EREC 'forced into' liquidation
The European Renewable Energy Council (EREC), which has acted as an umbrella lobbying group for various EU renewables associations for nearly 15 years, has been “forced into liquidation” due to unsustainable lease obligations tied to its Brussels headquarters.
The decision comes two months after the European Wind Energy Association (EWEA) left the organisation, according to EREC.
Founded in 2000, EREC originally housed six renewables trade groups – including EWEA, the European Photovoltaic Industry Association, and the European Biomass Industry Association.
Over the years it added five additional members, including the European Solar Thermal Electricity Association.
Eight years ago EREC and its member organisations moved into what is now known as the Renewable Energy House in Brussels, and transformed the 140-year-old building into a “living renewable-energy and energy-efficiency showcase”, with all of the heating, lighting and ventilation needs met through renewables.
At an extraordinary general assembly on 6 March, the group decided to enter liquidation due to its “high liabilities arising from its lease obligations” for the building, says EREC president Rainer Hinrichs-Rahlwes.
It is “particularly regrettable and somewhat ironic” that, given the success of the building in demonstrating the reliability of renewables technologies, “the lease agreement ... has now turned out to be the cause of the demise of the organisation”, says Hinrichs-Rahlwes.
Among the achievements it claims credit for, the EU’s 20% renewables target for 2020 “would probably not” have come pass without EREC, says Hinrichs-Rahlwes.
Wind for Prosperity MoU in Jordan
Danish turbine manufacturer Vestas and developer EP Global Energy have signed a memorandum of understanding (MoU) under the Wind for Prosperity programme in a bid to bring wind power to remote communities in the Middle East.
Jordan is set to become the first country in the Middle East, and the second country globally after Kenya to host a project under Wind for Prosperity, which was launched by Vestas last year.
The first project under the MOU is expected to be commissioned in Jordan before the end of 2014 and will use the Wind for Prosperity wind/diesel hybrid solution to bring electricity to more than 100,000 people.
Vestas and EP Global Energy will collaborate to help improve access to electricity for communities that currently have no, or only limited energy infrastructure.
Jordan is facing severe energy challenges owing to rising local consumption and limited domestic fossil fuel resources, said the partners.
"The Wind for Prosperity initiative is a cost-effective and robust way to provide electricity from non-polluting renewable sources to those communities that need it most,” said Efthyvoulos Paraskevaides, chairman of EP Global Energy.
Morten Albæk, Vestas group senior vice president, added: “This agreement is an important milestone – for Wind for Prosperity, the Middle East region, and especially for Jordan.
“Partnering with EP Global Energy will allow Wind for Prosperity to scale up and travel to new countries to the benefit of those living in energy poverty.”
The MoU builds on co-operation between Vestas and EP Global Energy over the 117MW Al Tafila project in Jordan.
That plant is expected to start operating in the second quarter of 2015.
NextEra Energy entered the wind-power business by accident.
It was the late Eighties and the company — FPL Group as it was called then — had lent money to some wind projects as part of a diversification strategy. It was a tough time for the nascent US wind sector, and some of those projects went bankrupt. To its great surprise, FPL found that it suddenly owned them. An even greater surprise was the realisation that it could make money from them.
NextEra's Horse Hollow wind farm in Texas

From this inauspicious start, the Florida-based company has risen to become the biggest wind and solar developer in North America — and one of the most profitable in the world — with its 10.2GW wind-energy empire alone providing shareholders with double-digit returns and expected earnings this year of at least $1.61bn before interest, taxes, depreciation and amortisation (Ebitda).

By way of comparison, NextEra’s wind capacity in the US is larger than the portfolios of Iberdrola and EDP Renewables put together (9.08GW), while its four closest US-based rivals — MidAmerican, Invenergy, NRG and Duke Energy — can only muster 9.5GW between them.

So how has a company that was little more than a regulated utility (Florida Power & Light) achieved so much success in such a relatively short period of time?

Like many other hugely successful companies, excellent management has been key, along with a little bit of luck and a big gamble that paid dividends.

In 1998, soon after it built its first wind farm, in Oregon, the company created an independent power producer arm, FPL Energy — renamed NextEra Energy Resources in 2010 — to manage its growing interests outside its Florida service area, which included solar, nuclear, hydro and natural gas.

