Mitsubishi Heavy Joins With Vestas in Offshore Wind Projects

September 27, 2013 by  
Filed under Green Energy News

Mitsubishi Heavy Industries Ltd. (7011)
and Vestas Wind Systems A/S (VWS), the Danish turbine maker that’s
been unprofitable for two years, agreed to form a venture to
develop offshore wind energy. Vestas’s shares surged.

The partnership, to be formed in March 2014 and equally
owned by the two companies, will design, procure, build and sell
offshore wind power plants, Mitsubishi Heavy said in a statement
to the Tokyo Stock Exchange. Mitsubishi has an option to expand
its share to 51 percent in April 2016.

Vestas shares jumped as much as 12 percent to the highest
since June 2011 in Copenhagen trading.

“Vestas has essentially sold its offshore business to this
new JV that will come to be controlled by Mitsubishi,” Justin Wu, Bloomberg New Energy Finance’s head of wind analysis said in
an e-mail. “Vestas keeps its core business intact, offloads a
potentially significant financial burden, but receives no cash
in return.”

Vestas, which is seeking to lower fixed costs by 400
million euros ($540 million), will move development of its 8-megawatt sea-based turbine, the V164, to the venture, along with
its V112 offshore order book. The Japanese company will inject
100 million euros into the venture, rising to 200 million euros
based on milestones met.

Talks

“Today marks the beginning of a new chapter in offshore
wind, a market segment with significant growth potential,”
Marika Fredriksson, Vestas’s chief financial officer, said at a
Tokyo press conference today.

The agreement brings to a close talks that Vestas first
announced in August 2012, ending its search for a partner to
develop its biggest-ever turbine and tap the offshore wind
market that BNEF estimates will expand to an annual 8 gigawatts
in 2020 from about 2 gigawatts last year.

Vestas’s new chief executive officer, Anders Runevad,
pledged last month to expand the company’s foreign business and
to continue to invest in offshore turbine technology.

“The challenge is very clearly profitability,” Runevad
said at the time. “Vestas has geographical spread and market
leadership strengths, which is something to leverage on and
continue to build on the international presence.”

Annual Accounts

The former Ericsson AB executive took over at Vestas on
Sept. 1 after Ditlev Engel was fired.

Vestas said it doesn’t expect the transaction to have any
effect on its annual accounts this year, and only a “marginal”
impact on next year’s revenues. The company will book as a
special item a gain of 40 million euros when the transaction
closes.

The March 2011 Fukushima nuclear power plant disaster in
Japan has prompted a surge in investments in clean energy such
as wind and solar.

To contact the reporters on this story:
Shigeru Sato in Tokyo at
ssato10@bloomberg.net;
Alex Morales in London at
amorales2@bloomberg.net

To contact the editors responsible for this story:
Philip Lagerkranser at
lagerkranser@bloomberg.net;
Jason Rogers at
jrogers73@bloomberg.net

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