http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/GB603/RSS.ashxVestas Win[d] PagesMon, 04 Dec 2006 14:10:02 +0100http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/GB603/http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/GB603/?Page=1http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/GB603/?Page=11 India and wind energy Facing up to climate change and the end of oil Constitution projects have begun to produce measurable results New unit to reinforce political input Safety always comes rst Talent to drive Vestas forward Wind Vestas OIL GAS No. 06 Year 03 22 November 20062006-12-04T14:10:02+01:00http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/GB603/?Page=2http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/GB603/?Page=2A plan that holds water It is now almost 18 months since Vestas launched the strategy called The Will to Win a cornerstone of the companys development in the period 20052008. It is with great satisfaction that today, we can state that the strategy and its goals hold water. This positive view is built on the ongoing results of the longterm initiative we implemented through the launch of the strategy an initiative that all Vestas employees are actively helping to make a reality. For example, we have worked concertedly to improve our working relationships with customers and suppliers, and we have come a long way in this area, partly through entering into longterm strategic framework agreements. At the same time, we can see that suppliers are making the investments necessary to ensure timely deliveries of components of the appropriate quality, which is an essential precondition for our ability to ful l the enormous potential that exists within the industry as a whole. Our relationship to the world outside and our partners is one thing another is the fact that we have also turned the spotlight on ourselves. Our vision is to make wind power a source of energy on a par with oil and gas, and day by day, we are getting closer and closer to achieving this aim thanks to the increased competitive ness of wind power and the rising demand for an independent source of clean energy. However, the achievement of our vision is rst and foremost conditional upon the Group functioning as a well oiled machine, with all parts of the value chain making the best and most ef cient contribution in other words, functioning in the way that best serves Vestas interests. A lot of improvements have already been introduced, improve ments that often stem from the Vestas Constitution, the document that lays down the ground rules for the company. In 2007 we will be focusing even more intensely on internal processes and continu ing to work concertedly to improve quality and ef ciency in our production units, which play such an important role in the remark able growth Vestas is currently experiencing. It is against this background, for example, that we anticipate an EBIT margin of 79 per cent in 2007, while the gure for 2008 is expected to reach 1012 per cent. Another expression of the optimisation of our business is the fact that we are now revising the target for our net working capital in 2008 to a maximum of 20 per cent compared to the previous target of a maximum of 2025 per cent. The ongoing globalisation of the company and adaptation to our markets constitute another important step for Vestas. For this rea son, Vestas has decided to establish blade factories on two of the companys largest markets those of Spain and the United States. These factories will additionally expand Vestas production capacity, reinforce delivery reliability and, at the same time, highlight Vestas position as the leading global supplier of wind power systems. The magazine you are currently reading is more proof of the development underway at Vestas. Vestas Wind is the companys new magazine which will be published four times a year on the same dates as we publish our interim accounts. We see this as a natural step towards generating more openness and transparency at Vestas, and to giving all stakeholders the best possible insight into the company. We hope you enjoy this issue. Ditlev Engel President and CEO2006-12-04T14:10:02+01:00http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/GB603/?Page=3http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/GB603/?Page=3Content 4 Wind, oil and gas As the world faces up to climate change and the end of oil and gas, wind power is not an option it is a necessity. 12 Talent and clear goals are to ensure development Focus on employee development and new talents is a must in a business in rapid growth. 16 Safety rst At Vestas, safety is always the highest priority. 22 Constitution projects generate visible results The introduction of the Six Sigma management tool is starting to generate measurable results. 26 More reliable gures on the risk Six Sigma project makes it possible to calculate the nancial risk linked to a service contract. 27 Vestas to improve contact with political decision makers Governmental Relations to make political input more proactive. 30 Vestas in brief 32 India and wind energy A closer look at India the fourth largest market in the world for wind energy. 36 High energy at Vestas India India needs new sources of affordable energy and Vestas India is ready to meet the challenge. 2006-12-04T14:10:02+01:00http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/GB603/?Page=4http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/GB603/?Page=4With the end in sight for oil and gas, and the overwhelming need to reduce CO2 emissions, the longterm future of wind power has never seemed more secure. Yet these drivers do not make wind a secondbest technology instead, it is a competitive source of power that should form part of any balanced generating portfolio. 4 Wind, oil and gas2006-12-04T14:10:02+01:00http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/GB603/?Page=5http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/GB603/?Page=55 As the Vestas vision Wind, Oil and Gas makes clear, wind is no longer an alternative source of energy. Wind is a mainstream energy resource alongside oil and gas and coal and nuclear too. Some of the reasons are obvious. The end of oil and gas as sources of cheap energy is within sight, the twilight decades of fossil fuels likely to be marked by continuing high prices and price volatility. Even more important is climate change, which brings the desperately urgent responsibility to stem the growth of carbon dioxide CO2 emis sions before it is too late. Wind, the most mature and affordable of the widelyapplicable renewable energy technologies, is the natural choice to lead the replacement of fossil fuels. But the existence of these powerful driving forces does not make wind a secondbest energy source, to be used only because of envi ronmental pressures. Modern wind power plants match or exceed the performance of traditional generating technologies in their speed of con struction, controllability and power quality. Wind can reduce the overall cost of power generation, even when it is not in itself the cheapest generat ing technology, by offsetting the risk of oil and gas price rises. And several arguments commonly used against wind, including its intermittency and the need for huge areas of land, are misleading or just plain wrong, experts say. The end of oil and gas Noone can say for sure how much oil and gas we have left, but most experts agree that we are reac h ing the bottom of the barrel. We will probably see oil production peak by 2015, and start to decline by 2020, says Poul Erik Morthorst, an energy spe cialist at Risø National Laboratory in Denmark. Of course the oil companies will nd new reserves, but this is not likely to be at a rate that will match the current growth in consumption. Gas should last for 1015 years longer than oil, Morthorst says, if we continue to use it in the same way that we do now. But as oil produc tion declines, some current uses for oil may be replaced by gas which could mean that reserves are used up faster. Oil companies, for instance, are now rushing to build gastoliquids GTL plants that convert natural gas into liquid fuels and chemical feedstocks. Although many energy experts believe that the price of oil could stabilise at 50barrel in the me dium term, they agree that the era of cheap oil and gas has passed. Ultimately, these resources are likely to be seen as too precious to be used as fuel reserving them to make chemicals and plastics may help supplies last a little longer. 2006-12-04T14:10:02+01:00http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/GB603/?Page=6http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/GB603/?Page=6And as reserves become exhausted, both price and price volatility can only increase. Political tensions, terrorism and crime are forcing many nations to reduce their dependence on imported energy and look for homegrown solutions, including wind power. It is possible, of course, that future petroleum engineers will develop large reserves of fossil fuels that are not accessible or not economic with todays technology. Examples include tar sands, and methane hydrates locked up in permafrost and deep oceans. The world also has enough reserves of coal for several hundred years. But the problem of climate change caused by rising CO2 levels will seriously limit the extent to which we should be burning any hydrocarbon fuels. The big one climate change According to Professor Robert Socolow of Princeton University, USA, there is now a rm sci enti c consensus that the worlds climate is chang ing because CO2 from the burning of fossil fuels and methane from agriculture are trapping solar heat within the atmosphere. The global average temperature changes are small 0. 7C so far, and perhaps 35C to come but they are enough to cause changes in weather and sea level that will expose millions of people to drought, oods and storms. Human activity currently puts a net 7 billion tonnes gigatonnes, Gt of carbon into the atmos phere every year. This has already increased the concentration of CO2 in the atmosphere to 380 parts per million ppm, compared to less than 320 ppm in 1960. Worse is to come, however, because energy use is linked to prosperity and to popula tion, both of which are rising. At current growth rates, by 2055 we will be emitting 14 Gty of carbon and the atmospheric CO2 concentration will be above 500 ppm. Be cause of the time lag in the global carbon cycle, however, atmospheric CO2 could eventually rise as high as 850 ppm, with disastrous effects on Earths climate. If we can hold carbon emissions at their current level for the next 50 years, and subsequently re duce them, scientists believe it should be possible to limit the future CO2 peak to 500 ppm. This is still enough to have serious environmental conse quences. Predictions of the actual average tem perature rise vary, but centre around a value of 3C four times the effect we have seen so far. A sustainable future needs energy technologies that promote equality and security while limiting CO2 emissions. The 500 ppm CO2 ceiling is a com promise between the desirable and the practical holding carbon emissions at their current level for the next 50 years is reckoned to be technically possible, but it will certainly not be easy. The most important lesson is that no single approach to reducing CO2 will be enough. Breaking down the problem At a meeting held earlier this year at the UKs Royal Society in London, Professor Socolow out lined the size of the CO2 problem. If energy demand grows as predicted, Socolow said, then to hold CO2 emissions levels constant we will have to prevent the emission of 175 Gt of carbon over the next 50 years. That is an average of 3. 