Economic Potential in The Maryland Offshore Wind Energy Act


As the U.S. offshore wind discussion continues in Maryland and other coastal states, AREVA is in the unique position of providing its experience from helping build an offshore wind industry in Europe.

In testimony to the Maryland House of Delegates – Committee on Economic Matters, Steven Cuevas, AREVA’s Director of Business Development Offshore Wind for North America, represented an offshore wind turbine manufacturer’s perspective regarding the Maryland Offshore Wind Energy Act (HB 1054, SB 861).

Cuevas’ testimony included AREVA’s experience building a modern offshore wind turbine manufacturing facility, and described the potential regional economic impact of sourcing 3,500 components in the U.S. for AREVA’s 5 MW offshore wind turbine.

“AREVA is prepared to make a full commitment to the North American offshore wind market, and is currently seeking partners to fully deploy the M5000 offshore wind turbine. Our market entry strategy is not merely to sell our turbine into the market in support of a small number of wind farms; AREVA intends on establishing a large industrial footprint in the United States as we help build the fledgling U.S. offshore wind industry. “

Read Cuevas’ full testimony and details on AREVA’s experience below.

“Good afternoon, Mr. Chairman, members of the committee, thank you for your work on this very important and complex issue, and inviting me to provide you the “supplier perspective.” I’ve drafted my testimony to be informative and add value to your review and assessment of the proposed legislation. Along with my written testimony already provided to you, I prepared an oral statement, after which, I am happy to take any of your questions.

My name is Steven Cuevas, and I am the Director of Business Development, Offshore Wind, for AREVA Renewables, Inc. AREVA Renewables is the wholly-owned subsidiary of AREVA Inc., a Delaware corporation. Globally, AREVA is a clean energy company providing customers with technologies and solutions to generate low-carbon electricity. AREVA is organized into several business groups focused on nuclear and renewable energy power generation. In the United States, we are headquartered in Bethesda, Maryland, and employ approximately 5,000 employees in 31 locations. Last year, AREVA’s North American operations earned more than $2.4B in revenue across all business lines.

Worldwide, AREVA’s renewable business group has ongoing activities in offshore wind, solar thermal, biomass, and energy storage and distribution. Specific to offshore wind, AREVA’s industry-leading, state-of-the-art 5 MW offshore wind turbine, the AREVA M5000, has successfully generated electricity since 2009 in a 6-turbine pilot project located 28 miles off the island of Borkum, Germany. The Alpha Ventus installation was Germany’s first offshore wind park. Subsequently, the M5000 was chosen for Germany’s first utility-scale offshore wind project – Global Tech 1 – consisting of 80 turbines (400 MW). Furthermore, AREVA recently signed TSA & SMA Agreements with Trianel GmbH (a consortium of German regional utilities and communities) for the Borkum West II project consisting of 40 AREVA M5000 turbines (200 MW). Both projects will be installed in 2012/2013, with commissioning scheduled for 2013. The Borkum West II project is the first offshore wind project in Germany to achieve third-party project financing, supported by a syndicate of eleven banks.

The AREVA M5000 is the first turbine exclusively designed for large offshore wind farms.

Its unique hybrid-drive is an ultra-compact design harboring extensive technology in the smallest space. The specific configuration of components in a relatively small area of the nacelle is the result of extensive studies and adaptations of conventional turbines. The hybrid-drive’s compact design is made possible by the integration of the rotor bearing, gearbox and generator, thus dispensing with the need for plant component housings. The small dimensions lead to short paths for load transmission to the tower head – ideal for offshore wind turbines.

These component integrations and smaller dimensions result in a relatively low weight-per-megawatt ratio, which facilitates transport and erection—crucial logistic and cost factors when working on the open sea. Completing nacelle assembly on land simplifies transport and lifting the structure onto the tower, ensuring a higher degree of safety and ultimately saving time and costs. Additionally, the reduced top-weight of a hybrid-drive nacelle adds flexibility in selecting tower and foundation structures. Accordingly, the compactness is not an end in itself, but the result of intentional component optimization achieving the unique requirements of offshore wind energy turbines.

Reliability, the decisive factor for operating offshore wind turbines, is an integral element of the AREVA hybrid-drive concept. The low rotational speed and small number of rotating parts and roller bearings reduce the risk of drivetrain damage to a minimum. Additionally, all auxiliary aggregates and operation sensors have redundant systems to ensure continued operation of the overall system.

Protecting the offshore wind turbine’s hybrid-drive from the salt-corrosive marine atmosphere is also vital to a long service life. AREVA’s M5000 uses a patented process to pull in external air at the base of the above-water tower section and then cleanse it of corrosive salt particles and moisture through several treatment stages. The pure, dry air is then blown into the tower, creating overpressure throughout the entire system and ensuring that no salty ambient air intrudes into the turbine or tower structure. This combination of internal environment integrity and robust hybrid-drive technology results in reduced maintenance and service frequency, and lower operation and maintenance costs compared with other technologies.