A year later, management abruptly ended wind development in favour of natural gas, which was booming at the time. But an internal analysis of the market later revealed that the glut of gas plants being built across the country would squeeze profits, and that wind would be more profitable. Lewis Hay III, who was appointed chief executive in 2001, immediately changed course, converting a large deal with General Electric for gas turbines into an order for wind turbines. (The agreement benefited both sides: GE, which had recently entered the business, found a big launch customer; and FPL could push ahead with multiple projects — adding to its early-mover advantage. To this day, NextEra is GE’s biggest global wind customer).

Although FPL Group took a financial hit from its sudden turnaround, it was far less than many other utilities. As credit ratings and share prices of other utilities plummeted when the gas boom turned to bust, its ratings remained relatively stable.

Hay decided to improve the company’s profits by increasing its generating capacity from all energy sources and improving the efficiency of its operations. With its rivals weakened, and a decent credit rating, FPL Energy was able to acquire power plants at knock-down prices.

As cash flow improved, so did FPL Group’s credit rating, enabling it to borrow at cheaper rates, leading to better returns and an even better cash flow. A spiral of growth was created.

NEXTERA_PANEL.jpgFPL Energy managed to turn a $169m loss in 2002 into a $194m net profit the following year. By then, the unit was generating 19% of the parent company’s net income, compared to a meagre 1% in 1997.

Around this time, the small US wind sector was on the ropes as Congress repeatedly allowed the vital federal production tax credit (PTC) to “sunset” in 1999, 2001 and 2003. But while other developers put projects on hold, Hay gambled that the PTC — which pays $23 per MWh for ten years, inflation-adjusted — would continue. He ploughed ahead with new projects and acquisitions, securing some of the best wind sites in the US.

The PTC was repeatedly renewed, helping wind energy compete on price with fossil-fuel-derived electricity, and enabling FPL to win long-term power-supply contracts across the country. By 2002, the company had a wind portfolio of 1.74GW — 37% of the US total — and by 2007, this figure had reached 5GW.

Hay’s 11-year reign as chief executive is still felt strongly. The executive team that he recruited oversees the business today — including current group chief executive Jim Robo, chief financial officer Moray Dewhurst and Energy Resources boss Armando Pimentel.

“They are very experienced, well-regarded and savvy,” says Stephen Byrd, clean-energy research director at Morgan Stanley. “NextEra’s management has had a big part to do with why the wind industry is as successful as it is now. These folks have been the biggest player in wind since the beginning. I think that does really set them apart.”

Paul Patterson, an analyst at Glenrock Associates, adds: “It’s pretty remarkable how successful they’ve been in seeing the landscape and how it’s changing, and then acting nimbly and quickly.”

Hay understood that cost control was critical for helping deliver solid returns with wind, and made sure the company did not overextend itself financially to grow the business.

Because it was an early mover, NextEra has some of the best US wind resource areas under lease or an option with landowners until it can win a power-supply contract. “When a utility requests proposals for wind, they know what the wind conditions and economics are quite well,” says Byrd.

While building scale has been an essential part of NextEra’s long-term strategy — helping to cut costs by buying turbines at volume, and adopting efficient, standardised processes — the bottom line has always come first.

“We pursue profitable growth, not growth for growth’s sake,” Robo said last year. He tells his staff that it is better to dip a “toe in the water” when approaching new business development, rather than trying to “swing for the fences” and striking out.

“NextEra is a sophisticated energy company that really knows how to develop these resources. It also is disciplined. Management is not going out on a limb with this stuff,” says Patterson. The credo at NextEra is that projects be executed on time and within budget.

“While we are certainly not perfect, I do think our track record is pretty good,” Dewhurst told investors recently. In the past decade, the company’s engineering and construction team managed 66 wind projects and 17 from other energy sources, deploying $19.6bn capital against budgets of $20.3bn. The result: 89% were on time, with the balance a few days or weeks late due to third-party issues such as transmission hook-ups, for which the company holds itself accountable. “Some things are tough to control, so we plan for that,” he noted.

NextEra’s cumulative wind growth has averaged 19% a year since 2002, with a $5.4bn capital investment in 2010-12 and $3.2bn more targeted for 2013-16. It expects to boost its wind capacity by 2.2GW by the end of 2016.

It now has more than 9,000 turbines across the US and Canada that generated nearly 30 terawatt hours last year — a company record and evidence of its ability to deliver competitively priced clean energy.