5 Gt of carbon every year, but because we are effectively starting from zero, we will have to ramp up the amount of carbon reduction until by 2055 it reaches 7 Gt a year. 62006-12-04T14:10:02+01:00http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/GB603/?Page=7http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/GB603/?Page=7Figure 1 shows how carbon emissions will grow if we do nothing, and the at path that we could achieve if we try hard enough. The gap between these two lines Socolow refers to as the stabilisa tion triangle. 7 Gtyear of carbon is a huge amount too big to be achieved through any single carbon reduction technology, Socolow says. Instead, we must break the problem down into manageable pieces. The number and size of these pieces is up for debate, but he suggests we begin with seven, each starting from zero and increasing steadily to 1 Gtyear by 2055. The result is that we divide the stabilisation triangle into a series of smaller wedges Figure 1. In total, the seven wedges add up to yield our target of 7 Gty by 2055. Socolows point is that this will be so challeng ing that we need to follow every avenue that looks reasonable. Its too soon to pick winners, he says. The wedge method decomposes a heroic challenge into a limited set of monumental tasks. To achieve one wedge, we must replace the equivalent of 700 GW of coal red generating technology with lowcarbon technology by 2050. By Socolows estimate this could be done by, for instance, cutting the amount of electricity used in homes and commercial buildings by 25 per cent tripling the worlds existing nuclear generating cap acity devoting an area of 140 x 140 km 2 million hectares to solar cells capturing and storing the CO2 released by 800 large 1 GW coal red 1954 7 14 20042054 Toward tripling Avoid doubling Historical carbon emissions with two potential pathways for the future Year Currently predicted path Billions of tons of carbon emitted per year Historical emissions Flat path Stabilisation triangle Figure 1 Holding Carbon emissions constant means avoiding emissions within the stabillisation triangle red that bridges the gap between current emissions and those that result from predicted growth in energy. Comstock Images Comstock Images 72006-12-04T14:10:02+01:00http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/GB603/?Page=8http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/GB603/?Page=8power plants running 2 billion vehicles on bio fuels, which would require onesixth of the worlds agricultural land or putting up a million 2MW wind turbines. Each of these targets is achievable, but the message is clear we cannot pick and choose. The world needs to start using every energy conservation strategy and lowcarbon generating technology that looks practical and reasonably affordable and wind power, as one of the cheap est and bestproven renewable sources, has an essential part to play. Wind to 20 per cent and beyond Not every country, of course, will choose the same set of technologies to reduce carbon emissions. It depends partly on local conditions, says Poul Erik Morthorst, which helps to explain why Norway gets all its electricity from hydro, and why Austria uses a lot of biomass. But some decisions are fairly arbitrary. France and Sweden have a lot of nuclear capacity, for instance, but in Denmark we decided to go for wind instead. This was a political deci sion, and if we had chosen the nuclear option we would probably not have the wind industry that exists today. Of the many countries around the world that have invested seriously in wind power, Germany and Denmark are two that show clearly what others can aim for. With more than 18 GW of in stalled wind capacity, Germany accounts for nearly half the European total. What is most impressive, though, is that Germany is harvesting nearly 80 per cent of its available wind resources, accord ing to Professor Bill Leithead of the University of Strathclyde, Glasgow, and the Hamilton Institute in Dublin. Denmark, meanwhile, is using less than 20 per cent of its potential wind resource, but manages to generate around 20 per cent of its electricity needs. It has worked well until now, but we are not yet using wind in the best possible way, says Poul Erik Morthorst. Even the company that runs the transmission grid has agreed that we could increase this share to 40 per cent by using technol ogies such as demand management. The Euro pean Wind Energy Association EWEA believes that wind could supply 20 per cent of Europes electricity by 2030, even allowing for a 50 per cent increase in demand. Available, controllable. . . Opponents of wind power often claim that wind is an intermittent resource that must be backed up with conventional power sources because it cannot be relied on. It is certainly true that at any one site, the wind is likely to be not blowing for a signi cant part of the time. Across a region or country, how ever, the wind is almost always blowing some where, so the distributed nature of wind power actually makes this a fairly reliable technology. On top of this, transmission systems already need enough backup generating capacity to cover the sudden loss of a large 12 GW power station. Poul Erik Morthorst, an energy specialist at Risø National Laboratory in Denmark. Professor Robert Socolow of Princeton University, USA. 82006-12-04T14:10:02+01:00http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/GB603/?Page=9http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/GB603/?Page=9For small amounts of wind power, this is enough to compensate for winds variability, and at greater wind penetration it is relatively cheap to add back up capacity. According to Professor Leithead, for instance, the UK would need an extra 300500 MW of conventional capacity if wind provided 10 per cent of the countrys electricity, and this would add just EUR 0. 003k Wh to the cost of wind power. A more concrete problem is the fact that exist ing electricity grids are designed to take electri city from a relatively small number of large power plants, generally built near centres of population. Wind power plants, in contrast, are often in somewhat remote areas where the grid, in engi neering terms, is weak. In some cases it will cer tainly be necessary to reinforce the grid to han dle high levels of wind power. The same is true of other nonfossil generating technologies, how ever, while the relatively large size 100 MW of modern wind power plants means that they can be treated more like conventional power stations. Modern wind turbines also score highly in terms of the quality and controllability of the power they deliver to the grid. The large size of todays wind power plants brings new requirements for control lability and loadshedding, says Poul Erik Global atmospheric concentrations of three well mixed Greenhouse Gases Methane Carbon Dioxide Nitrous Oxide Year Radiative forcing Wm2 Atmospheric concentration CH4 ppb N2O ppb CO2 ppm 1. 5 1. 0 0. 5 0. 0 0. 5 0. 4 0. 3 0. 2 0. 1 0. 0 0. 15 0. 10 0. 05 0. 0 310 290 270 250 1750 1500 1250 1000 750 360 340 320 300 280 260 1000 1200 1400 1600 1800 2000 Indicators of the human influence on the atmosphere during the Industrial Era 9 Source www. unfccc. int2006-12-04T14:10:02+01:00http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/GB603/?Page=10http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/GB603/?Page=1010 Images Comstock Images2006-12-04T14:10:02+01:00http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/GB603/?Page=11http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/GB603/?Page=11Morthorst, and wind turbines can react very fast, within a few seconds. Coal and especially nuclear are much less responsive, and responsiveness is important to the companies who are responsible for balancing supply and demand on the grid. . . . and affordable too The drastic consequences of climate change mean that, in one sense, cost should be the last issue we think about when considering alternati ves to fossil fuels. But, of course, any new tech nology stands the best chance of being adopted quickly if it is costcompetitive with existing systems and that is increasingly the case with wind. Professor Leithead estimates the cost of wind power at EUR 0. 0450. 06k Wh, making wind competitive with new coal EUR 0. 0380. 068 k Wh and new nuclear EUR 0. 060. 10k Wh capacity. Wind power also has very low external costs over the complete fuel cycle, he says EUR 0. 0026k Wh compared to EUR 0. 020. 15 for coal. Calculating the cost of any generating technol ogy is notoriously tricky because of the presence of indirect costs, such as the environmental costs of coal mining or climate change, and subsidies both visible and hidden. Certainly, most experts agree that wind power, especially offshore, is not yet as cheap as power from natural gas. Paradoxi cally, this does not mean that using more wind power will increase the cost of electricity. Because its fuel is free, wind power has a low marginal cost. This means that in a mix of gener ating technologies, wind enters the overall supply curve the line that shows how quantity depends on market price at the bottom. When plenty of wind power is available, it moves the supply curve to the right and lowers the market price. This is simply a consequence of how the power market works, but I dont think it has been appreciated widely enough, says Poul Erik Morthorst. Wind power does cost more, but when it is plentiful it can reduce the total cost of power by 57 per cent. There is also an argument that the hidden costs of fossil fuel price volatility more than offset any apparent disadvantage as far as wind is concerned. Economist Dr. Shimon Awerbuch of SPRU, a research institute at the University of Sussex, UK, is a champion of this view see Vestas Global, April 2005, p. 7. Oil price spikes between 2000 and 2005 cost the EU EUR 400700 billion, which is more than the estimated total investment needed to meet the EU target of 20 per cent renewables by 2020, he says. Talking about the cost per k Wh without also talking about risk is like watching a movie with the sound turned off. Awerbuch recommends a portfolio approach to energy, in which lowcost but pricevolatile fuels such as natural gas are balanced by a signi cant proportion of lowrisk generation from sources such as wind. This, he says, can be mathematically shown to yield the lowest expected generating costs. Moreover, wind and other nonfossil sources