Monday 30th June 2014


June 30, 2014

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Wind Watch

Samsung has a reputation for not backing down. The South Korean firm’s two-year legal battle with Apple over smartphone technology patents is a case in point.

So it has surprised some wind industry onlookers to hear that the conglomerate’s offshore wind arm, Samsung Heavy Industries, is poised to exit European offshore wind. If the firm is happy to go toe-to-toe with Apple then why not go into battle with a dominant turbine maker like Siemens?

But this talk of an exit from European offshore wind looks premature.

The company confirmed it is carrying out a review of its operations in the sector, and we will see the results of this review in the next couple of months. It has also said that reports that it has decided to pull back from European offshore are “not true”, and it is simply reviewing its future plans. This is something we would expect good companies to be doing in all sectors all the time.

Still, let’s say it decides to exit European offshore. What impact would that have?

The firm’s operations in European offshore are limited to two areas.

The first strand is that it has installed a prototype 7MW turbine at Energy Park Fifeoff the coast of Methil, eastern Scotland. Commissioning was delayed until March because of a damaged blade. This is the world’s largest installed turbine and the best-known prototype installed by an Asian manufacturer in European waters.

The second strand is that the company has been shortlisted as supplier for the EDPR-led 1.1GW Moray Firth project planned in Scottish waters. It is in competition with MHI Vestas, which is the joint venture between Mitsubishi Heavy Industries and Vestas, but no deal has yet been done.

And that, pretty much, is that.

Yes, the company said two years ago that it would set up a £100m manufacturing plant in Fife, but that hasn’t yet happened. The upshot is that, actually, it would not have a huge immediate impact if the firm did decide to scale back its commitments in Europe. It would be good news for MHI Vestas because it would take away the competition in the race at 1.1GW Moray Firth. But let’s see what happens.

All this speculation about Samsung’s future highlights a danger of going over-the-top when a business installs a prototype. Yes, prototypes may be exciting, but we can only say a firm has made a big commitment to a market when it has made or received big orders. At present, Samsung doesn’t meet this basic criteria.

We can also see why an Asian manufacturer would want to set up a prototype in Europe, to gain knowledge it can then apply in its local market. It will be easier to make an impact in a fledgling Asian market than in Siemens-dominated Europe. In short, it would make sense for Samsung to focus on offshore elsewhere.

But that isn’t to say we don’t want to see Samsung in Europe. If it can establish itself then this could bring competition and innovation that can only help the sector.

It wouldn’t be easy — but neither is going into a legal battle with Apple.

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