Danish turbine maker Vestas Wind Systems has agreed a partnership with engineering giant Mitsubishi to develop offshore wind energy.
Vestas, which has not been profitable for two years, will work in partnership with Mitsubishi to design, procure, build and sell offshore wind power plants
The Japanese company has an option to expand its share to 51 percent in April 2016.
“Today marks the beginning of a new chapter in offshore wind, a market segment with significant growth potential,” said Marika Fredriksson, Vestas’s chief financial officer.
The agreement brings to a close talks that Vestas first announced in August 2012, ending its search for a partner to develop its biggest-ever turbine and tap the offshore wind market that BNEF estimates will expand to an annual 8 gigawatts in 2020 from about 2 gigawatts last year.
The Danish firm’s new chief executive officer, Anders Runevad, pledged last month to expand the company’s foreign business and to continue to invest in offshore turbine technology.
“The challenge is very clearly profitability,” Runevad said at the time. “Vestas has geographical spread and market leadership strengths, which is something to leverage on and continue to build on the international presence.”
Vestas, which is seeking to lower fixed costs by 400million euros, will move development of its 8-megawatt sea-based turbine, the V164, to the venture, along with its V112 offshore order book.
The Japanese company will inject 100 million euros into the venture, rising to 200 million euros based on milestones met.
“Vestas has essentially sold its offshore business to this new JV that will come to be controlled by Mitsubishi,” Justin Wu, Bloomberg New Energy Finance’s head of wind analysis said.
“Vestas keeps its core business intact, offloads a potentially significant financial burden, but receives no cash in return.”
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