AREVA is prepared to make a full commitment to the North American offshore wind market, and is currently seeking partners to fully deploy the M5000 offshore wind turbine. Our market entry strategy is not merely to sell our turbine into the market in support of a small number of wind farms; AREVA intends on establishing a large industrial footprint in the United States as we help build the fledgling U.S. offshore wind industry.

AREVA has full industrial operations in Germany, and we are developing full market-entry strategies for the United Kingdom, France, North America and Asia. These strategies combine industry-leading offshore wind turbine manufacturing in association with regional supply chain development. Localized renewable energy production can be truly competitive when compared to traditional solutions. AREVA has experience employing this successful strategy in other business units. For example, in our efforts to advance the nuclear market in the U.S., we announced capital investments of over $2.5B. These investments created thousands of direct, indirect, and associated jobs.

Similar to our successful approach in Bremerhaven, Germany, our North American plans include building and operating an assembly plant capable of meeting market demands. In efforts to further reduce cost, we will work with local supply chain manufacturers to source a majority of the more than 3,500 components. Through this initiative, we will create significant economic benefit in those regions and reduce the cost of our turbine, which aids project economics. This effort is already underway in European markets, including France and the UK.

Due to the early-stage status of the U.S. market, AREVA has not created a site-specific industrial plan; however, AREVA has developed methodology for the industrial ramp-up of a new market. Further, we commissioned a job-creation study, polled domestic and European suppliers on their interest in entering the U.S. market, evaluated port facilities, and developed an industrial plan for a scalable modular assembly facility adaptable to the needs of the market.

Taken together, this demonstrates our expertise and commitment to the industrialization of regional markets.

However, the key word in that statement is “markets.” The size, complexity and costs associated with establishing a major industrial footprint in any market, including the United States, requires not merely a few scattered projects that have deftly navigated the various industrial, regulatory, commercial and environmental obstacles – but a sustained, reliable, commercially-viable industry that can be served for decades to come.

In my view, the current Federal legislative environment does not lend itself to bold and broad action in the area of energy policy – specifically, in promoting the development and deployment of renewable technologies. Credit should be given, however, to the federal agencies that are actively doing what they can to assist the market – such as the Department of Interior’s “Smart from the Start” initiative and other activities streamlining the permitting process or reducing the cost of energy through technology advancements.

These types of activities at the federal level will further the goal of reducing the cost of energy of offshore wind projects and bring about grid parity over time. However, this goal will require the brave and bold action of local economies to give birth to this industry at a time when costs are high, but first-mover benefits from establishing a regional turbine manufacturing facility can be substantial. In return, these local economies will reap the benefit of industrial development, job creation, and increased tax base—and serve as a magnet for related industries.

This is not a theory. An example exists which proves how the development of an offshore wind industry can give rise to an economic boom – I am speaking, of course, of Bremerhaven, Germany, an industrial center for AREVA Wind.

At the end of the 1980s, Bremerhaven was in serious economic decline. It had thrived as a maritime city, relying on shipping, shipbuilding, and commercial fishing. Since WWII the city served as a main logistical and supply port to U.S. forces stationed in Germany. In addition, many American families lived in Bremerhaven and supported the local economy.

In 1989 as a direct result of the fall of the Berlin Wall, Bremerhaven lost its key role as a U.S. Army supply harbor. During this shutdown, many local jobs evaporated. At the same time, Bremerhaven faced new and strong competition in shipbuilding from Asian and Eastern European shipyards. A sagging fishing industry further accelerated the region’s economic problems. In total, Bremerhaven lost nearly one-third of its population, and was poised to lose even more.

Faced with a calamitous situation, the city council acted and acted boldly. The city fathers realized that, in order for Germany to meet its offshore wind power goals, the country needed a location, like Bremerhaven, with access to a deep-water river and harbor. Based on this long-term market opportunity, the council developed a vision and plan that leveraged its advanced sea port and specialized, skilled work force.

This intentional positioning and municipal support attracted two major turbine suppliers, including AREVA, to set up operations in Bremerhaven. Following the turbine suppliers to Bremerhaven were blade manufactures, foundation manufacturers and research and development facilities. This led to a renaissance of industrial development. In 2009 alone, approximately 1,200 direct jobs were created, and that number continues to grow today.

Bremerhaven is a powerful case study on how regional or state-level leadership is vital to the future of the offshore wind industry. Insightful policies, like Maryland’s enforceable Renewable Energy Portfolio Standard and the one described in your pending legislation, will create a market and prompt large industrial companies to make local investments and create local jobs. We must look beyond the handful of entrepreneurial projects blazing the trail up and down the eastern seaboard, and establish policy that promotes an ongoing pipeline of activity building an offshore wind industry. I am speaking of gigawatts, not megawatts, of development.

Maryland’s neighbors are actively engaged in attracting offshore wind activity and forging ahead of where you are today. But through bold regulatory action, regional partnerships and sound political leadership, Maryland can quickly place itself in the competitive forefront establishing and benefiting from this relatively short-lived, first-mover market opportunity.

I thank you for your time and look forward to answering any of your questions.”

Share this post

Share post:



More like this