DONG Energy enters into framework agreement on 6 megawatt offshore wind turbines with Siemens Energy

Friday, Jul 20, 2012

DONG Energy and Siemens Energy have today signed a framework agreement on the supply and servicing of a total of 300 offshore wind turbines of 6 megawatt each, giving a total capacity of 1,800 megawatt. The turbines will be installed at selected DONG Energy offshore wind farms in the UK in the period 2014-2017.

The agreement concerns Siemens Energy’s newly developed 6 megawatt offshore wind turbine with a 154-metre rotor based on gearless direct drive technology. Siemens Energy’s new turbine belongs to the next generation of large offshore wind turbines of more than 5 megawatt and will give a significantly higher production per position.

”The agreement will enable DONG Energy to install a significantly larger turbine from 2014 compared to the turbines, we know today. The agreement is a key element of DONG Energy’s strategy to significantly expand offshore wind and will strengthen our position as market leader in the offshore area,” says Carsten Krogsgaard Thomsen, Acting CEO of DONG Energy.

”The agreement on the supply of the new turbines totalling 1,800 megawatt is an important step for the growing wind industry and will help make offshore wind more competitive,” says Carsten Krogsgaard Thomsen.

The agreement will support Siemens Energy to optimise production of its 6 megawatt offshore wind turbine and strengthen its market position as supplier of wind turbines for the offshore industry.

“Offshore wind energy has huge potential,” says Michael Suess, member of the Managing Board at Siemens AG and CEO of the Energy Sector.

“Offshore wind conditions are strong and stable, enabling an energy yield that can be about 40 per cent higher than onshore. The UK, Denmark and Germany, in particular, are counting on the future of offshore wind energy. We are pleased that our long-term customer DONG Energy has chosen the latest generation of our wind turbines. Together, we are working to further reduce the costs of this environmentally-friendly form of power generation.”

Under the framework agreement, Siemens Energy will design, manufacture, supply, install and service the 6 megawatt offshore wind turbines. Furthermore, the partners have agreed on product and performance warranties reflecting the size of the agreement.

The agreement commits DONG Energy to pay a cancellation fee in the event of the cancellation of projects comprised by the agreement.

Whether individual projects comprised by the agreement will be built and the total capacity under the framework agreement will be utilised depend on official approvals of the specific projects and DONG Energy reaching positive investment decisions for the projects.

DONG Energy and Siemens Energy both have a long track record in the offshore wind turbine industry. In March 2009, DONG Energy and Siemens Energy entered into an agreement on the supply of up to 500 3.6 megawatt offshore wind turbines with a total capacity of up to 1,800 megawatt. The supply agreement was the world’s largest of its kind and the parties thus took a big step towards industrialisation of the offshore wind sector.

DONG Energy and Siemens Energy are currently working together on projects under construction on Lincs, London Array and West of Duddon Sands in the UK, Borkum Riffgrund 1 in Germany and Anholt offshore wind farm in Denmark. These projects total approx. 2,000 megawatt.

The information provided in this announcement does not change the previous financial guidance for the 2012 financial year or the announced expected investment level.

Source: DONG Energy