Presentation Potential Licensees July 2012 AdP R1[1]

8/9/2019 Presentation Potential Licensees July 2012 AdP R1[1]

1/25

30 years of experience // Lessons learned // Technology simplicity // High efficiency

Presentation July 2012

Direct drive / gearless, natural airflow cooled Permanent Magnet Generator (PMG), Full Converter


2/25

Advantage through experience

Date : July 2012.

Agenda

______________________________________________________________

1. History & Introduction Lagerwey Wind B.V. (LW)

2. Status Quo of LW & Current focus

3. In house manufacturing at LW

4. Sales Focus

5. USPs technology and product

6. Wind sector development trend awareness

7. Additional expertise

8. Items to discuss


3/25


15 years gearbox technology 17 years direct drive technology

20 kW 80 kW 250 kW 750 kW 1500 kW 2000 kW 2600 kW

600 units60 units 300 units 200 units 20 units 2 units 2 unitsjanuari 2012250 planned

1. Historie & introduction of Lagerwey Wind B.V.

2012


4/25

L93-2.6MW @ 90m hub height installation Lelystad, NL, January 2012


5/25


Lagerwey Group BV

holding structure(100% privately owned)

Design and engineeringLicensing, IP owner

Production & sales Service & Maintenance

Head Office Barneveld, NL Test turbine production, Wekerom, NLLagerweyGroup

Lagerwey

Systems BVLagerwey Wind BV

Lagerwey

Service BV

Management:

Lagerwey is managed by the 4 owners whojointly have a total wind experience of 100 year.


6/25


Products:

L82- 2.0MW Prototype installed end 2009 in DLicensed to Reliance India (250 units planned),

L93- 2.5/2.6MW Prototype (2 units) installed in January 2011, in NL

Production start Lagerwey: 2H-2012

L100-2.5MW Prototype foreseen for end-2012

Product in pipeline:

L120+, 3 MW+ Detail engineering starts in 2012, prototype 2H2013

Current focus:

Direct sales of LW-sales team to target countries* / joining dedicated customers

License sales

Raising capital to fulfill growthperspectives for expansion of production and sales in targetcountries*

*: countries in NW - Europe

2. Status Quo of LW & current focus


7/25Advantage through experience

Supply superior wind turbine technology to strategic partners with a strong focuson durability and reliability

Expand product line with bigger rotor sizes, with focus on low and medium speedwind sites (IEC II, IEC III)

Expand production capacity of Lagerwey Systems

Create limited amount of regional production licenses

Serve the world market with local multiple production hubs

Lagerwey Goals

Become the best, not the biggest!

Make customers feel like partners, ensuring a good anddurable relation!


8/25Advantage through experience



9/25


Pictures in house generator - produc t ion

Pictures in house Hub, Controller and Nacelle production



10/25


License sales:

Focus on big industrials or larger project developers present in a market withlarge potential and with a strategic geographical location

Turbine sales with LW sales team:

Netherlands & Belgium

U.K. & Ireland

Scandinavia & Finland

Austria

4. Sales focus Lagerwey Systems B.V. 2012/2013


11/25


5. USPs technology and product

Already competitive based on a smallscale of economy

No active cooling system on the generator,just passive air flow cooling

Robust, reliable, low number of parts, easyto control

Relatively easy to transport, relatively easy

to erect and install

Low Top Head Mass of 107t and lowcritical hoisting weight of 50t

High level of in house productionpossible (complete inhouse productionof generator, main bearing construction

and controller, only standard available(key) components are sourced multiple)enabling sufficient profit and increasingsupply control

Cross cut of nacel le, generator and hub:

L93-2.6/2.5MW & L100-2.5MW


12/25


General disadvantages of Direct drivePMG and our answer to that:

Disadvantage Our answer

Larger diameter of generator Only 4,2m for the L93-2.6MW

Higher THM (Top Head Mass) 49t generator weight, less than 110t THM

Expensive Permanent Magnets Intelligent sourcing, optimizing magnet

configuration and shadow design available

Complex generator assembly True, but with advanced production technology

well doable and cost effective. Besides that

production is a single challenge ones and the

geno will last long

Demagnetisation at high temperature Natural air flow cooling, no active cooling

system which might not work!

Advanced cooling system required See former item

Full power conversion more expensive Full power conversion is a necessity more and more

any way, this in order to be able to meet grid

requirements


13/25


6. Wind sector development trend awareness

Cost price reductiontrend in the wind sector:

The Sales prices of wind turbines at supply ++ bases is expected to be at a level of 700.000/ MW (supply ++) within 5 years from now, the operational costs are expected to decreasesignificantly as well, in total resulting in 70% of the current cost price of wind energy.