yield sizeable macroeconomic GDP bene ts 2535 per cent of each MW investment in wind power may be offset by GDP losses that will be avoided by switching away from fossil fuels, Awerbuch notes. Unfortunately for wind power, the losses asso ciated with fossil fuel price rises tend to affect entire economies rather than the generating companies themselves. Companies that invest in wind dont have a way to capture the bene ts of the risk miti gation that they provide for the gener ating portfolio as a whole, says Awerbuch. In fact, gas investors in many countries seem to have enough market power to pass on the risk of fuel price rises to their customers. So there may be a case for supporting investment in wind. As long as we examine the wide picture, then, wind power is cheaper than the alternatives. Wind power plants are quick to build, the energy payback time for a modern wind turbine is 610 months, and decommissioning is paid for by the scrap value at the end of the turbines 20year life. Wind power can shield us from further cli mate change, and it will continue to be a reliable source of electr2006-12-04T14:10:02+01:00http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/GB603/?Page=12http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/GB603/?Page=12Taleclear are to edevelo Talent and clear goals are to ensure development 122006-12-04T14:10:02+01:00http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/GB603/?Page=13http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/GB603/?Page=13ent and r goalsensureopme Vestas has launched a new Graduate Programme to attract talented, young professionals one of several initiatives aimed at supporting Vestas growth with the right people and the right culture. 132006-12-04T14:10:02+01:00http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/GB603/?Page=14http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/GB603/?Page=14Talent and clear goals are to ensure development The 19 participants started their careers with Vestas with a 14day introduction course at Sitges near Barcelona. The course included a presentation by Ditlev Engel, President and CEO of Vestas, and a visit to a wind turbine site. On 1 September 2006, 19 new employees arrived at Vestas for their rst day at work and in doing so, turned the page on a new, important chapter in the history of the Group. The reason for this is that they are the rst participants in the Vestas Graduate Programme, a 2year programme designed to give participants the best possible conditions for developing their talents talents that are to help them become Vestas managers and specialists in the future. The new programme is one of the tangible results of closely targeted input at Vestas intended to promote skills devel opment among current staff, and to attract the best candidates to the company. Vestas commit ment to this initiative is re ected in the fact that the company has increased the budget for this area tenfold, explains Roald Jakobsen, President of Vestas People Culture. The market on which Vestas operates is distin guished by rapid and continuous change. This nat urally makes demands on both Vestas and Vestas employees, who must constantly develop, he says. Roald Jakobsen highlights three tendencies that greatly in uence the way Vestas adapts and helps employees to develop their skills a rapidly expanding market, increased globalisation, and a fundamental shift in distinctive features of both customers and competitors who are currently primarily multinational and extremely professional companies. All three are pointing in the same direction, namely towards the importance of constantly developing skills and competences at all levels within the organisation, so that we are in a position to supply our customers with the best possible products and have the capacity to function as a professional and competent partner in all phases, says Roald Jakobsen. The growth of the market means that we at Vestas have to increase our total workforce signi cantly over the coming years. To deal with such growth, we must constantly have the capacity to attract skilled workers to the company which is what we are doing through the Vestas Graduate Programme, for example. At the same time, we have to secure our internal food chain so that we can be sure of nding skilled employees and help ing them to develop so that they can take on key positions at Vestas in the future, he continues. Geography not important Participants in the Vestas Graduate Programme work in areas including project management, sales, nance and supply chain management. During the 2year programme, they work at Vestas facilities in three different countries to help them get to know the global organisation at a range of levels. We received 800 applications for the 19 places available, and we believe that we have taken on a 142006-12-04T14:10:02+01:00http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/GB603/?Page=15http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/GB603/?Page=15group of highly skilled employees who can cer tainly help in uence the future development of Vestas, says Anni Vind Frandsen, Talent Manager, with regard to the programme partici pants. The new candidates come from ten differ ent countries in Europe, Asia, the Middle East, North America and Australia. We want the very best employees for Vestas, and in this context, geography is not important. It is the talent that counts. Talent has always been a central driving force behind Vestas development, and we have now created a structure speci cally designed to develop it, says Anni Vind Frandsen. One of the rst participants on the programme is Elsa Domene Ruiz, from Spain, who is currently working in the area of nance. Working for a global company like Vestas means waving goodbye to a local mindset and starting to see things from a wider perspective. It also gives you the chance to work with all kinds of people from all parts of the world. In my opinion, it is important to have the chance to travel the globe and learn about other cultures and other ways of working. I am certain that Vestas will give me the opportunity to develop both professionally and personally, says Elsa Domene Ruiz. However, skills development at Vestas is not limited to the participants in the Vestas Graduate Programme. Vestas has also stepped up its focus on its own training system, the Vestas Business Academy, which provides courses for all Vestas employees. In addition, an internal talent devel opment programme has been launched to nd those employees who have the potential to be come managers. Finally, leadership development initiatives for current managers are to raise the company to an even higher level. One of the tools in this regard is the introduction of a performance culture, as Roald Jakobsen explains This means that we set goals for our input for individual employees, too and that we then measure our performance in relation to our goals. This puts us in a position to ensure that we focus on the most relevant areas through supplemen tary training, for example. In this way, we can make sure that we constantly optimise the Vestas organisation for the bene ts of our customers, partners and other stakeholders. Competences and culture Development is also a key concept at Vestas Technology RD. Vestas is currently investing more heavily in research than ever before. In fact, Vestas devoted EUR 42. 6 million to research in the rst six months of 2006, compared to EUR 24. 1 million during the same period last year. In 2008, many of the employees of Vestas Technology RD will be moving into a new devel opment centre in Århus, Denmark. At that time, it is expected that the development division will employ 800 people compared to 500 today. Vestas is also working on establishing a develop ment centre in Singapore, where the employees are to work closely with their colleagues in Denmark and India to develop the Vestas prod ucts of the future, as Finn Strøm Madsen, President of Vestas Technology RD, explains. The new development centre is scheduled to open during the rst six months of 2007. This is another way of generating develop ment, by setting up the best possible framework for a professional environment centred on innovation and collaboration. Not only does this give Vestas the best options for maintaining its leading position in the industry, but it also helps to lay the foundations for allowing our employees to develop, says Finn Strøm Madsen. In Roald Jakobsens opinion, it is precisely this development that is to assure Vestas future success. We are to be a professional, competent organ isation both now and in the future, and to succeed in this aim we need the two elements that form the name of our business unit People Culture. The right people and the right culture. 152006-12-04T14:10:02+01:00http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/GB603/?Page=16http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/GB603/?Page=16Safety First The increased focus on safety at Vestas is encouraging everyone, including service technicians, to speak up and set limits. 162006-12-04T14:10:02+01:00http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/GB603/?Page=17http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/GB603/?Page=17It is no secret that building, installing and servicing wind turbines can be challenging and dangerous work. Size, height, weight, wind, water, harsh weather conditions you name it service techni cians must deal with these factors on a daily basis. In the past, the target at Vestas Northern Europe was that incidences of injuries must not exceed 25 see fact box on page 21. For some years, Vestas Northern Europe lived up to its target but in recent years, there have been more industrial ac cidents than usual. And in January 2006, a Vestas employee was killed in a tragic and meaningless accident that shocked everyone and increased the companys focus on safety. According to Maj Britt Jensen, Quality, Safety and Environment QSE Manager for Vestas Northern Europe and Vestas Asia Paci c, the incidences of injuries in Vestas Northern Europe, Denmark was 31 last year equal to 28 reportable accidents and 39 in the 2004 equal to 43 report able accidents. This is clearly not acceptable. As a result, the management of Vestas Northern Eur ope decided in January 2006 to increase its focus on safety. The result is a project called Safety First. Apropos the increased focus on safety, Presi dent and CEO Ditlev Engel says emphatically in the special safety issue of the companys inhouse magazine Vestas Inside that safety always comes rst. Failure is not an option at Vestas, he says, and compromising safety no matter how insigni cant the situation constitutes a failure. 