The Danish Vestas will build its first blade factory in Russia

By Swann Bigot, legal expert and consultant in international affairs, for Eurasia Network – September 23, 2017

Wind turbine, May 2017 – Source : S.B.

The Danish Vestas Wind Systems A/S will build its first blade manufacture plant for wind turbines in Russia. The agreement was signed on September 7^th by Sergey Morozov, Governor of the Ulyanovsk region, Sergey Nikolayevich Vasin, General director of the Ulyanovsk Region Development Corporation and Tommy Rahbek Nielsen, Senior Vice President of Vestas.

Mr. Nielsen told journalists that “wind industry has a huge potential in Russia”, reported the business media Delovoye Obozrenie.

Vestas, which is currently the largest wind turbines manufacturer in the world, will invest around USD 24 million (RUB 1.4 billion) in the project, revealed the Kommersant. The Danish company intends to maximize the localization of components production (at the early stage, components will be supplied from different countries of Europe and Asia) and obtain the legal status of a Russian producer, giving the right to participate in public programs.

Vestas will comply with the Russian regulation over domestic manufacture and plans to reach a 65% level of localization or even more if needed suppliers can be found on the Russian market, said Tommy Rahbek Nielsen to journalists of Kommersant.

The manufacture plant will be located in the Zavolzhskiy district of Ulyanovsk. Its construction is expected to start in the coming months and will be achieved by the middle of 2019. Tommy Rahbek Nielsen added that 200 new jobs will be created. The production capacity will be 300 blades per year.

First, the blade production will supply local wind power projects. Vestas would be ready to meet the needs of the Finnish energy company Fortum in wind turbines in a volume of 3.5 GW by 2022. Fortum is now building a 35 MW wind farm in the Ulyanovsk region. The construction started in December 2016.

Even if the 35 MW wind farm under construction has received blades from China, the next local wind power projects are promising for Vestas. Indeed, the Governor Sergey Morozov have said several times that Fortum and Rusnano intend to increase the wind power capacity of region up to 300 MW.

Vestas will register a Russian subsidiary in Ulyanovsk in order to implement the manufacture plant project. Alexander Alexandrovich Smekalin, Chairman of the regional government, stated that the partners of Vestas will be Rusnano and the Ulyanovsk technology transfer center. Moreover, a skills center for wind industry will open in Ulyanovsk.

Lasting partnership

Finnish Fortum and Russian Rusnano aim to build a lasting partnership with the Danish Vestas as manufacturer and provider of blades for wind power plants in Russia.

Indeed, the Finnish Fortum won the right to build six wind farm projects in the Ulyanovsk region by 2021 according to official results of the federal tender on renewable energy held last June. Moreover, Rusnano plans to invest in wind power projects in the Rostov region, as Anatoly Chubais, chairman of the state corporation, told journalists during the exhibition “Innoprom 2017” held in Ekaterinburg last July.

Finally, both companies agreed last April to create a Wind Energy Development Fund, through which they will invest jointly $ 520 million (RUB 30 billion) in wind farm projects with a total capacity of several hundred megawatts in the next five years.

A region leading in wind power

Last June the Governor Sergey Morozov stated that regional authorities wanted to create wind turbine manufacture capacities, generating a new industrial sector with its supply chain, new job opportunities and new fiscal income. The Governor added that the wind power potential of the Ulyanovsk region exceeds 500 MW.

Determined to take advantage of this wind potential, the region already hosts a 35 MW wind farm project led by the Finnish company Fortum and the Russian state corporation Rusnano. The wind farm made of 14 wind turbines will be achieved by the end of this year. Furthermore, wind measurements works are being held in order to increase the regional wind power capacity.

In this context, Alexander Smekalin explained that regional authorities aim to create a wind power industry hub for all Russia in the Ulyanovsk region. Indeed, as the Chairman of the local government said to journalists, towers, electric equipment and other components for wind farms could be manufactured in the region.

Moreover, Ulyanovsk is a natural logistics center with its position on the Volga, the largest river in Europe.

As explained Sergey Morozov last February during the Russian Investment Forum held in Sochi, the Ulyanovsk region needs more energy than it generates and is now forced to buy electricity at much higher prices than neighboring regions. Renewable energy sources would strengthen the energy autonomy of the region and its industrial actors.

More and more Russian regions launch renewable energy projects since Russia has a good wind potential according to the data of the world wind atlas from the International Renewable Energy Agency (IRENA). One of the leading places in Russia is the Ulyanovsk region.

Wind measurements conducted showed that the average annual wind speed in this region is 6.5-7.5 meters per second on different sites. This is a good industrial wind capacity, from which it is possible to generate energy with a good power coefficient of 33-35%. The power coefficient shows how efficiently a turbine converts the energy of the wind to electricity.The established industrial standard is 35-40%.

The Russian government declared the year 2017 as the Year of the Ecology in Russia and the environmental issue has become a priority in the recent Strategy for scientific and technological development of the country. Russia has decided to develop renewable energy solutions and the federal program now plans a 3.35 GW wind power capacity across the territory by 2024.

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