March 19, 2016
France

Siemens-Gamesa merger puts French offshore wind deal at risk

By Geert De Clercq | Reuters | Mar 18, 2016 | www.reuters.com

Siemens (SIEGn.DE) has no plans to build a turbine factory in France after it merges its wind assets with those of Spain’s Gamesa (GAM.MC), nor does it want any jumbo turbine technology developed by Areva (AREVA.PA), two sources said.

The German and Spanish companies plan to combine their wind assets to form the world’s biggest wind farm manufacturer ahead of Denmark’s Vestas (VWS.CO), but the project has stalled over how to deal with Gamesa’s existing venture with France’s Areva.

That venture won contracts to build wind parks with 1.5 gigawatts of capacity off the French coast, on condition that Areva develops and builds a jumbo offshore turbine in France.

But the planned Siemens deal with Gamesa has cast doubt on that venture, called Adwen, and risks derailing French ambitions to create a national champion in a sector now thriving after years of overcapacity and losses.

“Siemens has no need for Areva’s technology. It is developing its own big turbines,” one source familiar with the matter said.

A second source said Siemens, which is Europe’s market leader for offshore wind power turbines, could not build a factory in France for just two contracts.

Adwen’s two contracts are a 1 gigawatt offshore park in consortium with Engie (ENGIE.PA) and a 500 megawatt (MW) farm with Spain’s Iberdrola (IBE.MC) – with Areva due to build the turbines in both cases.

Siemens Chief Executive Officer Joe Kaeser, who met French Industry Minister Emmanuel Macron on Monday in Paris, declined to comment on the Gamesa deal on a conference call on Friday.

Areva, Engie and Gamesa also declined to comment.

ONLY WEAPON

France awarded Areva the contracts – which together are worth nearly 6 billion euros to the consortiums – in 2012 and 2014, buying the power at the above-market price of about 200 euros per MW with a view to creating an offshore wind champion.

But Areva, which is chiefly a state-owned nuclear power company, is now virtually bankrupt after five years of losses and is being bailed out by the state.

One of the sources said France had few options to influence Siemens, but given the offshore wind farm contracts were conditional on turbine factories being built in France it could still cancel them.

“That is the only weapon the government has,” one source said, adding that Siemens was talking to the government about the conditions under which the contracts could proceed.

Talks are also underway with General Electric, Mitsubishi Heavy Industries (7011.T) and Mitsui (8031.T) about buying part, or all of Adwen, the two sources said.

Attempts to turn French energy company Alstom (ALSO.PA) into a national wind power champion ended when it sold its energy division to General Electric (GE.N).

The U.S. giant has inaugurated the first two of four planned wind turbine factories in France for an EDF-led (EDF.PA) consortium which is building a 1.5 GW wind park off France’s Atlantic coast.

(Additional reporting by Hans Seidenstuecker in Frankfurt and Jose Elias Rodríguez in Madrid; editing by David Clarke)

URL to article:  https://www.wind-watch.org/news/2016/03/19/siemens-gamesa-merger-puts-french-offshore-wind-deal-at-risk/