172006-12-04T14:10:02+01:00http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/GB603/?Page=18http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/GB603/?Page=18Everyone at Vestas should know that if faced with the choice of delaying a job and possibly costing Vestas money by following safety procedures or compromising your own or a colleagues safety dont be in doubt safety always comes rst The objective of Safety First is to increase the awareness of safety issues throughout Vestas Northern Europe and reduce the incidences of in juries to less than 25 in 2006 and to less than 15 in 2008. The project is being rolled out in Denmark, but will continue in the rest of Vestas Northern Europe once the feedback and experience gained from activities in Denmark are analysed. First steps Ms Jensen explains, After the decision to launch the project in Vestas Northern Europe was made we went through an analysis phase which led to various initiations such as training top managers in the international health and safety management system OHSAS 18001. Our objective in Vestas Northern Europe is that all the countries in this region are OHSAS 18001 certi ed by the end of 2008. In Vestas Northern Europe, only Sweden and Celtic lack certi cation. This fall, safety awareness training of task managersmiddle managers and service technicians begins. There will be a strong focus on the roles and responsibil ity of managers in terms of safety, continues Ms Jensen. Our goal is to encourage everyone at Vestas to speak up when they feel there is a prob lem or if safety has been compromised in any way. In short, we want everyone to know they have the right to draw the line. The bottom line is we want all our people to come home safely to their families every day We never want to lose another colleague again. Preventing accidents Another important aspect of Safety First will be an increased focus on why accidents happen. When accidents occur, we need to look more closely at what went wrong and at what almost went wrong near misses and at how these things can be prevented from happening again in the future, continues Ms Jensen. We want our safety initia tives to be both corrective and preventive. Our plan is to analyse accidents and near misses so we can correct what happened and take the neces sary actions to prevent a repetition of the same problem. An important part of this process will be funnelling the information gathered about accidents and near misses to Vestas Technology RD so that Vestas if necessary can improve the present design of turbines and learn from these incidences when developing new turbines to eliminate or reduce the risks. We need to ensure that the lines of communications are open between technicians in the eld and the turbine designers at product development. In the old days when Vestas was a smaller organisation, this was a natural process. But now that Vestas has become 182006-12-04T14:10:02+01:00http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/GB603/?Page=19http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/GB603/?Page=19192006-12-04T14:10:02+01:00http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/GB603/?Page=20http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/GB603/?Page=20such a large organisation, service technicians may no longer be close enough to say oh I hit myself on this bit when I climbed up or this bit shouldnt stick out or this is too slippery. But the people in Vestas Technology RD need this valuable input in the design phase. So Safety First is designed to promote open communication. One of our goals is to ensure that it is easy for our service technicians to report back when something can be improved. Field visits To encourage feedback and improve communi cation, a new system of eld visits has been set up to make this happen. Starting at the end of September, every service team in the eld will receive a personal visit by a task manager and a safety representative for a facetoface talk about how work is going in the eld. Each interview is expected to last between one to three hours. The main purpose of these interviews is to obtain as many suggestions for improvements as possible. According to Ms Jensen, the visits are expected to make a big difference because usually technicians dont see their task managers on site but normally just talk to them on the phone. Its one thing to talk to your manager about a problem on the phone, its another thing to actually send people to the sites to see whats going on with their own eyes. Back at the of ce, the input that has been collected will be processed, prioritised and sent to the relevant people and departments so that Safety coordinator on a mission Allan Rose was a Vestas service technician for ve years until he injured his arm and shoulder when a ladder fell on him as he was get ting out of a nacelle in the autumn of 2005. He was operated on and the injury has required a long rehabilitation period. Rose, who is just 29, will probably never be able to work as a service technician again and he says facing the truth was a dif cult process for him. At rst I thought I would recover fully and be able to go back to work. But that was not the case and it took me a long time to realise that I would never be able to do that kind of work again. Once he realised that the injury had changed his life forever, Rose started thinking about what he could do. Thats when I realised I wanted to work with safety. Since I have experienced what a serious accident can mean for ones life, I decided to go to Vestas and tell them I could help them improve safety. My proposal was received with open arms and today I have a full time job as a safety coordinator at Quality, Safety and Environment QSE. Rose will be one of the new team of people who will be visiting the sites in Den mark and other countries in Northern Europe to talk to service technicians about safety. He feels that his presence will be an important plus to the team. I know these men and understand their problems since I worked as a service technician for ve years I believe the best way to communicate is face to face. Service technicians have their own language and I am sure that my background as a service technician will help promote constructive dialogue. Another priority for Rose will be giving feedback to the service technicians. Communication goes both ways and it will be important to tell the people in the eld that someone back home is listening to them and that concrete results are coming out of this process. Allan Rose, Safety Coordinator. Maj Britt Jensen, Quality, Safety and Environment Manager for Vestas Northern Europe and Vestas Asia Paci c. 202006-12-04T14:10:02+01:00http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/GB603/?Page=21http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/GB603/?Page=21the appropriate improvement projects can be initiated. Some will be handled internally at Vestas Northern Europe and others will be handed over to the other business units such as Vestas Technol ogy RD. Allan Rose, a former service technician who was injured in an accident, has been hired to collect and document the reports from the eld. See box for Roses story We want to get to the point where the safety process is preventive rather than corrective so we know in advance how to build turbines so there are as few accidents as possible, concludes Ms Jensen. Incidence of injuries At Vestas, the incidence of injuries is de ned as the number of industrial injuries per 1, 000, 000 working hours. Industrial injuries are de ned as incidents that cause one days absence or more in addition to the day of the incident itself. According to Frans Krone Jørgensen, Environmental Coordinator at the department of Quality, Safety and Environment at Vestas Northern Europe, the number of industrial injuries and incidences of injuries in Denmark is as follows Year 2002 2003 2004 2005 Q3 2006 Injuries number 22 23 43 28 18 Incidence of injuries 26. 4 25. 2 38. 5 30. 7 43. 1 212006-12-04T14:10:02+01:00http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/GB603/?Page=22http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/GB603/?Page=22Constitution projects generatevisible results One of the new concepts that Vestas employees had to get used to after the arrival of Ditlev Engel as President and CEO is that of The Vestas Constitution. This concept has to do with laying common foundations for the mindset, culture and processes throughout the Group. As such, it is closely linked to the company mission, which states that at Vestas, failure is not an option. The Vestas Constitution involves, for example, a wide range of speci c improvement projects intended to ensure overriding quality and, at the end of the day, to lead to more satis ed customers and improved earnings. These projects are now beginning to generate the rst visible results. 222006-12-04T14:10:02+01:00http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/GB603/?Page=23http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/GB603/?Page=23Change processes usually start with the man agement of a company, from where they trickle down and spread to the rest of the organisation. As a consequence, it usually takes a while from the launch of a project until the effects start to become tangible to individual employees. During this phase, the process will appear to most people as a collection of foreign and often incomprehen sible concepts that can be dif cult to relate to. One of the foreign concepts that has started to become apparent at Vestas different business units in the recent year is that of Six Sigma. Even though at rst glance the name seems to refer to a computer game, it is in fact an internationally recognised tool for generating ongoing improvements in companies production processes, administrative processes and product development. Brie y put, Six Sigma is to make Vestas more professional so that the company can adapt to the constantly increasing demands distinctive of a rapidly growing market. Palle Haderslev, who is responsible for the Vestas Improvement Programme at the Vestas Business Academy, relates that the introduction of Six Sigma falls under what is known as Constitution Project No. 4. As an important part of our overriding Improvement Programme, we have chosen to work with three recognised methods for achieving ongoing improvements Lean, TPM Total Productive Maintenance and Six Sigma. In some companies, the decision is made to elevate one of these methods to the rank of overriding strategic management philosophy. However, we at Vestas have chosen to use them as structured and systematic tools for improve ment that can be applied individually or com bined within the separate business units depend ing on goals and requirements, explains Palle Haderslev. He continues It is a little like having a toolbox containing a saw, a hammer and a screw driver. Each of these tools is ideal for some processes, while in other cases it is better to choose one of the others to achieve the desired result. In other words, there is no con ict between the methods quite the reverse there are many situations in which there is much to gain from combining them. At the Vestas Business Academy, a number of important roles are linked to the introduction of Six Sigma. On the one hand, we are to ensure that suf cient numbers of employees are trained in the skills necessary to use the tool actively, and thus generate the candobetter culture and ongoing re nements that make up the overrid ing goal of the Improvement Programme. On the other, it is essential for us to collate and commu nicate best practice so that the various business units can make the very most of each others experience in the area, says Palle Haderslev, who goes on to add that to date, 24 employees have been certi ed to the level known as Green Belt in Six Sigma language and that more are cur rently being trained. The foundations of the Six Sigma method com prise a standardised project process involving ve Palle Haderslev, Programme Manager, Vestas Business Academy. 