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Is vertical integration of blade technology the new trend?

Wind energy OEMs are constantly working to lower the cost of energy by innovation. One reason for this is to reach grid parity compared to other (non-renewable) energy sources. But another important reason is to be competitive and stay ahead of other OEMs.

So far we have seen mergers and takeovers of OEMs to benefit from the economies of scale and diversified geographical market shares. A good example of these are the Nordex/Acciona and Siemens/Gamesa deals.

Regarding the latest acquisitions it looks like the OEMs are now focusing more on blade technology and blade manufacturing capacity. Several of the bigger players have recently acquired blade manufacturing companies and/or blade technology companies.

In October of last year Doughty Hanson, the European private equity firm, announced that it had agreed to sell its stakes in LM Wind Power to GE for an enterprise value of € 1.5 billion. So far the transaction has not been finalised, but it is expected to happen in the first half of 2017, subject to regulatory approvals. Probably LM Windpower has been bought by GE for the technology it possesses and to secure the supply of blades for GE’s wind turbines. Before that GE had already bought Blade Dynamics.

And GE is not the only one buying blade technology. Also at the end of last year Senvion acquired 100% of the shares of Euros Group in an all-cash transaction. Euros, located in Berlin and southern Poland, covers all areas of rotor blade design and production as well as master plug and mould design. With the addition of the Euros production sites in Poland, Senvion will both control the end-to-end production cycle and also expand its blade manufacturing capacity by 25%.

And just recently the Nordex Group acquired SSP Technology, a developer and manufacturer of rotor blade moulds and the holder of numerous patents for the production processes for this component. The acquisition includes IP rights, around 70 employees and the facilities with a floor area of some 10,000 square metres in Kirkeby (Denmark). Clearly this acquisition was to get a hold on the technology of SSP Technology as the Nordex Group does not manufacture blades itself.

Obviously blades are one of the most important components of wind turbines so it is not that strange that the OEMs are focusing on them. In the years before the credit crunch happened the industry faced a serious supply bottleneck for components, so do the OEMs foresee a supply chain problem in the (near) future regarding blades? Or is this where the OEMs think where most progress can be made to lower the cost of energy? There are more blade companies on the market and not all OEMs have followed this strategy yet so who will be next? We will be sure to keep you posted.

Enjoy reading,

Floris Siteur

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