 m below the surface, about 6 m of that below the sea bed, to 17 m above it. The diameter of the base is 23.5 m, and the shaft 6.5 m, matching the diameter of the tower. The foundation structures are fabricated on land and installed at sea by a heavy lift crane, on a gravel bed pre-installed in a seabed composed mainly of medium grain sand. The weight of the concrete structure is about 2700 tonnes. The ballast is a combination of sand and heavy fill, of sufficient weight to provide a counterbalance to overturning moments, typically around 4500 tonnes depending on the type of fill.

Large order book

REpower preliminary figures for Q2 of 2008 (April to June) are showing a substantial expansion of production and book orders, a staggering year-on-year increase of 126%, reflecting the current steep rise in offshore business. What the company calls ‘total performance’ has increased to r240.9 million, compared to r105.5 million in the corresponding period of the previous year, with sales increased to r231.8 million. Its EBIT (operating profit) increased to r10.2 million from the 0.1 million Euro figure recorded last year. Significantly, in the same period orders on hand increased to 1522.6 MW, the highest number of orders since it was founded.

In the same period, the company installed and recognised in income 138 wind energy turbines with a total output of 276 MW. The order book at 30 June contained purchase agreements for 718 wind energy turbines which corresponds to a contractually confirmed order volume of r1.6 billion.

These results are symptomatic of a good year for German manufacturers and suppliers which have taken a leading position in the expanding wind energy business. Last year they provided nearly 28 % of the worldwide turnover of r22.1 billion, creating at least 10 000 new jobs in the country’s wind industry.

Project finance

In 2006 the European Wind Energy Association predicted that Europe on its own has the potential to install more than 70 GW by 2020, equivalent to almost twice the then installed wind capacity in Europe. But the capital needed to develop wind farms offshore is enormous, and substantially greater, per MW installed, than for those onshore. At around £1.5 million/MW plus, the current estimate of the all-in offshore installation cost, meeting the EWEA’s 70 GW target would require more than £100 billion of investment.

But bankable offshore wind farm projects have been slow to materialise. Wind farms have been operating offshore since 1991, but financiers have, to date, avoided them, and those that have been built have been financed on-balance sheet, typically by large utilities, rather than by the commercial bank and project finance markets. Reasons are not hard to find – lack of a track record, the lack of proven machines, and the very high cost.

As a consequence of these factors, progress to date has not been spectacular. In 2005, 90 MW of offshore wind capacity was installed, compared to 11 441 MW of onshore wind capacity. In 2004, the figures were 60 MW and 7 967 MW, according to the Global Wind Energy Council. Although a great number of projects have been consented, more than 800 MW in the UK alone, installation of offshore wind farms has been hampered by rising component and steel prices and limited turbine supply.

Now the 120 MW Prinses Amalia (aka Q7) project located off the coast of the Netherlands (see page 43) and the Thornton Bank project are fighting it out for the title of first project-financed offshore wind farm, but no matter which is awarded the accolade the introduction of commercial lending to the offshore wind sector will be a huge boost for the industry.