232006-12-04T14:10:02+01:00http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/GB603/?Page=24http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/GB603/?Page=24phases see fact box on page 26. Each phase is important to the nal result, so early on in their training, course participants are required to de ne a training project that is then to be carried out in parallel with the theoretical section of the course. In this way, the new theory is continuously tested in practice, and even the rst project will generate a nancially noticeable improvement for Vestas. 85 per cent fewer stoppages in the V801. 8 MW VRCC Two of the employees who completed the Six Sigma course in May July are Ole Sønderby and Tue Hald. They are senior engineers specialising in system integration and, in consultation with their manager, chose to de ne a training project entitled Reduction of failures and downtime rela ted to overspeed on the V801. 8 MW VRCC. The wind turbine in question is the American ver sion of Vestas V801. 8 MW model, and colleagu es at Vestas Americas had noticed that this model was beset by a disproportionate number of stop pages in connection with strong gusts of wind. Ole Sønderby relates that Six Sigmas systemat ic application of data collection, mathematics and statistics in connection with the project produced a range of particularly tangible results, which would probably have remained undiscovered had a conventional problem solving approach been used. By systematically collecting and analysing data from no fewer than 112 overspeed situations, we found out that the root of the prob lem was the turbine controller, which was quite simply not doing its job well enough. In addition, our analyses showed that there were bene ts to be gained by expanding the permissible range of variation for the speed of revolution by as much as 25 per cent. Finally, by applying Design of Ex periments methodology, we zeroed in optimised controller tuning. The really eyecatching result of the project is the fact that, according to the simulations that Ole Sønderby and Tue Hald have performed, it will be possible to cut the number of stoppages by 85 per cent. This is a result that people can relate to and it is worth noting that these improvements have been achieved exclusively by utilising the components to the full and adjusting a few parameters in the controller software. The costs linked to achieving this remarkable improve ment are therefore very limited, particularly when viewed in relation to the value of results achieved, says Ole Sønderby. What is Six Sigma Six Sigma is a statistically based tool in tended to minimise the number of faults and errors in all work processes, including produc tion, assembly, administration, service and product design. Sigma is actually a letter of the Greek alpha bet that is also used as the symbol for standard de viation i. e. variation in a process. Variation results in un wanted errors and inef cient work processes. The goal of Six Sigma is to reduce variation system atically so that there are no more than six standard deviations between the average value and the nearest threshold value. This means that there must not be more than 3. 4 errors per million possible. In prac tice, Six Sigma is therefore a tool used actively to achieve zero errors and to ensure high quality in the work processes. At the end of the day, the results are more satis ed customers and increased earnings. Source ASI 242006-12-04T14:10:02+01:00http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/GB603/?Page=25http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/GB603/?Page=25Valuable hours saved In another training project, Bo Pedersen, Head of Test Development at Vestas Control Systems, took on a particularly tangible problem that had long been causing headaches for the production staff at Vestas Nacelles. The test performed on the hub for our 2 MW wind turbines could last for anything from 2 to 22 hours, which had the un fortunate effect of making it a real bottleneck for production and, as a result, delivery, explains Bo Pedersen. Bo therefore used his Six Sigma tools to analyse the subsidiary processes in the test, and this work produced an unexpected result. To our surprise, we found that the problem was that the hydraulic oil often became contaminated during the test, partly because the products from a single supplier did not meet the purity requirements in our purchase speci cation. The solution thus involved both setting up a supplementary clean ing process for the hydraulic oil and opening a dialogue with the supplier in question with a view to sorting out the quality problem. In practice, the project has made it much easier for the produc tion staff to de ne the test tempo more accurately, which, in turn, means that they can plan produc tion much more precisely, for the bene t of both Vestas and the customer. In fact, the test can now be completed in around an hour and a half. Thus far, Bo Pedersen is very satis ed with the Six Sigma experience, and he feels that he has plenty of backing from those around him. To start with, it was just a phrase that people had dif culty pronouncing. However, as things gradually be came more tangible, my colleagues started to see that there was a concrete return at the end of the process, and I clearly noticed genuine interest and enthusiasm, he says. The crucial role of the managers Palle Haderslev, Programme Manager, considers success to be dependent upon the managers of the various business units adopting Six Sigma and building up a general understanding of the opportunities it offers ideally even before their units send the rst employees on courses in the improvement tool. It makes no sense if the newly certi ed employees have to battle uphill through the system to be allowed to apply their new skills. So we offer both sales and production units the chance to hold a 112day Management Aware ness Seminar for their departmental heads not to certify them as either green or black belts in Six Sigma, but to provide them with insight into the tool and the opportunities it offers. At the same time, Palle Haderslev stresses the importance of ensuring that the training projects the Six Sigma course participants de ne are ac tually rooted in real problems that would have to be solved in any event. Most managers would have no trouble at all in dreaming up some kind of ctitious problem, but when the course par ticipants actually have the capacity to deal with existing problems during their training, there is no reason not to let them do so, he says, before add ing that in principle, the 3month training course is run within normal working hours, which is yet another argument in favour of aiming for a tangi ble return on the individual participants training projects. A return which may, for example, take the form of everything from reduced test times for a component to reduced stoppages from strong gusts of wind. 252006-12-04T14:10:02+01:00http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/GB603/?Page=26http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/GB603/?Page=26Morten Skifter Andersen, Risk Analyst. When Vestas sells wind turbines, customers are offered the option of purchasing a service con tract designed to shield them from unpleasant surprises both technological and nancial. For Vestas, the pricing of these service contracts has always been a critical factor. It is a matter of nding a price that is not only attractive to the customer but also provides Vestas with the most reliable picture possible of the nancial risk. Contracts of this kind are often calculated using both best and worst case scenarios. In other words how well or badly can things go However, such calculations are not particularly op erational, so one of the 13 Constitution Projects is devoted speci cally to improving the nancial evaluation of service contracts. Last summer, Morten Skifter Andersen, a Risk Analyst at Group Finance, took up the chal lenge. As part of his Six Sigma green belt training, he de ned a training project intended to cre ate a simulation that involves using the lifetimes of critical wind turbine components to calculate more precisely the nancial risk linked to a service contract. Using Six Sigma as a tool makes you think your data basis through very thoroughly before you start drawing your conclusions, stresses Morten Skifter Andersen, who goes on to say that for his training project, he used historical data from two Polish wind farms. Applying the process resulted in the speci cation of a range of critical components in the turbines and, more importantly, the likelihood of the individual components malfunctioning. This put us in a position to perform what is known as a Monte Carlo simulation, says Morten. He explains In a Monte Carlo simulation, you moreorless ask the computer to play heads or tails for each and every critical component. However, the likelihood for malfunction is not precisely 5050, but de ned by the service lifetimes of the individual components. In this way we can, for example, set up 10, 000 simulations and then see which combinations of errors andor malfunctions occurred in each of them and then use these results to calculate the associated cost to Vestas. As a very tangible result of Morten Skifter Andersens simulation model, analysts at Vestas can now set the price of the service contracts on the basis of a much more precise risk pro le. We can now choose to cover this or that percentage, and then set the price accordingly. The simulation has initially been tested on historical data, and the next step will be to integrate it into the broader, futureoriented work. This is a challenge Morten Skifter Andersen is really looking forward to. Thanks to my new Six Sigma skills, I have been given the opportunity to work on quantifying risks in a systematised fashion which was quite simply not possible previously, so I will certainly be using these tools in my work in the future, concludes the newly certi ed Six Sigma specialist. More reliable gures on the risk Five phases in a Six Sigma process The foundations of the Six Sigma method comprise a standardised project process involving the following ve phases De ne de nition of the problem and the customers requirements. Measure measurement of the function and faultserrors of the process. Analyse analysis of data and identi cation of the causes of the problems. Improve improvement of the process to eliminate causes of faultserrors. Control control and maintenance of the solution to prevent the faults errors recurring. 