14/25


Transport, erection / turn key supply:

7. Additional expertise

Service & Maintenance (all inclusive long term service packages):

Durable and controlled technical operational costs & high availability standards


15/25

Items to discuss:

1. Content of technology transfer

2. How does Lagerwey maintain continuity?

3. Can LW retain its advanced technology?

4. Anticipation on competition from China

5. Production facilities and tooling

6. Education & knowledge transfer

7. Competitiveness

8. Service & maintenance

9. Blade production

10. License structure


16/25

1. Content of technology transfer

The scope of supply under the License Agreement comprises, amongst other (but is notlimited to):

Sales- and production rights in the Territory of the

L93-2.5 / L93-2.6MW at 80 and 90m tower

Optional: L100-2.5MW at 80 and 98 m tower

The rights to take out Service & Maintenance for the sold turbines

Supply of

The technology transfer / education and documentation enabling the Licensee to

Assemble & partly produce,

Maintain,

And sell the wind turbines

Specific tools enabling local production (separate order)

Support with the (basic support included)

Setup of the production facilities and tooling

Supply chain setup

Remark: LW will durably supply the Turbine controller components (hard- and software) and

generator to the Licensee


17/25

2. How does Lagerwey maintain continuity?

LW is a debt free company with a highly valued asset by means of the IP andproduction technology of the State-of-the-Art wind turbine types which create a newstandard in the industry, enabling LW to meet the future requirements for cost pricereduction.

With other words: LW offers a unique and very attractive business case to futurepartners!

Having this said, LW foresees good opportunities for organic growth. In addition: Itsees ways to harvest the opportunities in some developing markets with largepotential, such as Turkey and therefore it is striving to find Licensees.

The sales opportunities with the L93 and L100 platform are excellent in combination

with the significantly lower technical operational costs (in relation to the Full ServiceAgreement offered)

Lagerwey has in house all expertise, capital and know-how to engineer the nextplatform(s), such as the L120+ - 3MW+, and to engineer and execute the entireproduction process for such, finally resulting in a costeffective, durable and reliableproduct.


18/25

3. Can LW retain its advanced technology?

Key element always is cost effectiveness!

Lagerwey has learned from experience in the past that awareness regarding costeffectiveness is crucial, saying that besides being a technologydriver one has toanticipate every day on priceperformance level.

LWs goal was and is to offer Direct Drive wind turbines to the market for a competitive

price (related to CAPEX), knowing that the long term (10 year+) full technicaloperational costs will be significantly lower then with geared turbines, the final resultwill be a significantly lower cost price per kWh over the lifetime and a longer life time!

LWs knowledge & expertise in the field of generators (especially PMG) and drive trainconstruction is huge, the team is decisively, fast, flexible, very dedicated and notpolitical driven (to be explained) and the length of experience goes back for over 30years in the wind sector as a wind turbine designer, produces and supplier and goes

back over 17 years in direct drive technology.

Lagerweysmotto has always been and will be:

Pushing cutting edge technology!


19/25

4. Anticipation on competition from China?

First note: Not to underestimate the Chinese.

The Chinese bought cheap licenses of dated products which did not become so successful in EU andUS. At the same time they have / had to go through a learning curve and their own government invitedthem to install bad quality products because the incentives were linked to an installed turbine not to aworking one!

Goldwind, Sinovel and some other bigger and more serious players have experienced their lacking

performance (poor quality products and services) as a result of the learning curve and dated designs.Now they enter the global market they have to perform better and we see two development processes:

They invest themselves (enabling financing of the projects) and strive for BOT solutions

They increase their prices because they also have to ensure quality

The general advantage of the Chinese is: Cheap labor (due to lower social costs and other HSE rulesmainly) and access to some cheaper crude materials. Labor costs represent only about 5% of the totalturbine costs, transport costs represent about the same. Notice that for example towers and blades

contain a higher level of labor and therefore could be sourced from low labor countries, crucial is qualitycontrol.

The general advantage of the EU-players is: Image (!), bankability, expertise, more sophisticatedknowledge and quality awareness. In general Europe is at least half a decade ahead of China related towind turbine technology and that is a lead which cannot so easily be taken over.

Statement: Only cutting edge EUtechnology can compete with China


20/25

5. Local production facilities and tooling

Assembly- and production plant suitable for 100-150 turbines annually (single shift):

1. Equipped with internal cranes to a max. of 25t

2. Excellent working conditions regarding heating, light, humidity

3. With a good (flat, hard) workfloor

4. With sufficient internal logistical options

Dimensions, Indoor:

Assembly nacelles + hub: 3600sqm, height hall 8m, 7m crane hook, capacity 2 x 25t:

Storage indoor:

Nacelle & hub: 1500sqm, height hall 7m, 6m crane hook, capacity 1 x 15tStorage outdoor: 4500sqm (approx.)

