Cleantech Investor

First published on the Cleantech Investor website, November 2011. Copyright Cleantech Investor Ltd.

Inspiration on the future for wind energy from Jorge Calvet at the LSE/Spanish Chamber of Commerce in London

Gamesa Chairman and CEO, Jorge Calvet, delivered an inspirational speech at the London School of Economics on 16 November, on the occasion of the 125th anniversary of the Spanish Chamber of Commerce in Great Britain. A key message from Calvet was that Gamesa is a global company: it was the only major turbine manufacturer to increase its global market share last year and has entered into 31 new countries with 45 new clients since Calvet's appointment two years ago. 

Gamesa is active in China, which accounts for around a third of the firm's sales. Calvet says that the company likes working with the Chinese as they - like Gamesa - operate in a cost-efficient manner. Gamesa plans to expand into new markets such as Australia and South East Asia - and to move into Latin America in a much bigger way.

The UK was highlighted as key to Gamesa's future. The company has already set up a research and development division for offshore wind in Glasgow - where it's working on the development of its 7MW offshore turbine and already employs 82 engineers. To illustrate the challenge involved, he compared the complexity of these new mega turbines and their positioning out to sea as comparable to positioning a Boeing 747 on a tower in a remote location in the sea. He observed that the installation of a 'supergrid' will be key to the success of the offshore wind industry in the North Sea/Northern Europe.

Gamesa will open an offshore HQ in London shortly - and it plans to establish a manufacturing base in the UK. Calvet was non committal on whether that manufacturing base will be in England or Scotland at this stage - the decision is yet to be taken. However, Calvet is convinced that the UK Government is committed to offshore wind and that support for the industry will be maintained.

International expansion, for Calvet, needs to be accompanied by risk management. He cited Gamesa's withdrawal from what had originally seemed like a lucrative 80MW project in Syria, in the wake of the events of the 'Arab Spring', as an example of risk management.  

Despite its international presence, Gamesa will still always consider itself to be a Spanish company, Calvet affirmed. However, he commented that the firm is thwarted in its ambition to create jobs (a role which he considers to be the biggest responsibility for both corporate executives and politicians) in its domestic market - a situation which he hopes will change after the upcoming Spanish election. Calvet highlighted the irony that the conditions exist for Gamesa to create jobs in markets such as China - but not in Spain, and also not in the US.   

In terms of the cost of wind energy, and the implications for electricity consumers of the growing portion of renewables in the mix, Calvet emphasised the potential of wind. He noted that wind energy has achieved 'grid parity' - that wind energy is already being contracted at prices which are cheaper than the price of natural gas generated energy in Brazil. Wind doesn't need subsidies according to Calvet. However, he claims that "not all renewable energies are efficient" - citing solar thermal as the sort of energy which, if added to the mix, may result in rising energy prices.

Calvet observed that there is a trend for new entrants into the wind energy market as investors, in the form of industrial and retail companies. Gamesa is seeing new customers such as Ikea and Walmart take up the slack from traditional utility sector customers, who are investing less in the sector. A joke about 'flat packed turbines' proved - later in the session - to be closer to the mark than might have been expected, when Calvet outlined what Gamesa is doing to meet the off-grid challenge for the millions of the world's population who have no access to electricity: pre-packaged energy generation kits containing wind and solar equipment, which can be dropped by aircraft in remote locations (obviously these packs do NOT contain the turbines being supplied to Ikea!).

With respect to future technologies, Gamesa is investing a significant portion of its research and development in energy storage; and Calvet sees potential, longer term, for floating offshore wind platforms (which, due to the geography of the seabed, will be important in Spain).

On the future of wind energy generally, he was upbeat on the long term prospects, based on the facts that: 1. fossil fuels will never be cheap again; and 2. energy security is key for all countries. He sees the central challenges of this century to be energy and water. Gamesa appears to be strongly on track to address at least the energy challenge.