262006-12-04T14:10:02+01:00http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/GB603/?Page=27http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/GB603/?Page=27There is nothing new about Vestas playing an active role on the energypolitical stage. For many years, the company has worked to in uence important political decisions on a wide range of national markets through involvement in national and international sector organisations such as the European Wind Energy Association EWEA, the American Wind Energy Association AWEA and the Global Wind Energy Council GWEC. The decision to set up the Vestas Governmental Relations Department is thus a reinforcement of our work to date, combined with recognition of the fact that Vestas, as the leading wind turbine manufacturer in the world, simply has to remain at the forefront of political processes on all markets, if the company is to have the opportunity to react to these processes and, where appropriate, attempt to in uence them towards a favourable outcome. Experienced diplomat at the helm As Head of Governmental Relations, Vestas has called on Peter Brun 39. For the past 14 years, Peter has been pursuing a remarkable career with the Danish Foreign Of ce, where he has operated as a diplomat at both bilateral and multilateral levels. During his career, Peter Brun has worked abroad at the United Nations in New York, at the Danish Embassy in Bonn and at the EU in Brussels. For the past ve years, he has also advised Danish export companies that have seen their commercial room to move cut back by political decisions on certain markets for example, through having their access to a market completely cut off or severely restricted as a result of new legislation or administrative decisions. Peter Brun took up his new duties on 1 August this year, and he is looking forward to the major challenges facing both him and his staff, whom he is currently recruiting. It is so exciting to work behind the political lines, and there can be no Few sectors are as heavily in uenced by political decisions as the energy sector. That is why we at Vestas must become much more politically active than we are today. Recognition of this fact has laid the foundations for the establishment of a new unit Governmental Relations. Vestas to improve contact with political decisionmakers 272006-12-04T14:10:02+01:00http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/GB603/?Page=28http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/GB603/?Page=28doubt that with this new unit, Vestas will be able to achieve very tangible results and thus create an even stronger platform for the direct sales work, says Peter Brun, who was asked, as one of his very rst tasks, to nd a suitable home in Copenha gen for Governmental Relations. The deal has just been clinched. We have found an ideal site close to both the motorway network and Copenhagen Airport. Support for the sales units Peter Brun stresses that Governmental Relations is to operate in close collaboration with the other parts of the corporate organisation, i. e. the SBUs Sales Business Units and PBUs Production Busi ness Units, including choices concerning the positioning of the function worldwide. The majority of the political work must necessarily be carried out in the various markets around the world, as you simply cannot keep your nger on the global energypolitical pulse from inside an of ce in Copenhagen. As a result, we will be posting Governmental Relations employees to the individual markets and giving them responsibility for cultivating and looking after national political interests, while the Copenhagen of ce will largely be functioning as a kind of sounding board, driver and best practice generator with the role of ensur ing professional, coherent and continuous political work. One of our rst tasks, for example, will be to coordinate the creation of a database of political contacts on individual markets. Similarly, we are to maintain continuous focus on communicating best practice so that all units have access to the experience gathered in all parts of the organisa tion. Peter Brun adds that, after just a few weeks in his new position, he noted that a vast amount of information is owing through the company and he considers it essential to get this information systematised. The Governmental Relations of ce in Copenhagen is expected to be in place around the start of the New Year. It is all about being proactive To the question of what is needed to in uence political framework conditions, Peter Brun replies You have to have your nger on the pulse at all times, and know what is going on, when and where. This is an essential precondition for the ability to act proactively rather than reactively, which is still the norm for far too many compani es. According to Peter Brun, Vestas ability in the future to set up a good political network will thus become crucial to the results of the companys political work. For example, if a government is considering closing off a support scheme for wind power, it is often pointless to attempt to in uence the decision after the fact. Our task is therefore to pick up on the initial political considerations at an early stage so as to ensure, for example, that we know when an important subject is going to appear on the agenda. In such situations, it is es sential to ensure that the politicians and civil serv ants involved have the best possible conditions for making the right decisions by making sure that all the various political considerations regarding the environment, supply reliability and local politics are correctly weighted. Peter Brun continues You have to remember that political decisions are not taken in a vacuum. It would be wrong and bad for the decisionmaking process if the wind energy sector failed to set out its opinions and informa tion just like other energy suppliers do to a great extent all over the world. Once they have all the relevant information, it is up to the politicians to make the right decisions and, we hope, to rec ognise the value of our views and suggestions. Peter Brun adds Speci cally, since Governmen 282006-12-04T14:10:02+01:00http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/GB603/?Page=29http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/GB603/?Page=29tal Relations was established at the beginning of August, we have been making an active contribu tion to the energypolitical debate that is currently taking place in Denmark. At the moment, we are focusing heavily on this Danish debate, because we believe that the positive tendencies from here will spread to Europe and from there to the rest of the world. It is extremely positive that there is such strong backing for wind energy in Denmark, and that the latest statements from the Danish government seem to indicate that the country will remain an attractive wind power showcase for the rest of the world. Active on all fronts Over the coming months, Peter Brun will be work ing closely with the SBUs and PBUs to formulate a strategy for the political work on Vestas most important markets. Noone will be passed over, because units such as Vestas Technology RD also need to do political work. In this context, we will be prioritising very strictly to ensure that we con stantly make the best possible use of our resources. Even though we have taken a giant step forward with the establishment of Governmental Rela tions as a dedicated staff function, we cannot, for obvious reasons, play an active role in every single energypolitical decision made throughout the world, stresses Peter Brun. The fact that Vestas wants more direct contact with decisionmakers around the world does not mean that Governmental Relations is setting out to replace the national and international wind power interest organisations. On the contrary, Peter Brun is quick to emphasise that Vestas will continue to function as an active player in the vari ous national and international sector organisations, as these are often rmly anchored in national political environments, which makes them signi cant partners. As such, it is a matter of establishing close working relationships at local level. In other words, there will be two sides to our role at Gov ernmental Relations, says Peter Brun, who goes on to explain At sector level, we are to apply our in uence as the leading wind turbine manufac turer in the world, contributing, for example, to making the organisations even sharper in their overriding work. In parallel with this, we are to build up and maintain direct contact with the key decisionmakers on the political stages throughout the world. An important part of the vision The goals for Governmental Relations constitute an important part of Vestas vision of making wind power a signi cant source of energy, on a par with oil and gas. The wind energy sector has earned the right to take its place at the negotiating table when the time comes to plan the energypolitical strategies of the future. In this area, it is a question of ensuring that Vestas becomes a respected and natural member of the traditional energypolitical society, explains Peter Brun. The goal for Vestas is not simply to be invited to sit down at the table when politicians and civil servants are to lay down the framework conditions for the wind turbine industry. We are to make sure that we are invited to participate from the very start, i. e. when the work is being done to plan national energypoliti cal strategies on the various markets. It is here that we are to contribute to wind energy becoming an integrated part of the national energy mix. Just like the other parts of the Vestas organisa tion, Governmental Relations has its own speci c goals. Our competences in the eld of political work are to be so good that they live up to Vestas stated mission of failure is not an option. In prac tice, this means that we are to supply our business units with the accurate information they need to help them make the right choices for the future, concludes Peter Brun, the experienced diplomat and newly appointed Head of Vestas Governmen tal Relations. Peter Brun, Head of Governmental Relations. 292006-12-04T14:10:02+01:00http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/GB603/?Page=30http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/GB603/?Page=30The residents of the Southern Italian mountain town of Ricigliano had the chance to witness an extraordinary sight for ve days in October 2006, when a number of giant 44metre long blades for Vestas turbines were airlifted by helicopter to the site on a mountain peak 1, 000 metres above sea level. The Ricigliano project comprises 12 V903. 