Creating a Successful Offshore Wind Supply Chain
On Friday, the Hapag Hall in Cuxhaven, Germany, was filled by the regional maritime business community.
They were gathered to once again celebrate and discuss the establishment of a Siemens AG wind power plant manufacturing facility. Cuxhaven's focus has been on offshore installation and service. But now a leading manufacturer is coming to town. "And it is not unlikely that if parts are manufactured in Cuxhaven, they will also be installed from Cuxhaven," said Hans-Peter Zint, President of the Cuxhaven Harbor Business Association (pictured below).
Even a market leader needs good market conditions, he added. The Law on Renewable Energy will switch from a guaranteed payment for contributing electricity to the network to a system of electricity auctions, which may lead to a disruption in the market. Nonetheless, the fundamental forces driving forward Germany's shift to renewables remain in place.
Politically, Germany has decided to force a shift to renewable energy. Strategic elements play a role here, as well as geopolitical stability.
In terms of industrial policy, secure jobs will be developed on the coast.
Fossil fuels and their cyclical nature do not demonstrate the same natural price stability as wind power, which has more obviously calculable generation costs.
Thorsten Granzow of Siemens AG next spoke and confirmed that Cuxhaven has the best conditions for future development, in terms of bringing fabricated wind park parts to various installation sites. Esbjerg (= clicked nacelle and final assembly), Aalborg (= blades), Brande (= nacelle/backend and hub) and Lindo (= generators) are current production sites; Hull (= blades) and Cuxhaven (= nacelle) will be added shortly. Granzow hopes that the Autobahn 7 will, in due course, be extended to Cuxhaven, further improving coastal infrastructure.
The property Siemens has acquired for its plant includes 174,000 sq m (= approximately 18 hectares) and its buildings will have total volume of 56,000 sq m; there will be 1,000 employees, 90 percent of which are blue collar. 100 (or more) nacelles per annum will be fabricated. 36 hectares of space, directly adjacent to the facility, will also be available for suppliers.
The Siemens facility in Cuxhaven is intended to be a benchmark facility, which is why automation processes and the most modern techniques will be deployed. The goal is to ensure "just in time" delivery, so that large storage spaces are not needed. Siemens intends to do much of this work via external service providers. They plan on cooperating closely with local suppliers and industry. Start of production is scheduled officially for Q4 2017. Site construction will commence from Q4 2015 to Q2 2017. This will include piling works necessary for foundational stability.
Dr. Joachim Stietzel (pictured above) noted that Siemens will change how Cuxhaven is perceived both domestically and internationally - it will trigger direct value creation (infrastructure investments, production sites), indirect value creation (demand by suppliers and service providers) and induced value creation (spending by new employees and suppliers of 20-35 M€ (over $20 million)). In total ca. 215 M€ $234 million) will have been invested in Cuxhaven for the facility alone.
Included amongst the necessary works and procurements are the following: building materials, steel and concrete, metalworking, construction, underwater construction, transport and logistics, facility manufacturers, service providers, crane builders, etc. If Cuxhaven is not only a production site but also an offshore basis port, other positive effects will be triggered.
Granzow, with respect to a question about capacity development, noted that their production plans are arranged in accordance with the existing capacities for wind park construction (= permitted MWs) to date. He also added that Cuxhaven will be Siemens' "offshore port" and, in terms of exports to the U.S. and Asia, he said that he would need to investigate what other markets' demands are and whether Siemens can suitably cater to them.
The opinions expressed herein are the author's and not necessarily those of The Maritime Executive.