Moog investment in German wind energy specialist exploits both companies’ complementary skills
Moog Inc has made an investment from available cash balances, resulting in 40 percent ownership of the wind energy business of the privately-held company LTi REEnergy GmbH of Unna, Germany. LTi REEnergy specialises in the design and manufacture of servo controllers, as well as complete drive systems for electric rotor blade controls for wind turbines. Sales for the past 12 months were EUR55 million (approximately $85 million). The Company expects to acquire the remaining 60% in 12 months subject to conventional conditions of closing.
Together the two companies will further strengthen LTi REEnergy’s leading market position. LTi REEnergy is one of the leading providers of electro-mechanical blade pitch control systems (PCS), while Moog offers its own longstanding expertise in a range of electro-hydraulic technologies. With this investment, Moog arguably becomes the world’s only supplier of both electro-mechanical and electro-hydraulic PCS for the wind energy market.
Dr Wolfgang Lust, LTi REEnergy GmbH says: “LTi REEnergy and Moog, as two fast growing companies, are actually an excellent strategic match to join together. Moog’s investment in our company means that we will be able to strengthen our leading position on the international market and optimally handle our fast-paced growth.”
Recent market research by Intercedent Asia showed that the portion of new wind turbines using pitch control (as opposed to stall control) will grow to nearly 100 percent in the future. Intercedent Asia’s research also shows that the number of wind turbines with pitch control in 2007 was approximately 18,000. This includes both electro-hydraulic and electro-mechanical systems.
“On a worldwide basis wind power capacity is expected to grow in excess of 30 percent annually, which is an excellent proxy for the market for pitch control systems“, said Sal Spada, a research director for ARC Advisory Group. “Additionally, the wind power market has matured technically, and the emphasis has shifted towards improving performance and safety of the turbines.”
The blade pitch determines the rotor speed and thereby the performance of wind turbines. “Pitch control systems hold the key to maximising and protecting a wind turbine”, said Harald Seiffer, European General Manager of Moog’s Industrial Group. “We believe we can take our experience with creating motion control systems for the aerospace and manufacturing industries and our high quality standards to make a sound contribution to our new partnership.”
The operator of a wind turbine has to maintain the inclination angle of a turbine’s blades in two ways. First, even when the wind isn’t strong enough, the turbine needs to accelerate to reach a certain speed. Second, when wind conditions are strong, the turbine needs a failsafe to put the blades at an angle where the load is reduced. Over the last few years, the LTi REEnergy GmbH systems and components have been incorporated in more than 7500 installed wind turbines.
The LTi REEnergy wind business offers complete pitch systems, including the company’s robust PITCHmaster servocontroller, as well as motors, batteries, control systems, and software for remote diagnostics and back-up power. Most of the blade pitch control components reside in the hub of the wind turbine’s prop, where temperature and motion can be extreme. If, for example, the wind turbine loses electrical power, then the blade pitch control taps its battery power to gauge speed, adjust the turbine’s blades and put the prop into a safe operating mode that is designed to protect a wind turbine from damage.
LTi REEnergy’s blade pitch control system stands out because of its ability to handle harsh weather conditions. Many blade pitch controls can fail in this regard, but LTi REEnergy’s wind energy PITCHmaster is proven to withstand temperatures ranging from -30 to 70C. LTi REEnergy has a climate chamber at its disposal which makes it possible to simulate temperature situations within the range from -40 to +80C. A complete pitch system with all components can therefore be tested and optimised under extreme conditions.
Moog is also among the market leaders in slip rings, which make the electrical connection between the rotating and fixed parts of a wind turbine via high-tech brushes. For situations calling for high-speed data transfer and reliable transmission, Moog has designed fibre optic rotary joints, which make a connection via light in much the same way a slip ring creates an electrical connection. These slip rings and joints make the wind turbine and its inner workings immune to stormy weather conditions.
LTi REEnergy is supplying the German offshore windpark Alpha Ventus with 5MW PITCH systems. The Alpha Ventus offshore wind farm off the North Sea Island of Borkum is the first offshore German pilot project for wind turbines. The 5MW wind turbines have been erected 45km offshore at a water depth of up to 30m with an average wind speed of 10m/s.
“LTi REEnergy is a clear market leader, having delivered over 7,500 wind turbine systems and components worldwide,” said Dr. Steve Huckvale, President of the Industrial Systems Group of Moog. “This is a great match of LTI’s competencies and Moog’s global reach to support the growing wind energy market.”
The investment will be accounted for under the equity method and, accordingly, the Company will record 40% of the earnings of LTi REEnergy in Moog’s Industrial Systems segment. As a result of this investment, Moog increased its forecast earnings per share by $0.01, to $2.72, in fiscal year 2008.
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