0 MW turbines, and the site is located in the Apennine mountains. As the V90 nacelles and towers feature a lightweight design, it was possible to transport them by lorry up the twisting mountain roads, but an alternative solution had to be found for the blades. The project set new standards for blade transport by air, as the blades were the largest ever to be transported to a site by helicopter. The previous record involved 32metre long blades for V66 turbines, which were airlifted to a project site in Austria. The challenges in Italy included safety in connection with the transport, and the Vestas employees at the site had re ceived special training in dealing with the landbased aspects of the operation. In collaboration with the transport supplier the American company Erickson Air Crane it proved possible to deliver all the blades to the site in just ve days, a day less than esti mated, despite two days of bad weather. Mobile training Vestas and the rest of the wind energy sector are experiencing a period of almost explosive growth, which makes high demands for the training of new employees. One of the initiatives Vestas has launched to ensure that Vestas products are always of the same high quality is the establishment of the Vestas Mobile Training Centre. This mobile unit is used to cover part of the training for new employees at Vestas blade factories. The centre consists of four 40foot contain ers, which are equipped with the tools employees will subsequently be working with at the factories. This provides new employees with theoretical and practical training in their future work processes even before the new factory is nished. Most recently, the Vestas Mobile Training Centre has been located in China, where it was used to help employees of Vestas new blade factory in Tianjin to complete part of their training. Part of the Vestas Mobile Training Centre arrives at the site of Vestas rst factory in China, the blade factory in Tianjin. Vestasin brief Record transport in Southern Italy One of the 36 blades on its way to the site in the Apennine mountains. 302006-12-04T14:10:02+01:00http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/GB603/?Page=31http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/GB603/?Page=31Local nacelles for the South European market President of the Junta of Castilla y Len, Juan Vicente Herrera, sign ing the book of honour. The rst nacelle leaving the factory in Villadangos. The mayor of Tianjin, Dai Xiang Long second from left, carries out the of cial opening along side HRH Prince Joachim of Denmark and Vestas President and CEO Ditlev Engel. The Capital Markets Day included at tour of the production facilities at Vestas blade factory in Tianjin. In May 2006, the rst 39metre blade rolled off the pro duction line at Vestas rst factory in China. The factory, which is located in the Tianjin Economic Technological Development Area TEDA, currently employs around 200 people and has the capacity to manufacture approximate ly 600 blades a year for V802. 0 MW turbines. On 8 June 2006, the factory was of cially opened by a select commit tee including HRH Prince Joachim of Denmark, Dai Xiang Long, Mayor of Tianjin, and Ditlev Engel, President and CEO of Vestas. On account of growing demand, the decision was taken to increase capacity even before the factory was nished. The extension is scheduled for completion in the middle of 2007, after which the factory will employ around 400 people and have the capacity to manufacture approx. 1, 200 blades a year. Capital Markets Day in China First Vestas blade from China Analysts, investors and the press were all given the chance to take a behindthescenes look at Vestas on 28 August, when Capital Markets Day was held in China. A total of 30 guests from all parts of the world participated in the event, at which Vestas new blade factory in Tianjin was the venue for activi ties including a guided tour of the production facilities. The event included a speech by Ditlev Engel, President and CEO of Vestas, who spoke about topics such as Vestas increased input in the area of People Culture. Other speakers included Søren Husted, President, Vestas Nacelles and Thorbjørn N. Rasmussen, President, Vestas Asia Paci c, who spoke of Vestas increased focus on and investment in the region, which experts believe may well become one of the largest markets in the world for wind energy. Bob Fritz, Vice President, Vestas Constitution gave the participants an insight into how the Vestas Constitution is working as a catalyst for anchoring the Groups strategy The Will to Win in the Vestas culture. 5 July 2006 was a memorable day for Vestas in Spain, as this was the date of the of cial opening of a new nacelle factory in Villadangos, in the province of Castilla y Len. The opening was carried out by President of the region of Castilla y Len, Juan Vicente Herrera and attended by a number of representatives of local government as well as Vestas, including Ebbe Funk, President, Vestas Mediterranean. The factory is expected to manufacture 300 nacelles a year. Vestas already operates nacelle production in Spain at the Groups factory in Viveiro, Galicia and growth in demand has meant that this factory, too, will be expanding its capacity in 2006 to 500 nacelles a year. Interest in and commitment to wind energy is more pronounced here in Spain than in almost any other part of the world, and with the opening of our new production facilities, we at Vestas are proud to initiate yet another phase of our partnership with Spain, said Ditlev Engel at the opening ceremony of the new factory. 312006-12-04T14:10:02+01:00http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/GB603/?Page=32http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/GB603/?Page=32India and wind energy India is the 4th largest market in the world for wind energy and with the countrys rapid economic growth, renewable energy is looking more and more attractive. 322006-12-04T14:10:02+01:00http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/GB603/?Page=33http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/GB603/?Page=33India is one of the worlds most interesting mar kets when it comes to wind energy. The potential for wind energy in this vast country is enormous and due to the pressing need for energy to sus tain the countrys high growth rate, the focus on winds potential is increasing. Moreover Indias dependence on coal and oil is worrying, so energy and the growing energy crisis are in the news. Energy is increasingly being discussed in the pub lic forum and it is becoming apparent to the general public that the lack of energy is a major bottle neck in sustaining the rapid growth of the Indian economy. In addition, there is growing concern for the environment, so the need for alternative energy sources is becoming apparent. Against this background, India has become the rst country in the world to set up a Ministry for Non Conventional Energy Sources MNES. Already now, India is the 4th largest market in the world when it comes to wind energy, accord ing to BTM Consult. At the end of 2005, India had a market share of 7 per cent compared to, for example Germany, which is the largest market with 31 per cent and Denmark, which is the 5th largest market with 5 per cent. 1 332006-12-04T14:10:02+01:00http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/GB603/?Page=34http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/GB603/?Page=34On 1 April 2006 installed capacity in India crossed the 5, 300 MW line thanks to a capacity addition of 1, 700 MW during the year 200506. But the potential for wind energy is far greater. As per data published by the Indian Ministry of Non Conventional Energy sources, the gross potential for wind power in India is 45, 000 MW. But according to Madhu Kumar, Corporate Com munications Manager at Vestas Wind Technology India Pvt. Ltd. , this estimation is based on wind studies made at mast heights of 2030 metres. With the present generation of higher capacity turbines, the estimated gross potential is more likely to be in the range of 100, 000 MW. The Indian challenge The Economic Survey of India 20052006 predic ted the growth of Indian economy at 8 per cent. According to the sector analysis of economic growth, electricity, water and gas supply must also grow by the same amount. Especially in a developing country like India, electricity or power acts as one of the major driving forces of the economy. However, the per capita consumption of elec tricity in India is around 408 k Whpersonyear and in developed countries like the United States it is around 13, 052 k Whpersonyear2. Also the average de cit of 9. 3 per cent and peak demand de cit of 12. 8 per cent adds to the woes of the country. The total installed generation capacity of India as as of 30 June 2006 was 1, 260, 089 MW 126 GW. Of this amount, renewables constitute almost 6, 191 MW. The fuel mix of the electricity generation is as follows3 Fuel Generation Percentage in MW Mix Coal 68, 488 54 Gas 13, 582 11 Oil 1, 202 1 Hydro 32, 726 26 Nuclear 3, 900 3 Renewable 6, 191 5 Total 126, 089 100 As conventional fuels like coal and oil are depleting at a rapid pace and overreliance on imports for power generation is not advisable for energy security in India, generation through non conventional energy sources such as wind, solar and other renewables is being encouraged in the country with the aid of various policies. Indias Ministry of Non Conventional Energy Sources MNES has set the target of 10, 000 MW for wind energy by 2012. According to the Central Electricity Authority, it is estimated that India has to add fresh capacity of nearly 100, 000 MW by 2012 to bridge future en ergy demands as well as current energy shortages above 10 per cent4. To help meet this goal, the government is promoting the use of renewable 342006-12-04T14:10:02+01:00http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/GB603/?Page=35http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/GB603/?Page=35energy by means of tax concessions, tax holidays, custom and excise duty relieves on imported wind turbine components. Most of the concessions and subsidies which were offered in the late nineties have now been withdrawn, but the very few listed below still continue to be in force. Central and state government policies towards wind The Government of India central government offers the following incentives for wind farm projects5 Accelerated Depreciation up to 80 per cent of the Total Project Cost, resulting in income tax saving in any existing business. Income generated from the sale of wind power is taxfree for a block of 10 consecutive years, within 15 years from the commissioning date. However, in India, electricity is still a state matter and the various states have different policies to promote wind power. The states provide the fol lowing bene ts Wheeling of Power The power generated by the wind farm can be wheeled to the consump tion point of any developer through the govern mentowned grid at a nominal wheeling charge of between 5 per cent 10 per cent. Banking The excess power generated in a par ticular month can be banked for utilization later during the year, with a nominal charge. Power Purchase The power generated by the wind farms shall be sold to the state utility at prices varying from 5 USD cents to 7 USD cents this varies from state to state. Power Purchase Agreements PPA Long Term Power Purchase Agreements 1020 years are signed by the utilities in most states of the country. Sources 1. BTM Consult Ap S, March 2006. 