Vestas: a Q & A

The Chris Cook Economics 3.0 column

The following questions originate from an official in the Isle of Wight. The answers – brutally honest at times – come from one of the top wind global wind turbine consultants, who was working in the early 80’s with the original turbine company on the IOW site. This was Aerolaminates Ltd (later acquired by Vestas), which in turn evolved out of the early James Howden and Wind Energy Group turbine work.

1 – What are the alternative wind turbine products that could be produced at the plant, for which there is an established market in the UK / Europe? (I’ve only heard of “prepreg”).
Alternative products. This factory was a blade factory, and one of the few in the world (only?) based upon wood laminates for the load-carrying member (spar). For the Vestas V-82 they added carbon fiber as well. Retooling would mean switching to a more standard design usable for other turbine models, and another technique such as one of various pre-pregs (pressurized bonding of epoxy and fiber filament.) Yes the staff could be retrained, but they basically would need new molds and other technology. More important, the European market is already saturated with blade factories for onshore turbines located in the prime markets from Spain and Portugal to Poland.

Offshore is another dimension totally, and would likely involve a new factory as the best option. But the major players already have their shops set up in Bremen/Bremerhaven to ship to the UK.

2 – Who else is currently producing these products and are they profitable?
Most manufacturers are producing their own blades, AND buying from LM Glasfiber and others for what they can’t produce. LM is the primary supplier around the globe, with factories everywhere. Of course these factories are profitable, as is the industry. The simple fact is the UK has already lost out even with the offshore push

3 – How much do you think the costs would be of converting the plant from its current production of blades that can only be sold in the USA to blades that would be bought in the UK / Europe? (This question is critical).
The factory was producing blades for the Vestas V-82, which is actually a stall-control turbine from NEG-Micon, which Vestas bought in 2004 or thereabouts. Stall control is primitive, does not work for large turbines, and this design at this scale (82 m rotor) is a dead end. The turbines are being phased out according to Vestas in the US, and colleagues who are currently in discussion with them. Vestas itself has been making V82 blades at the Windsor facility in Colorado since January 2008. Since the Windsor facility is already in operation, and also makes state-of-the-art V90 blades, the Vestas decision is even more justified.

I can’t address the conversion cost issue. Advantage Wight, trained staff. Disadvantage Wight, little chance at market share for competing blades. The real issue is that this situation is a direct result of the UK’s sub-optimal policies with regards to onshore windpower, and the politicians do not want to face up to that. Nor the workers, as it is true that Vestas is shutting the plant because of UK policies. That is the hard reality.

The other reality about plant conversion is that this plant made very poor quality blades, which continue to cause trouble for their owners. How do you retool reputation, and what does that cost?

4 – Once converted would such a plant be profitable immediately / in short-term?
Given 1-3, highly unlikely. The only alternative would be if the UK suddenly permits a few thousand MWs into an ongoing onshore program, with the likelihood of a gigawatt per year production. Then even a new factory on the same location would be profitable.

5 – Presumably the current workforce would have the skill to switch to any such alternative production?
Even given the failure of the existing blade output, it is not the workers’ fault. Yes, they could easily be retrained.

The consultant went on to make the point that where the IOW plant used to be at the cutting edge of the wind turbine industry, a failure of government policy over almost thirty years has led to the current position where the factory is now producing an obsolete product, and is badly placed to produce any other product against entrenched global competition.

Having said that, he considers that Mr Miliband’s approach of investment in a research and development facility is an extremely constructive one, and the one most likely to rescue something from the ashes.

I advocate an innovative financial approach – a research partnership – to this proposed R & D, whereby the relevant intellectual property is held by a custodian, alongside a licence from Vestas to IP they introduce. Any revenues would then be shared proportionally between these public and private investors, and a John Lewis style Cooperative of the relevant staff and management.

As I said last week there is an opportunity to create in the UK – within a partnership-based framework – a decentralised network of community scale energy developments. This would be complementary to existing efforts to relax planning restrictions in respect of industrial-scale onshore developments.