MA Mortenson Views $160 Billion International Market by 2020 as Global Windpower 2004 Clears Ground for New Investment

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Written by Richard Finlayson, International Correspondent for Industrialinfo.com (Industrial Information Resources, Incorporated; Houston, Texas). Having delivered nearly 40% of windfarm construction in the U.S. in 2003, M. A. Mortenson Company (Minneapolis, Minnesota) will be exhibiting, networking, and conferencing at Global Windpower 2004 (Chicago, March 28 & 31), with a view to further expanding the presence of its design and build wind project expertise in other world markets in addition to the North America.

The international market that beckons Mortenson saw the installation of 8,133 megawatts (MW) of wind power, globally, in 2003 with a capital investment value of $9 billion dollars, bringing the world’s total wind power generating capacity to 39,294 MW, according to the AWEA and EWEA (the American and European Wind Energy Associations). In fact, after polling opinions of turbine manufacturers and project developers, the EWEA’s ‘WindEnergy Study 2004’ predicted that growth of the sector through 2010 would be 110,000 MW for a total installed base of 150,000 MW. Growth in the installed base over the period would represent around $160 billion of investment, reported the study. The most important markets identified by respondents were France, UK, Austria, Italy, and the USA.

Industrialinfo.com notes that India, which is showing increasing windpower activity and manufacturing capacity, did not make the top five.

The following recently release quote from the AWEA emphasises this. "Wind power potential remains grossly untapped in the Asian region. In the region's fast-growing economies, there is an intense demand for new generation capacity based on clean and green energy sources. India is the fifth largest wind power generator in the world and the potential for wind energy in India is around 45,000 MW. It is expected that 10% (10,000 MW) of the proposed addition in energy capacity of 100,000 MW in the next 10 years would come from the renewable energy sector and more predominantly from the wind energy sector. Wind power has come of age and the next 20 years will see greater and enhanced deployment of wind electric generators as a clean and green source of power generation in India and other Asian countries. Against adding some 500 MW per year we should be looking at capacity additions of at least 2,000 to 3,000 MW per year. This is possible only if India starts developing national Renewable Energy legislation immediately," said Mr. Sarvesh Kumar, chairman of the Indian Wind Turbine Manufacturers Association (IWTMA).

Brent Bergland, Senior Design Phase Manager for the Industrial Operating Group within MA Mortenson Company (Mortenson), told Industrialinfo.com that since 1998, Mortenson’s Industrial Group has played a role in the construction of 25 wind power projects totalling 1196 MW in ten different states for eleven different customers. Minneapolis-based Mortenson is the 40th largest general contractor in the U.S (per ENR’s 2003 rankings), with revenues exceeding $1billion over the previous five years and maintains regional offices in Denver, Chicago, Milwaukee, and Seattle. Brent’s responsibilities are to position the company in strategic utility scale wind power project opportunities and to provide pre-construction services to various customers within the wind power industry. He is a member of AWEA’s Communication Team and Siting Committee. Brent holds a BS degree in Construction Management from North Dakota State University.

Click on the image to see full size photo.

"Under the umbrella of services we offer comes the experience of meeting on-site challenges encountered during the progress of a project head on". said Bergland. "Beyond the typical site logistics and weather obstacles we face on a daily basis, our experience in this realm of the wind turbine market has honed our abilities to address unique situations as well, including monitoring delays in the planned progress of a project, overcoming the logistics problems connected with remote locations and road access to the site and the positioning of the site in relation to power transmission facilities and the electrical grid," he said.

Landowner and local community issues are other areas where experience of similar projects is of great assistance when approaching the challenges of land use approval and clearing the legal hurdles surrounding property ownership, environmental impact, and the sometimes emotional feelings of the local community and the larger public towards the establishment of wind projects in their backyards. Mortenson is not a land and property developer in its own right, but the company often jumps in to help coordinate land logistics and assist with matters to do with the acquisition of the site.

At the project specification and execution stage, experience in the total environment of a windfarm and lessons learned has helped to build a positive working relationships with all the major equipment suppliers, engineers, testing agencies, developers and utilities with which they have worked.

"I very much appreciated the customer oriented attitude of both Mortenson’s home office and field personnel, and I must say it was refreshing to work with a project manager who was more interested in avoiding change orders than submitting them. It was a great team effort, and I look forward to working with Mortenson again in the future," Dean Russell, Babcock & Brown, Project Manager, Sweetwater Wind Power LLC.

"We are also well prepared to face the challenges of working with the very wind that is being tapped as an energy source. For instance, on the average, the wind blows harder in the U.S. than in Europe. Wind speeds of over 10meters/sec (22 mph, 36 kph) require constant adjustments to the lifting capacity of cranes, as the wind pressure on the crane’s structure is considerable. Given the high probability that excessive wind levels will disrupt the flow of work on the site on a daily basis, it is crucial to anticipate the impact of wind impact days during our project planning phase, well before starting construction. It is during this project planning phase that Mortenson essentially ‘builds’ each project on paper, before setting foot on the site. Such planning addresses all the potential factors that could impact the most efficient work flow and schedule, thus minimizing the actual impacts that could otherwise be detrimental to the successful completion of the job." he said.

Click on the image at right to view a crane lifting a rotor at the Brazos Wind Ranch energy project.

The typical wind farm site in remote and/or rugged terrain can also place limitations on the size of turbine to be used. The average project is now moving through the 100 MW mark and requires multiple turbines. Rotor dimension of 70 meters in length and increasing tower and turbine size not only present problems in themselves, but also require on site crane equipment to respond to turbine size. Although single turbines are now being tested in the 5 MW plus category, mainly for offshore installation, practical considerations of transport and construction could see the optimum inland rotor size coming in at between 1.5MW. and 3MW.

