4.4 REQUIREMENTS OF THE GERMAN OFFSHORE WIND ENERGY MARKET
4.5.3 strategies for a medium term market entry (3-5 years)
In the medium term a market entry can be realised via the ac-quisition of an approved project with confirmed grid con-nection capacity. Grid concon-nection in the German EEZ is as-signed via a capacity allocation process. The vast majority of the grid connection until 2020 is already assigned to projects which already advanced in their development process. There-fore and due to the needed time to change the respective ap-proval to new turbines the realisation of a project before 2020 is unrealistic . As a consequence the respective project most likely has to participate in the tendering procedure for setting the remuneration. To identify a suitable project a holistic due diligence examination has to be carried out.
If OWTs could be offered at a favourable price these approach would allow realising projects which wouldn’t be economically feasible with other OWTs.
In addition it is highly important that the OWF, including a service concept, is eventually sold to an investor. This way ex-perience with the specific customer requirements can be made and utilised for further projects.
A second medium term approach would be the installation of a prototype. The development of an offshore site for a proto-type is rather difficult, because the grid connection design in the German EEZ is designed for the connection of OWF clus-ters and not for single (prototype) turbines. To address this problem the Foundation Offshore Wind Energy together with Acquisition of an
ap-proved project with confirmed grid connec-tion capacity
Installation of a proto-type
type. Therefore close contact to the foundation offshore wind energy is recommended (for contact details please see Annex).
Another approach would be to install a prototype onshore in a location with strong wind speed (e.g. close to the sea) to gain first results and experience.
4.5.4 STRATEGIES FOR A LONG TERM MARKET ENTRY (6-10 YEARS)
In the long term approach the acquisition of a suitable man-ufacturer to enter the market is an option as well. Manufac-turers active in the German offshore market are Senvion, Sie-mens and Areva. In addition manufacturers operating in the international offshore market are Alstom, Vestas and Ge. Via the acquisition of an established offshore manufacturer access to a technology which is already proven to work can be gained.
This would reduce the risk of entering a young market where the technology is partly still under development.
An alternative way would be the development of an offshore project for your own OWTs. This would require the acquisi-tion of a project in the early development stages. For such a project a very detailed due diligence analysis have to be con-ducted especially regarding grid connection and therefore re-alisation probability of the project. Following the approach of developing an offshore project the areas which just submitted their application should be in the focus (seeFigure 17,Figure 18 and Figure 19). As can be seen from the maps most of them are quit far from shore and the grid connection infrastructure is not ready yet. Therefore the realisation of a self-developed project would take place post 2020.
The third long term option would be the acquisition of an approved project without confirmed grid connection. In this case a project, which is already approved by the BSH or the responsible local authority, would be bought and equipped with the OWT of the manufacturer who bought the project. In comparison to the development of an offshore project ap-proach the early steps can be skipped and the selection of pos-sible projects is bigger than it is the case for projects with con-firmed grid connection. The manufacturer could therefore ac-cess the proac-cess in the execution stage described in. Therefore the realisation would be faster than in the development of an offshore project approach. But still a holistic due diligence of the respective project would be necessary. In addition a part-ner/ consultant with long term experience in the development Acquisition of a
and implementation of offshore projects would be recom-mended.
4.5.5 CONCLUSION
In this concluding chapter regarding market entry strategies for the German offshore wind energy market the described strategies are assessed.
The general precondition for a successful market entry is that the specific requirements of the German market-availability of the turbine considering service concepts for different distanc-es to shore, logistic concepts for the supply of spare parts and bad weather conditions, solid track record and strong financial background-are fulfilled.
The option to acquire an approved project with confirmed grid connection capacity is a good option to comparatively quickly install a considerable number of offshore turbines. The quick entry is possible because the major preliminary and de-velopment work is already finished. The strategy would be suitable for a company with strong financial resources. If this strategy would be followed it would be highly recommended to establish cooperation with a consultant which has broad experience in the realisation of offshore projects.
To install an offshore prototype would be a very reasonable strategy to gain experience and demonstrate the technology. It would also be recommended to operate the prototype for sev-eral years, as experience has shown that for offshore turbine this long term experience is highly valuable. As a first step the offshore prototype could also be installed onshore in a loca-tion with strong wind speeds to gain first experience. The on-shore installation could also be realised in a shorter time hori-zon than the installation offshore. But as also mentioned above the installation of a prototype can only be a part of a success-ful market entry strategy and need to be accompanied by addi-tional measures. The strategy of installing a prototype was used for instance by BARD in Hooksiel and by Senvion (former Repower) and AREVA at the offshore test field alpha ventus.
Prior to the offshore prototypes the respective offshore tur-bines were installed onshore to gain initial experience.
market entry opportunity for companies with strong financial resources, because of the high purchasing price and the neces-sary investments for a successful further development.
One recent example is the joint venture between Gamesa and AREVA. Another example in this regard is the acquisition of Bonus A/S by Siemens. Via the acquisition Siemens got access to the track record of Bonus A/S and is now the dominant manufacturer in the German offshore market.
The development of an offshore project would take a long time and is connected with several difficulties. The complexity is very high if the development of a suitable technology and the development of an OWF, including logistics and installa-tion processes, should take place in parallel. This was the ap-proach of BARD but due to the several challenges and very high investment cost this has failed and BARD was liquidated.
The acquisition of an approved project without confirmed grid connection needs more time and effort than the acquisi-tion of an approved project with confirmed grid connecacquisi-tion.
Due to the in comparison even more comprehensive tasks and development process the cooperation with an experienced consultant is even more important.
In general it is important to note that the one and only strate-gy to enter into the market does not exist. For every individual manufacturer the suitable market entry strategy needs to be decided on a case by case basis taking the time horizon, com-pany strategy and financial resources into account.
The essential characteristics of the different strategies are al-so summarised in Figure 22 below.
Strategy
Time Horizon short term medium term long term long term long term
Initial Investment high moderate very high high moderate
Economical Permanance moderate low high moderate moderate
Strategy Combination necessarily necessarily not necessarily necessarily necessarily
Investment Risk high moderate high high moderate
Figure 22:
Characteristics of the different market entry strategies offshore
5 BUSINESS OPPORTUNITIES FOR COMPONENT MANUFACTURERS
Besides WTG manufacturers the German market also offers opportunities for component manufacturers for wind turbines due to the broad scale of companies active in the German mar-ket. This chapter therefore focusses on the components re-quired by WTG manufacturers and describes which industry could supply these components.