2. World Resource Institute, Washington www. wri. org. Data Year 2001. 3. www. powermin. nic. in. 4. Central Electricity Authority, The 15th and 16th Electric Power Survey, 2002. 5. www. windpowerinda. com. 352006-12-04T14:10:02+01:00http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/GB603/?Page=36http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/GB603/?Page=36High Energy at Vestas India With an impressive team and strong intellectual capacity, Vestas India is ready to meet the challenges of the fastgrowing Indian market. 362006-12-04T14:10:02+01:00http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/GB603/?Page=37http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/GB603/?Page=37When you talk to the people at Vestas Wind Technology India Pvt. Ltd. , their energy and en thusiasm is catching. According to Ramesh Kymal, Managing Director of Vestas India, India will soon be a world leader in renewable energy thanks to the very high level of technical manpower and intellectual capacity available in the country. Its like IT and India ten years ago, no one knew the potential India had, today India is a leader in IT. The situation is the same with wind energy. At the moment, people are unaware of our capacity, but the fact is we have a very strong technical workforce and intellectual capacity here that is relatively cheap. And this expertise is available not just for India, but for the rest of the world as well. And Mr Kymal continues, In terms of our domestic situation, the potential is also great. India is in desperate need of new sources of afford able energy to maintain its high economic growth and we have the expertise needed to meet this challenge. Vestas India Of the present installed capacity in India, Vestas India enjoys a market share of close to 20 per cent, with an installation base of 820 MW in August 2006. The two main Vestas turbines sold in India are the NM48750 k W and the V821. 65 MW, which is the largest turbine in the country and the driving force for the future. Company headquar ters are located in Chennai, in the southern part of India where the company also has a factory, which caters to assembly of the V821. 65 MW turbine. Some 110 people are employed here. There is another factory in Pondicherry, approximately 200 kilometres from Chennai, which supplies NM 48 750 k W turbines. Until now, the production of turbines has only been for the Indian domestic market, but in 2007, Vestas India will expand its activities and begin ex porting V82 nacelles to other countries such as the United States. Export production will take place at the Chennai plant because the basic infrastruc ture is in place, while domestic sales will be taken care of by the Pondicherry factory. The critical components like gearboxes, generators, control panels, brake systems, and bearings are imported from European suppliers while other components are locally sourced. According to Mr Kymal, the V821. 65 MW is the ideal turbine size for India for several reasons. The V82 is good for a lowtomedium wind region like India and it is very price competitive. It is also ideal because the roads in India cannot handle bigger turbines. But in the future, as the larger turbines become lighter, we may also be able to use them. Indian wind farms In India, 99 per cent of the wind energy projects are set up on a turnkey basis and wind turbine manufacturers are responsible for their develop 372006-12-04T14:10:02+01:00http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/GB603/?Page=38http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/GB603/?Page=38ment. This is quite unlike other countries where wind farms are built by professional developers and investors. In India, it is the turbine manufac turers themselves who are selling, building and running the installations, mainly because the pri vate sector has not had the necessary experience to develop wind projects on its own. Vestas India Corporate Communications Manager Madhu Kumar explains the process. We undertake all of the activities right from site selection, acquisition of lands, wind studies, micrositing to developing the infrastructure and roads, as well as building substations and trans mission lines. Then we supply the turbines, install them, get them commissioned and undertake operation and maintenance. Approximately 95 per cent of the investments in the wind sector come from the private sector. These investments are pri marily made by highenergy consuming industries that have invested in wind power for their own power requirements. To date, 50 per cent of the wind farm installations in India are in the windy coastal terrains of Southern Tamil Nadu, and the balance is spread across the other ve states mostly in the southern peninsula. When asked about what wind farm projects are underway at present, Mr Kumar says they are expecting large installations to take place in states like Maharastra, Gujarat and Karnataka. A qualityminded company Vestas India is a company that believes in focusing on quality. As a result, the company has been awarded a plethora of quality certi cates includ ing the Integrated Quality Management System ISO 90012000QMS, ISO 140011996EMS and ISO 180011999OHSAS certi cation for its manufacturing function including Safety, Health and Environment in February 2002. In September 2002, the same certi cates were awarded for its Installation and Service functions. Vestas India is the rst rm in India to be awarded these certi cates all at once within the same audit. A man of vision To further his vision for wind energy and a better India, Mr Kymal holds many key positions in wind power associations in India. Among others he is Chairman of Indian Wind Turbine Manufacturers Association, representing manufacturers contrib uting around 95 per cent of the market share of the wind industry in India. He is also a member of the Advisory Group on Wind Industry to the Min istry of Non Conventional Sources MNES and a member of the Governing Council of CWET Centre for Wind Energy Technology established in Chennai for the certi cation of wind turbines. In addition he is Chairman of Renewable Energy Council of CII. In general, Kymal says he is work ing to help create a level playing eld between conventional energy and renewable energy. He believes India should adopt the European model of support for wind energy which, among other things, requires utilities to purchase a percent age of their total requirements from wind energy producers. And he believes legislation will make a difference. Policy is the key to help grow the renewable energy sector and particularly wind energy. Of course renewables cannot replace conventional energy, he says, but they can sup plement it. So we need less hurdles in the policy Focus in India In September 2006, Vestas sold its 49per cent holding of the shares in Vestas RRB India to the company president. This means that Vestas is now exclusively represented in India via the wholly owned subsidiary NEG Micon Pvt. Ltd. , which manufactures turbines with a capacity of 750 k W and above. Vestas RRB India Ltd. manufactures turbines with capacities of less than 750 k W. This new structure allows Vestas Wind Systems AS to focus exclusively on large turbines and provides the best conditions for increasing the Groups share of the Indian market even further. 382006-12-04T14:10:02+01:00http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/GB603/?Page=39http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/GB603/?Page=39framework here in India and a uniform policy for the whole energy market. To achieve this goal, we are working for a renewable energy law from CII, which we expect will come during the next three years. Impressive change Watching all this unfold, Vestas Asia Paci c President Thorbjørn Rasmussen says, Ive been working with the Indian market since 1994 and it pleases me to see the development India has gone through in that short period of time. When you consider the countrys phenom enal growth rate and the development of so many highranking schools that are pumping out great intellectual capital, they really do have the capacity to meet their own goal of turning India into a developed country by 2020. From my point of view, it is impressive. And the same goes for wind energy. Just look at the growth rate of wind energy for the last three years. Today India is the 4th larg est market in the world, both in terms of accumulated and annually installed mega watts so no doubt, the potential is there. Centre of Excellency in Asia In July 2006, Vestas opened the Vestas Asia Paci c head of ce in Singapore. In the rst half of 2007, Vestas will also open a new Research and Develop ment Centre in Singapore with a Centre of Excellency in Chennai, India. Vestas Asia Paci c has three main hubs at present An Indian hub based in Chennai, an Australian New Zealand hub based in Melbourne, and a Chinese Korean hub based in Beijing. In this connection, India is already acting as a hub for service and project implementa tion for the rest of the Groups activities in the region, for example in Korea and China, until enough local people are trained to take over these functions. In addition, the Vestas Group is now using the expertise of the Production Engineering Department in Chennai to make the bill of materials and drawings for the V82 turbines for the whole group. At present, Section Manager Trond Martin Bredesen from Denmark is heading a team of 10 Indian engineers who are also working to streamline the process of sourcing items for turbines and buy directly from vendors in Asia. Madhu Kumar, Manager of Corporate Communications, Vestas India. Ramesh Kymal, Managing Director of Vestas India. 392006-12-04T14:10:02+01:00http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/GB603/?Page=40http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/GB603/?Page=4040 Wind Vestas OIL GAS Contacts Vestas Northern Europe 45 97 30 00 00 Sales and service in the UK, Ireland, Scandinavia, Poland and the Baltic area. Vestas Central Europe 49 4841 9710 Sales and service in Germany, Austria, Benelux, Russia and Eastern Europe. Vestas Mediterranean 34 902 41 98 00 Sales and service in the countries of the Mediterranean region, the Middle East, Latin America, the Caribbean, and North and West Africa. Vestas Asia Paci c 45 97 30 00 00 Sales and service in Australia, New Zealand, China, Japan, India and the rest of Asia. Vestas Americas 1 503 327 2000 Sales and service in North America. Vestas Offshore 45 97 30 00 00 Sales and service, offshore. For more information about Vestas sales and service business units, go to www. vestas. com and click on Find your local Vestas of ce. Vestas Wind Systems AS Alsvej 21 DK8900 Randers Denmark Tel. 45 97 30 00 00 Fax 45 97 30 00 01 vestasvestas. com www. vestas. com Editors Ditlev Engel Editor in Chief, Peter Wenzel Kruse and Hanne Poder Sørensen. Text Charles Butcher, Klaus Bundgård, Barbara Berger and Peter Gisselmann Rasmussen. 2006-12-04T14:10:02+01:00