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An Emerging Wind Industry Amongst the Pyramids

Written on: Friday November 2nd, 2007

I recently embarked on a short, unexpected adventure to the ancient country of Egypt. The Folkecenter received a contract to teach a course in Cairo to a group of manufacturing companies looking to get into the wind industry, the Arab Organization for Industrialization (AOI). Preben, the director of the Folkecenter and Tupac, our wind expert and course teacher, asked me if I would like to assist Tupac with the course. I agreed, and two days later, was on a flight to Cairo.

AOI is a consortium of Egyptian companies that work together to industrialize Egypt through research and development at a central research center. In the past the AOI group has specialized in the manufacture of military equipment for the government. The military contracts have started to dry-up and in an attempt to reinvent themselves they recently starting looking to delve into new industries. Wind is one of those new areas and the Folkecenter has been hired to help them build up their knowledge and the industry.

I spent 8 days in Cairo. During that time I helped Tupac prepare papers and assisted him with anything that he required to ensure the course went smoothly. The beginning of the week started a little rough as the students did not really understand much about wind, wind turbine manufacturing and had slightly unrealistic expectations. It became evident that the students were expecting Tupac to hand over complete turbine designs including all of the sub-components so that the AOI group could immediately build up their fully vertically integrated manufacturing business. With careful explanation and numerous examples we helped them to see the bigger picture and substantially improve their understanding of wind theory, the industry itself and how to best proceed with entering this highly competitive market.

Starting a wind manufacturing business is not as easy as it was 15 years ago. The technology is now big, mature and slowly being consolidated to a few large players. Furthermore, entering a new industry is risky business. A large amount of initial capital is required and a successful design and prototype is a must. A major failure in the initial phases of a new industry can devastate future access to capital and wipe out trust from the marketplace. For that reason, it is best to think about building a wind turbine the same way one constructs a bicycle.

Take the example of the US manufacture of Trek bikes. The only component that is actually manufactured by Trek is the frame (nacelle). Shimano supplies the gear set (wind turbine gear box), and the pedals (turbine blades) are built by Race Face, a Louis Garneau saddle (turbine tower) and Shimano shifters (the control system in the turbine). Essentially, Trek is an assembly company- they purchase most of the sub-components and put the bike together. This model has many advantages, especially for a new and starting company. However, it is still not a cake-walk, and requires careful consideration and planning of sub-suppliers.

An assembled device of individual outsourced components can create a better product as each individual component is from a manufacturer that specializes in a specific area. Furthermore, it allows the wind company to focus on the holistic design of the machine as opposed to the nitty-gritty details of manufacturing gearboxes, blades, control systems and generators. This leaves two main duties for the turbine assembly company: (i) appropriately sizing readily available equipment to meet the requirements of the machine through existing industrial channels and (ii) securing a supply of the components so that the manufacture of the machines is not bottlenecked by a lack of supply from the sub-manufacturers. If point (i) is done correctly but there is no supply the process fails. You can see that a holistic design approach has to be undertaken from day one.

Once designed, the manufacturing company must submit an application to a recognized certification body, such as GL in Germany or NREL in the USA. This is mandatory as an uncertified machine cannot be insured. The application details the design, all manufacturer parts and specifies which sub-manufacturers and components the production company intends on using. Furthermore, the certification process can cost upwards of $300,000 and can take a significant period of time. Once certification is granted, the production company is locked to using the design & sub-manufacturers specified in their initial application.

This is the primary reason that careful consideration of sub-suppliers must be taken. If a designated sub-supplier later goes bankrupt, or can no longer supply a component, the production company has to go back to the drawing board, find a new sub-supplier and submit a new application the certification board and eat all those extra costs. This could sink a new and starting-out company.

There are extremely long lead times in all of the components and therefore careful planning and sourcing must be made. In order to mitigate these issues manufacturers such as Vestas and Enercon have worked very hard at vertically integrating their companies so that they are not vulnerable to supply shortages. Elements such as gearbox design, blade design, and blade manufacture are very complicated and specialized. This takes a lot of time, money and R&D.

So you can see, starting a new wind company is harder than it looks. And this is why consulting companies such as Xmire exist. Xmire is a private offshoot of the Folkecenter that specializes in the integrated design process of wind turbines. The actual engineering design is only a small part of getting the turbine to market. As important are factors such as ensuring that the correct business arrangements are in place, understanding regulatory and certification processes, carefully choosing sub-suppliers and planning around lead times. Ultimately Xmire?s role is to guide new entrants successfully into the market.

By the end of the first week of three with the Egyptian engineers, Tupac had drilled all of the above information and a whole pile more into their brains. It was clear that they had never thought about half of the issues that were presented to them, which in my opinion means that they got good value for their money in the course.

The last two days that I spent in Cairo I visited the Pyramids, the Sphinx and the Egyptian Museum. While we were at the Pyramids we hired some horses to take us around the sites. The largest pyramid was constructed of over 3 million giant cut stones and was originally completely ivory white. They estimate that the pyramid took over thirty years to build which is amazing because most of the stone was shipped from up river. The Khafre pyramid is over 140 m tall and was the tallest building on earth until the 1930?s. It was truly amazing to be amongst such giants knowing that there where no cranes or digital positioning systems to make sure that the stones were placed in the right orientation. While I was there I also hired a camel named Charlie Brown. He was an interesting camel and I must admit that riding a camel is far different than ridding a horse. I have included two short videos of Charlie brown here that you can watch.

Although the people living in Cairo right now are not actually related to the Egyptians who built the pyramids they have some very inspirational structures to look upon when they start to tackle the wind turbine industry. Egypt has some of the most consistent winds in the Mediterranean and Red Sea and has the potential to dominate the African wind turbine market if they play their cards right. The management that I spoke with at AOI knows this and is very interested in racing towards the development of the wind industry. They also told me about some very large plans to install a giant water desalination system on the Mediterranean Sea which will be powered entirely by wind. It will be interesting to follow the Egyptians over the next few years, especially if they succeed! One day I will look back to the week I spent in Cairo amongst the Pyramids and seedling wind industry and remember that I played a very small but significant role in providing the water for the seed to sprout.