Wind Power New Growth Engine for Shipbuilders
By Kim Hyun-cheol
Staff Reporter
The invention of the steam engine in the 19th century freed ships from dependence on wind as their driving power. Two centuries later, however, wind is now a savior for Korean shipbuilding firms, which are desperately searching for a new growth engine amid the worldwide slump in the industry.
Battered by a sharp reduction in orders and Chinese builders making strong moves of late, makers here are branching out into the wind power generation business.
No notable showings have been made so far this year because they are taking baby steps, but analysts have no doubt they will beef up their share in alternative energy as the current doldrums in ship orders are likely to continue for some time.
Samsung Heavy Industries made the first move, by becoming the nation's first exporter of wind power equipment. Last month the company delivered a 2.5-megawatt generator to the U.S.-based energy firm Cielo.
Featuring 90-meter diameter blades, the equipment will arrive in Lubbock, Texas next January and start full-fledged operations in April. The deal came one year after the company announced its entry into the business.
Samsung Heavy is getting prepared for further commitments. It established a wind power generator sales branch in Houston, Texas in May this year. It also plans to set up branches in the United States and Germany over the next two years targeting the world's biggest markets for clean energy in America and Europe.
The export is a meaningful achievement because it shows the company's potential in the business amid growing competition, Samsung Heavy said in a statement. Currently it is developing a carrier for wind power generators, as well as reviewing plans for ships using wind power engines and floating wind power plant complexes.
Other shipbuilders are taking a different approach ― buying overseas makers. Daewoo Shipbuilding & Marine Engineering (DSME) acquired DeWind, a U.S. wind turbine maker, for $49.5 million in August, giving the company access to the booming global market for renewable technologies.
Founded in 1995, DeWind has supplied over 700 wind turbines to Asia, Europe and South America so far, with their combined capacity reaching 760 megawatts.
Top Shipbuilders Joining
DSME, the world's second-largest shipmaker by sales, will invest an additional $70 million in the development of new wind power turbines and build more manufacturing plants in the United States.
It has set itself the goal of being the world's third-largest wind power equipment maker by 2020 ― taking up a 15-percent global share.
The DSME deal followed a similar purchase by another Korean company a month earlier, when STX Group acquired Netherlands-based manufacturer Harakosan Europe for $19.2 million.
The acquisition, which changed the maker's name to STX Wind Power, will help the company reach a global top 10 spot in wind turbines by 2015 with $1.2 billion in sales, STX said.
The first contract STX Wind Power won was an order to provide six turbines for Romania's Atra Eco in October.
Hyundai Heavy Industries, the world's No. 1 shipbuilder, is also eyeing the new business. Last month, it started a a joint venture to build a wind power complex in Taebaek, Gangwon Province.
Earlier, Hyundai Heavy signed a deal in September with the U.S.-based Wave Wind to provide six power generators, which will be produced in its new plant in Gunsan, North Jeolla Province.
The 105.7 billion won ($91 million) facility with an annual capacity of 600 megawatts began commercial operation in October.
The similarity in fundamental principles between the two industries makes it easier for ship makers to switch to constructing wind power generating equipment, as facilities generating energy through whirling blades are just like the propellers that are commonly used to propel ships.
As the outlook prevails that the current stagnation will last for several years, the industry predicts efforts of shipbuilding companies to tap into the alternative energy will increase.
``The current volume of ship orders is insufficient to sustain operations, as companies here have up-sized substantially through the boom period in the last decade,'' a spokesman for a local maker said on condition of anonymity.
``At the end of the day, it appears inevitable for makers to look to other businesses with positive prospects, including wind power.''