Wind farms can lead to the creation of skilled, long-term jobs in areas where such employment is scarce and contribute to landowners’ income. In 2003 the industry paid around $5 million in annual fees to landowners.

The family-owned MA Mortenson Company (MA Mortenson, Jr., CEO and Chairman of the Board, represents the second generation of family leadership of the company) is now celebrating its 50th year of operation and is ranked as the 40th largest general contractor in the US and 125th in the world, with annual sales averaging well over $1 billion over the past five years (2002 $1.445 billion).

The company’s strategic plan includes it’s Purpose Statement, "To build structures and facilities for the development and advancement of modern society and its Mission Statement, 'To be one of America’s great companies and to fulfill customers’ needs and enhance their success through the integrated delivery of total facility services." These lofty ambitions are enabled primarily through the recruitment and retention of highly competent, innovative and dedicated people.

"When people come to the wind energy group from elsewhere in the company, they will probably have had three to four years under the company Engineer-in-Training Program covering basic and advanced engineering principles, field projects, and estimating and scheduling. This on-the-job training period is followed by immersion into the company’s Career Learning and Development Program, which encompasses a broad range of learning environments and opportunities, specifically catered to the career path preferred by the team member. This lifelong approach to career learning and development is referred to as the Mortenson University," said Bergland.

"In the wind energy group we have project management and field supervision career paths. If additional resources are required, someone with the required experience in Mortenson comes to work for the wind group. People with jobs as riggers, operators and carpenters are seen as specialist components of the team who build their own depth of experience. In fact, we are finding that individuals at all levels are seeking opportunities to become part of our wind team. This strengthens the motivation feedback loop for us and for the industry," Bergland commented to Industrialinfo.com.

Complementing the internal training and development of its people Mortenson boasts an exceptional workplace safety record. The Industrial Group itself has currently achieved the three year milestone without a loss-time accident, a full year without a recordable incident and a continuous one million hours worked accident free (latest award). The company itself was recently awarded the AGC Safest Contractor Award, recognizing our advancements in workplace safety and our dedication to the tenets of the Zero Injury Program.

Bergland and Mortenson’s wind energy business market leader, Jerry Grundtner, have been actively involved in participating with AWEA to convince Congress of the importance of extending production tax credits for the wind energy business. As it stands today, incorporation of these renewable tax credits (which are similar in theory to the subsidies received by nearly all other energy production sectors) are critical to the perpetuation of the wind energy business in the US. Mortenson is encouraged by the individual states’ response to the growing importance of renewable energy through their passing of Renewable Portfolio Standards legislation (XX% of the states now have passed these laws). However, if the PTC continues to be bogged down in the larger Energy Bill debate, Mortenson foresees a serious impact to the amount of economic activity that will take place in 2004.

The AWEA’s executive director, Randall Swisher, says in ‘Windpower Outlook 2004,’ says that the wind industry’s momentum was cut short when the federal wind energy production tax credit (PTC) again expired at the end of the year, due to the inability of Congress to agree on comprehensive energy policy legislation. This could be the third boom-and-bust cycle inflicted on the industry in the past five years, says Swisher. The industry is calling on Congress to pass a long-term extension of the PTC to provide a stable market environment and unleash the technology’s pent-up potential, the Outlook reports.

The PTC, enacted in 1992, provides a 1.8-cent per kilowatt-hour credit (adjusted periodically for inflation) for electricity produced from a windfarm during the first ten years of operation, and is important for financing wind projects.

The other major bugbear for the industry is tackled in the Outlook under the heading 'Transmission Reform and Planning: Gordian Knot.' In a gloss on the topic it says, "Securing fair rules, and a planning process that includes wind alongside other power technologies in the design of transmission upgrades and new lines, are key to getting windpower to market across the country." It adds that the challenge has been complicated by the sidelining of efforts by the Federal Energy Regulatory Commission (FERC) to overhaul and standardize transmission rules.

Towards the end of 2003, Mortenson’s windpower group completed eight important projects in the US: 160MW Brazos Wind Ranch in Fluvanna, Texas for Texas Wind Power Company; 44 MW Flying Cloud Wind Energy Project in Spirit Lake, Iowa for PPM Energy; 38 MW Sweetwater Wind Farm in Sweetwater, Texas for DKR / Babcock & Brown; 74MW Blue Canyon Wind Farm in Lawton, Oklahoma for Zilkha Renewable Energy; 162MW Colorado Green Wind Farm in Lamar, Colorado for GE Wind Energy; 51 MW Moraine Wind in Woodstock, Minnesota for PPM Energy; 86 MW Chanarambie Wind Project in Woodstock, Minnesota for enXco;.

Click on the image at right to see full size photo.

At Global Windpower 2004, Brent Bergland and the Mortenson windpower team will meet a broad spectrum of the world’s windpower leaders in research, technology, design, manufacture and project construction. Particularly useful to the company’s market expansion plans will be the highlighting of financing issues where sessions will cover developing and emerging markets, technicalities and legalities of project finance, project structures and strategies of wind energy finance and capital markets and future trends.

Michelle L. Vensel of Protean Advisors has been retained as a consultant by the AWEA and while saying that the US industry should grow to $100 billion by 2020 she believes that the time has come for investors to learn more about it. She says key issues still fraught with misconceptions include: Technology risk, Wind risk, Risk/reward and the Federal wind energy production tax credit (PTC). Hopefully information and answers will be delivered to the right visitors, exhibitors and conference delegates during Global Windpower 2004.