New Business for New Entrant in Wind Energy

January 26, 2007 – Vol.11 No.44

NEW BUSINESS FOR NEW ENTRANT IN WIND ENERGY.

It was only January 5, 2007 that American Superconductor (AMSC) of Westborough, Massachusetts announced it had finalized its acquisition of Windtec (tm), an Austrian wind system design, development and engineering firm.

Already the new, fully-owned division is bringing in new business to AMSC.

In its first order Windtec signed a deal to develop a 3-megawatt wind energy system for Doosan Heavy Industries & Construction Co. (Doosan) of South Korea. Aside from the designing, the new turbine Windtec will support the assembly and installation of the first prototype.

Doosan is a worldwide engineering, procurement and construction contractor with 5,000 employees.

With the deal Doosan is now in the wind energy business: Wind turbines will be included in the company’s portfolio of products and services by late 2009 when series production of the new turbine begins.

Doosan wind turbines will help open a new market for wind energy: Korea itself. The country now has only 98 megawatts of wind capacity, but by 2011 plans to have 5-percent of its total power come from wind, solar and tidal systems, up from 2-percent today. (Wind is the least expensive of the three. Read more wind than the other two.)

The initial $2 million contract is just a start for Windtec. Windtec has the right of first refusal for all future 3-megawatt wind turbine electrical systems from Doosan, making a follow on business opportunity for Windtec.

A second order for Windtec is a licensing agreement with the Zhuzhu Electric Locomotive Research Institute (ZELRI), a Chinese maker of electric drive systems for locomotives and power inverters.

Under that agreement ZELRI will get the rights to manufacture, use and sell Windtec's Model WT1650, 1.65 megawatt turbine now in the prototyping stage. ZELRI plans full scale production in 2008.

For Windtec and AMSC, the deal puts an upfront fee of about $2 million in Windtec’s pocket immediately. Royalties for each turbine built and a right of first refusal for AMSC to provide the electrical components for each WT1650 manufactured by ZELRI could exceed $30 million when the first batch of turbines leaves the production line.

The growth potential for wind energy in China - and thus possible business for ZELRI and Windtec/ AMSC - is huge.

According to a new report by Emerging Energy Research, 1040 megawatts of new wind capacity was installed in China in 2006. Further, the Global Wind Energy Council said in its Global Wind 2005 Report that from 2006 onwards 800 megawatts of new wind capacity would have to be installed to meet a national goal of 5000 megawatts total capacity by 2010. Beyond that, the Chinese government wants 30 gigawatts of wind installed by 2020, or 2500 megawatts per year.

Included in AMSC technical specialties is building highly-efficient power generation equipment based on high temperature superconductor (HTS) technology. Though the company hasn’t been forthcoming yet on how that technology might be applied to wind turbines (again, the acquisition of Windtec is still fresh) its seems likely that it would consider adopting that technology into wind turbines somehow.

Visit American Superconductor Corporation at http://www.amsuper.com/ Doosan http://www.doosanheavy.com/ , ZELRI at http://www.zelri.com.cn/