Germany's RWE Innogy Awards 115 Million-Euro EPC Contract to Norway's Aker Verdal

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Researched by Industrial Info Resources (Sugar Land, Texas)--Renewable energy company RWE Innogy (Essen, Germany), the renewable energy arm of electricity and gas company RWE AG (OTC:RWEOY) (Essen), has awarded a 115 million-euro (US$142.49 million) engineering, procurement and construction (EPC) contract to Aker Verdal AS (Verdal, Norway), a construction yard for large steel constructions that is owned by leading construction and technology company Aker Solutions ASA (OSL:AKSO) (Oslo, Norway). The contract includes the supply of 48 steel jackets, or steel structure foundations, and piles required for building the foundation of the 295-megawatt (MW) Nordsee Ost offshore windfarm on the North Sea in Germany.

The engineering, procurement, fabrication, load-out and sea fastening of the piles and steel jackets will be performed at the Verdal fabrication yard of Aker Solutions. The fabrication will begin in January 2011 and employ 100 people. The jacket substructures are scheduled to be delivered at RWE Innogy's offshore base port at Bremerhaven from October 2011 to July 2012, and then will be transported to the project site on one of the largest construction ships in the world. Each substructure would weigh about 450 tons and have a height between 45 to 48 meters. The 48 substructures will be installed at water depths of 22 to 25 meters, and each jacket foundation would be firmly anchored on the seabed with piles on its four feet. The steel foundations would support 6-MW wind turbines manufactured by REpower Systems AG (ETR:RPW) (Hamburg, Germany).

Offshore construction work at the Norsee Ost windfarm project will begin in January 2011, and the first generation of power is expected to be in mid-2012. The windfarm is scheduled to be fully commissioned in 2013. The 1.1 terawatt-hour-per-year of electricity produced should be sufficient to power 310,000 households. The project site is about 35 kilometers north of Helgoland.

Although the core business of Aker Solutions involves supply to the oil and gas industry, it has recently shown competence in other industries as well. The company's Verdal yard has been exploring the offshore wind energy sector during the last few years and has delivered six tripods to Alpha Ventus, Germany's first offshore windfarm.

Speaking about the new contract, Nina Udnes Tronstad, the president of Aker Solutions in Verdal said that the RWE Innogy contract was a breakthrough for the company in the offshore wind market. She added, "With this contract win, our business unit in Verdal demonstrates its capability to capitalize on its jacket substructure competence and track record within oil and gas to penetrate the offshore wind market." She said that Aker Solutions foresaw great business potential for Verdal in Europe's future offshore wind power market. However, the need of the hour was to move quickly and demonstrate the company's capabilities. At the same time, the company would need to further enhance its contract execution abilities to successfully build a sustainable business in the European offshore wind power market.

Erndtebruecker Eisenwerk GmbH and Company KG (Erndtebrueck, Germany), a steel-pipe supplier, has been awarded a 40 million-euro (US$49.56 million) subcontract by RWE Innogy to supply the project with the steel tubes required for the foundations. Late last year, RWE Innogy contracted the manufacture of offshore installation ships to a Korean shipyard. The 100 million-euro (US$123.89 million) contract is expected to be implemented in phases from 2011, following which construction on the windfarm will begin.

According to Dr. Fritz Vahrenholt, the chief executive officer of RWE Innogy, the last piece of the complete setup is the windfarm's grid connection. The local transmission grid operator, Transpower Stromübertragungs GmbH (Bayreuth, Germany), a subsidiary of Dutch national grid operator TenneT B.V. (Arnhem, The Netherlands), is responsible for ensuring the timely connection of the windfarm to the grid.

Undoubtedly, the European Union (E.U.) has been making great progress in utilizing wind power in recent years, but a new report suggests that hundreds of Britain's offshore windfarms could be slowing sinking into the sea because of an already identified design flaw in their foundations. The concrete mix used to fix the turbines to their steel foundation is believed to be wearing away, resulting in the wind turbines dropping by a few inches. The fault was first observed at Dutch windfarm Egmond aan Zee. The problem also affects turbines with single-cylinder foundations.

Engineers are investigating the matter and are estimating the seriousness of the destabilization problem. Repairs, if conducted, would require turbines to be shut down one at a time to minimize energy losses. Experts from leading renewable energy association Renewables UK (London, England) said the 336 British wind turbines believed to be at risk would require a massive investment of 50 million pounds (US$74.08 million) for repair.

While energy company Dong Energy A/S (Fredericia, Denmark) said that three of its windfarms have been affected, Centrica plc (OTC:CPYY) (Windsor, England), which owns utility company British Gas (Worthing, England) said that there were no operational or safety issues.

Although windfarm projects already are expensive to set up, offshore windfarms are preferred because of the higher consistency in terms of wind availability, which translates to a steadier supply of power. Clearly, if the U.K. and the E.U. are to meet their renewable energy targets by 2020, a viable solution needs to be found and implemented quickly.

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