Testing the Waters: Manufacturers in Michigan Power Up for Offshore Wind Farms
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By Jay Greene – CRAIN’S DETROIT BUSINESS
It may take three to five years before Michigan has offshore wind farms generating clean energy, but manufacturing companies are not waiting for necessary state legislative and environmental regulations to begin work on new alternative energy projects.
Several companies, including Canton Township-based Danotek Motion Technologies, Sterling Heights-based MAG Industrial Automation Systems and Ventower in Monroe, are working on research and development to prepare to build next-generation blades, turbines, towers, generators, gearboxes and other components. Other Michigan companies in the wind supply chain that are predicting sales and employment increases are Loc Performance Products in Plymouth, Cole Manufacturing Systems in Rochester, Diversified Tooling Group in Madison Heights and Lansing-based Astraeus Wind Energy.
More than 25 companies in Michigan have been identified as manufacturers and parts makers for wind farms and another 900 companies provide design, engineering, machining, automation or assembly services, said the Michigan Economic Development Corp
In a study by Michigan State University, the number of jobs created by wind farm development will total 1,100 construction jobs per year and 3,010 jobs in wind farm maintenance over the next 20 years.
For wind farm manufacturing, MSU said each wind farm assembly plant could employ 30 to 150 people, blade manufacturers could employ 200 to 500 people, and tower manufacturers could need 150 to 300 workers.
While large onshore wind farms are under way in the Michigan Thumb area and smaller residential and commercial wind turbines are generating electricity on a more local scale, company executives said they believe offshore wind farms have a far greater potential for generating orders and jobs over the next decade.
Curtis Hertel Sr., executive director of the Detroit-Wayne County Port Authority, said wind farms in Michigan could mean thousands of jobs just in the maritime industry alone.
“There is a great need to not only transport these very large and heavy components but also to do maintenance work on the turbines far offshore,” Hertel said. “As port authority director, I am talking with the Great Lakes shipbuilders who will build the new classes of ships and talking with the labor unions that will be on the ships to transport the wind turbines.”
With Ohio as Michigan's greatest competitor, Hertel said wind farms represent “a great shot in the arm” for local manufacturers and tool makers.
“Everyone thinks this will happen, but we need to do it right,” he said. In 2008, Michigan approved legislation that mandates 10 percent of the state's energy come from renewable resources by 2015, a goal that would require 1,250 new wind turbines in the state.
Bills in the Legislature would increase that renewable portfolio standard to 20 percent by 2020 and 30 percent by 2025, which would more than double the wind turbine needs. Ohio has a 25 percent goal by 2025.
“Michigan has just about everything going for a major wind OEM (original-equipment manufacturer) to build in Michigan, but what is holding them back is lack of sure demand,” said Frank Zaski, a member of the Midwest Governors Association Renewable Energy Advisory Group.
Zaski said Michigan must increase its RPS (renewable power standard) goal over the next several years or find itself at a regional disadvantage.
“Without a strong Michigan RPS, it is probable that no OEM will locate in Michigan, and Southeast Michigan companies will be at a disadvantage versus suppliers in these states at least for shipping costs,” said Zaski, a retired Chrysler executive who lives in Franklin.
While General Electric Co. and the Lake Erie Energy Development Corp. of Northern Ohio have announced plans to build an offshore wind farm near Cleveland by 2012, DTE Energy Co. and CMS Energy in Michigan plan to buy or lease a minimum of $4.6 billion in wind turbine manufacturing and related installation to meet renewable energy mandates. However, none of their Michigan wind farms would be offshore.
“Michigan is in a leadership position with wind energy because they came to the table quite a while ago and they have a workforce that is available and ready to be deployed,” Joe Jones, executive vice president of renewable energy for MAG Industrial's U.S. region. “Ohio is getting into the mix, but they are a year behind. Wisconsin is a little ahead.”
Jones said Michigan is in the best position because of its central Great Lakes location.
But offshore wind farms require state lake-bottom leases and environmental permits from state and federal agencies. State officials and the Michigan Great Lakes Wind Council are working on offshore wind legislation to put a regulatory process in place to handle future projects.
Federal officials last month gave final approval for the nation's first offshore wind project when the U.S. Department of the Interior approved the 130-turbine Cape Wind project in Nantucket Sound off Cape Cod.
If the $1 billion project beats back expected legal challenges, Cape Wind could provide a template for the steps Michigan would need to take to get offshore wind farms up and running, said Steve Chester, an attorney in the environmental practice group with Foley and Lardner L.L.P. in Detroit.
Chester said the Cape Wind project could spark a new American industry, which has lagged behind the offshore wind business in Europe, China and Japan.
“The first one is always the toughest to get through. It is a significant development for Michigan because we will be able to point to that landmark precedent,” said James Viciana, Ventower's chairman.