Tooling: There is only a limited number of specific tools necessary to enable local assembly / production.


21/25

6. Education & knowledge transfer

Within 2 months time:

A team of highly skilled engineers of the Licensee can be made ready to assemble nacelles and hubsindependently at the local production facility

LW will educate License s engineers on the job and theoretical

- In the Netherlands (Theory, assembly & production in Wekerom)- At the local facility by means of support of the startup of the local activities

Note:

LW has recently fulfilled its obligations reflecting the above towards Reliance ADA in India


22/25

7. Competitiveness

The most relevant USP of LW is: Already competitive based on small scale of economy!This means that we experience that we have a healthy sales - margin (much better than the currentestablished players!!!) on our product while still being competitive. The reason why LW is able to produce theL93 and L100 for a relatively low cost price is:

Less components, lower weight

Less processes to handle: For exampleno active generator cooling system

Inhouse production of

The generator

The main bearing construction

The controller

Intelligent product & production technology resulting in more simplicity in both the product itself as well as the productionsteps to be taken

Note: For any investor in LW and for any potential Licensee this shows an attractive business case because:

One can ramp up production slowly and is not forced to start at large scale of economy directly

One can count on upside potential thinking about reduction of costs as a result of economy of scale

Full Service Costs:

Due to the simplicity (absence of gearbox amongst others) of the product and more simple supply chain and lessstock components needed, LW can offer a FSA for a price which is significantly lower than that of the competition,saving at least about 200kduring the first 15 years of operation, possibly resulting in a multiple of that!


23/25

8. Service & Maintenance

LW is able to maintain its fleet for significantly lower costs than that of the competitionwith its conventional machines!

LW expects lucrative business in the area of Service & Maintenance while following the trend of reducing costprices (as indicated earlier in this presentation) meaning that LW calculates with approx. 75% of the currentcommon market prices for a FSA*.

* : FSA means Full Service Agreement, which includes:

All labor and all parts to be exchanged (LW being owner of the replaced part and repairing / overhauling it)

All costs related to storage, transport and importing of parts as well as necessary equipment such as cranes

All wear and tear

Availability warranty on the individual turbine (common is 95%) or wind farm (common is 97%)

Machine breakdown- and business interruption insurance

LW experiences (like the competition does) that end users / customers are no longer interested in serviceagreements without a complete package, that is why we only focus on the FSA, anticipating on the market.

LW emphasizes the importance of a strong and dedicated to the LW-fleet local service organization.

LW s SCC (Service Coordination Center) will manage the local service units, surveillance and supply chain

Huge strength of the LW machine is the ability to diagnose and remedy failures ahead and from distance

The above describes the approach of Lagerwey itself, the Licensee is responsible for its own service setup.


24/25

9. Blade production

LW s vertical integration level in this stage is already quite highas it produces the entiredrive train inhouse (generator + main bearing construction) and collects the pitch- and yawsystem drives and bearings from reputable suppliers. Currently LW procures its blades from LMWind Power, the largest independent and most experienced rotor blade supplier.

The majority of the established players have a lower in house production level.

As soon as one has a bottom line of at least 80 units annually one should consider own production ofblades, it makes you less dependent of external blade suppliers and allows you to optimize the bladesfor specific features.

LW has possibilities to supply a blade license for the production of the blade of the L93 and L100, suchprocess could be done step by step:

1: Multiple sourcing from LM Wind Power and at least one other reputable manufacturer of blades

2. Using LWs own blade design, produced by a reputable independent manufacturer

3. Startup production of your own blades based on your own design (obtained during former step)

Key success factors: Focus on automation of blade production AND focus on use of alternative materials


25/25

10. License Structure

LW will durably produce and supply to the Licensee the Controller and Generator

The scope of the licensee in the territory:

1. Sales

2. Assembly of hub and nacelles

3. Sourcing of components for production / assembly and for Service & Maintenance

4. Service & Maintenance

5. Blade production setup (optional)

Cooperation between LW and the licensee:

Supply of controller and generator by LW to Licensee

Sourcing of components

Service support by LW to Licensee

Internal sales of completed nacelles and hubs, components etc (optimizing the joint production capacity)

Blade production / internal sales of blades

Remark:

- LW will sell to Licensee the generator and controller for internal transfer prices ensuring a good businesscase for the License and ensuring the best possible performance of the LW-wind turbines

- LW will always consider a local generator production setup in the Territory of the Licensee and LW is willingto allow the Licensee to be able to invest in such jointly with LW, LW having majority shares.

Presentation Potential Licensees July 2012 AdP R1[1]

Documents

Transcript of Presentation Potential Licensees July 2012 AdP R1[1]