If NextEra has a weakness, it may be overdependence on the US wind market, whose future is hard to discern beyond 2015. While it is unlikely that the divided Congress will end all federal support, there is also no guarantee it will renew the PTC. Despite this, analysts do not believe that Robo will push for international activity beyond Canada, after the company was burned by a solar investment in Spain.

Yet the chief executive seems confident. “I would lay our development pipeline in the wind business up against anyone’s,” he declares.

NextEra has got it right for the past 13 years. Few wou
ld bet against the company getting it wrong now.

Brazil oks wind farm start tests
Brazil's power regulator Aneel has authorized pre-commercial tests for 26 wind farms with a combined 583 nameplate capacity.

The authorizations are for all or part of the turbines installed in each park located in the states of Ceará, Rio Grande do Norte and Rio Grande do Sul. Commercial operations will start after tests are concluded.

The farms and capacities authorized were:

Colônia 18.9MW and Taíba Águia 23.1MW – Controlled by Queiroz Galvão Renováveis

Cerro Chato IV 10MW – Controlled by Eletrosul and Rio Bravo investment fund

Eurus VI 8MW – Controlled by Eurus Energias Renováveis

Atlântica II 30MW, Santa Clara I, II, III, IV, V VI 180MW each – Controlled by CPFL Renováveis

União dos Ventos 1, 2, 3, 4, 5, 6, 7, 8, 9, 10 combined capacity authorized of 169.6MW – Controlled by Grupo Serveng

Morro dos Ventos I, III, IV, V, IX combined capacity of 144MW – Controlled by Desa

EGP finishes 30MW Cristal phase two
Italian renewables giant Enel Green Power (EGP) has completed the construction of the 30MW Sao Judas, its second wind project in Brazil, located in Morro do Chapeu in Bahia state.
Siemens SWT-2.3-108 turbines for the Windthorst 2 plant are produced in the US

This is the second of three stages to be completed at the Cristal wind power complex, with the first phase, Primavera, finalised earlier this year.

São Judas is comprised of 13 2.3MW Siemens turbines.

Cristal will have a total installed capacity of 90MW once completed, after an overall investment of about €165m ($227m).

The new wind farm brings EGP's installed capacity in Brazil to more than 207MW, of which 93MW is hydro. In addition, the company is building the Curva and Serra Azul wind farms in the state of Bahia.

Gamesa gets 98MW Brazil orders
Spanish wind turbine manufacturer Gamesa has tied up a total of 98MW of orders from two customers in Brazil.
Gamesa's G97-2.0MW platform

Gamesa will supply 68MW of its G97-2.0 MW machines to CER for the Assuruá 2, 5 and 7 wind farms, part of the Xique-Xique wind complex.

It also signed to deliver 15 turbines of the same model to Ventos dos Guarás Energias Renováveis for its Ventos dos Guarás 1 wind farm in the Morrinhos complex.

All the projects are in the northeastern state of Bahia and due for completion by the end of 2015.

Gamesa will supply O&M services at both for a 15-year term.

The Spanish group said the latest orders mean it has firm commitments  for the supply of 1,394MW to Brazil, where it already has 452MW installed.

Germany 'leads in offshore patents'
Among the world’s three top nations in offshore wind power – the UK, Denmark and Germany – the latter is the most innovative because it has by far the highest number of patents in the industry, claims a study by Germanwind, a unit of wind energy agency WAB.
REpower turbines at  Alpha Ventus

“Sixty-five per cent of all investigated offshore wind patents come from Germany. That is a very good result and shows an innovative and highly technological sector,” WAB managing director Ronny Meyer says.

Institutes such as the centre for wind energy research ForWind, the Fraunhofer institute for wind energy and energy system technology, and the German centre for aviation and space travel DLR are setting international standards in wind energy research, WAB stresses.

There are currently 18,000 people working in the offshore wind sector across Germany, but annual patent registrations have actually decreased sharply since 2012, Germanwind project leader Daniela Schimrigk warns.

“It is now the task of industry and politics to make sure that we continue to expand that leading position and assume a key role in the international offshore market,” she said.

Germanwind for the study looked at 3,000 patents from Denmark, the UK and Germany from 1992 to 2013 in areas such as blade and rotors, drive train components, nacelles and offshore towers.