Earlier this year, Ventower received $2.5 million in clean energy federal tax credits to help it become a worldwide manufacturer and supplier of wind towers, Viciana said.
In phase one of its plan, Ventower will build 250 wind turbine towers per year and employ 150, Viciana said. The company expects to begin production during the first quarter of 2011.
“We have pre-orders for towers now from several OEMs,” said Viciana, declining to name the OEMs. “We will fabricate them here and provide towers for the Great Lakes region.”
Because Ventower is in the Port of Monroe, Viciana said the company can receive raw materials by water or rail and transport them by truck, rail or water.
In phase two, Ventower will increase capacity by between 50 percent and 100 percent, which could mean 375 to 500 towers per year in 2012 and the hiring of another 50 employees, he said.
At Danotek, Scott Mabie, director of business development, said the company expects over the next several years to add another 125 employees to its current 42 to meet increasing demand for the type of generators the company manufactures.
“Offshore wind will benefit us and add to our orders of onshore wind generators,” Mabie said. “When you move offshore, the generators and turbines and blades get much bigger and more powerful.”
Last year, Danotek moved into a new plant in Canton that has a capacity of 4,000 generators per year, adding up to $300 million in revenue.
“Ideally, the majority of wind projects will be offshore,” Mabie said. “There could be fewer units, but larger ones and higher dollars.”
Mabie said Danotek is working to improve its generator design to incorporate newer permanent magnet direct drives, which will improve efficiency, reliability and reduce maintenance costs.
Chad Darr, Loc Performance's director of advanced engineering, said the Taylor-based company will use a $1.5 million federal stimulus grant to build pitch and yaw systems for large wind turbines. The systems control the position for the blade and for the direction the windmill is facing, he said.
“What we manufacture directly overlaps with the pitch and yaw drives on the windmills,” Darr said. “With the tight credit market, we are not where we want to be with the design work.”
Loc Performance, which makes gearboxes for military vehicles, expects wind farms to generate a significant amount of new business for the company over the next several years.
“Our long-term plan is to capture $18.7 million in annual sales providing pitch and yaw geared drive systems,” Darr said. “We are targeting industrial-sized turbines in the 1.5 megawatt capacity or larger, both offshore and land based.”
Darr said growth will help to create or save 90 jobs at Loc.
To build an automated machining center for wind turbine hubs, Astraeus Wind has contracted with MAG Industries, said John Truscott, Astraeus' executive vice president. A hub is the central component that connects a wind turbine's three blades to the turbine's powertrain.
“Right now all of the blades are handmade,” Truscott said. “It is very old technology. By automating it, we will take the industry a decade forward.”
The hub machining center will cut the time needed to machine the hubs to four hours from the current 20-24 hours, allowing hub production rates to increase to up to five per day from one, said Jones.
“The hub is the first component. We will move to develop composite blades, bed plates and star cap, and there will be other components,” Truscott said.
Truscott said MAG is scheduled to ship the first machine to Astraeus in October that would allow it to begin hub production by the end of the year.
Jones said MAG's experience in aerospace technology gives it a natural fit for developing wind energy components.
Over the next several years, MAG's goal is to have 10 percent of its $1.8 billion in annual revenue come from renewable energy products, including wind and solar, Jones said.
Astraeus also plans to use $6 million in state development funds to begin work on the next generation wind turbine blades that have a much longer lifespan than current blades, Truscott said.
“There is a dirty little secret that fiberglass blades used onshore only have a two and a half year lifespan. You need to have five years to get developers willing to take the risk to do an offshore wind farm,” Trus-cott said.
“The generators also put extra torque on the gearboxes, and you need a longer lifespan for gearboxes if you are interested in bringing down the costs of wind.”
Wear and tear on large 1.5 megawatt to 5 megawatt turbines — which will stand 350 feet high and have a 14-foot diameter with turbine blades more than 120 feet long — are much greater in the Great Lakes, where wave action is much stronger and temperatures are often below freezing during winter, said Matt Bissett, vice president of power and energy with Atwell-Hicks, an environmental engineering firm in Ann Arbor.
“The technology is developing rapidly, and most estimate it will take two years to develop the composite blade with the fiber optics inside to warm up the blades,” Trus-cott said.
Constructing strong foundations for the turbines and running electrical lines that would be located three to six miles offshore are other engineering problems that need to be solved, Bissett said.
“These projects have high construction costs from the equipment to transmission lines,” Bissett said. “We would be involved in a variety of environmental studies — hydro surveying, environmental impacts, avian studies, zoning and permitting issues.”
Cole Manufacturing in Rochester stands to benefit from offshore wind farms by selling greater numbers of gear grinding machines to wind turbine component makers, said Dwight Smith, its sales director.
Smith said if Michigan can quickly move forward with plans for offshore wind farms, companies located here would stand to benefit.
“Demand here needs to get very large and very fast,” Smith said. “European manufacturers have a head start on us.”
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