Transformer downsize

Power technology group ABB is to consolidate its global transformer business in response to overcapacity and increasing raw material costs. The main focus of the consolidation programme, which will run until 2008, will be to improve profitability, productivity and overall operational efficiencies.

ABB has also signed a $2bn, five-year revolving credit facility agreement with a group of 20 banks. This new facility replaces a $1bn credit facility which was due to expire in November 2006 and which was signed as part of its capital strengthening programme in 2003.

“Overcapacity has been the biggest problem in the transformer industry in recent years, mainly the result of deregulation in the power sector,” said ABB president and CEO Fred Kindle. “The situation has been made worse, however, by the unprecedented increase in raw material prices we’ve seen since 2004.”

ABB will close a small number of plants in high-cost countries and cut about 1300 jobs in the transformer business. It currently operates 57 plants in 28 countries.

EU approves VA Tech acquisition

The European Commission has given its approval of Siemens’ takeover of VA Technologie AG (VA Tech) on the condition that Siemens immediately sells VA Tech’s hydropower business.

Siemens will now integrate VA Tech’s transmission and distribution (T&D) group into its own power transmission and distribution (PTD) unit.

VA Tech T&D operates in the switchgear, transformer and automation businesses with a workforce of 5400 and global sales of €1.1bn ($1.3bn). The acquisition will reinforce Siemens’ leading position in the high voltage market and its second place in the global power transformer market. It will also give Siemens more research, development and manufacturing facilities, and give it greater access to the US transformer market.

VA Tech’s automation solutions are a good complement to those of Siemens. The Germany company will transfer the existing service activities of VA Tech T&D to its own service division.

Siemens’ €1bn takeover of VA Tech also includes VA Tech’s metallurgy and infrastructure units. Sales of the metallurgy, T&D and infrastructure units totalled over €3bn in 2004. VA Tech Hydro posted sales of just under €900m in 2004 and employs 3000 staff.

GE uprates its most advanced gas turbine system

GE Energy has uprated its advanced 109H gas turbine technology from 480 to 520 MW. The company said that it has used lessons learned during testing and operation of the 109H unit at Baglan Bay, Wales, to improve the design of the H System technology.

During test runs at Baglan Bay, the 109H generated up to 530 MW at 7à‚°C. From this experience, a number of enhancements have been made to the 50 Hz H System, including the introduction of moisture to the fuel to increase mass flow through the turbine, optimization of clearance control, and improvements to cooling and seals.

The H System is the first combined cycle system in the world designed to achieve a thermal efficiency of 60 per cent. Introduced at a rating of 480 MW, the first unit was installed at Baglan Bay in 2002 and recently completed 9000 hours of commercial operation.

  • GE chairman and CEO Jeff Immelt has reported strong second quarter results for the company, with double-digit earnings growth across all of its 11 business units. Both profit and revenue at GE Energy grew by ten per cent, to $698m and $4.54bn respectively.

Westinghouse to be sold by UK nuclear group, BNFL

UK nuclear group BNFL has said that it is to sell Westinghouse Electric, its US-based nuclear power plant manufacturer, and is reported to have received approaches from several interested parties. The announcement came as the company announced full year results showing improved losses of à‚£144m ($253m) for 2005 compared with à‚£283m the previous year.

The decision to sell Westinghouse follows a strategy review and an internal restructuring process. Mitsubishi Heavy Industries of Japan is one of the companies reported to be preparing a $2bn bid for the company.

“Westinghouse is a very successful operation in its own right. It has reached all its targets, continues to win new business and is in an excellent position to capitalize on the China new build programme,” said BNFL’s CEO Mike Parker. “There have been a number of unsolicited approaches for Westinghouse and it was decided at the Board meeting on 30 June to commence a sales process to determine whether a disposal would realise appropriate value.”

BNFL has restructured its business into three main groups: BNFL, Westinghouse and Nexia Solutions, and its main focus going forward will be the management of the clean-up of UK nuclear sites. To this end, most of its UK assets have been transferred to the newly-established Nuclear Decommissioning Authority (NDA).

News digest

Areva selling off: French nuclear group Areva is seeking a buyer for its FCI subsidiary. FCI’s four business units focus on energy transport networks and high-tension transformers. The subsidiary accounts for 12 per cent of Areva Group turnover and was acquired by Framatome as an intended offset to reduced activity in the nuclear sector.

Dresser buys: A unit of Dresser-Rand has agreed to acquire some of the assets of Tuthill Energy Systems (TES), a manufacturer of single and multi-stage steam turbines and portable ventilators and a division of Tuthill Corporation. TES manufactures under the Coppus, Murray and Nadrowski brands which offer power outputs of up to 20 000 hp for power generation and mechanical drive applications.

El Paso sells: El Paso Corporation is to sell its interests in four power plants in China to GP China Limited for $71m. The plants are the Meizhou Wan, Nanjing, Suzhou and Wuxi power plants.

Exelon approves: Shareholders of Exelon Corporation have voted in support of the company’s proposed acquisition of Public Service Enterprise Group (PSEG). The takeover will create Exelon Electric & Gas, one of the largest utilities in the USA. PSEG serves 2m electric and 1.6m gas customers in New Jersey with revenues of $10bn.

FuelCell Energy JV: FuelCell Energy Inc. and Enbridge Inc have signed an exclusive product development and distribution agreement for a new multi-MW product aimed at natural gas pipeline applications in North America. The Direct FuelCell – Energy Recovery Generation power plant will be a combined cycle generation system. It will generate heat required to prevent freezing at gas pipeline letdown stations and replace the existing combustion-based system.

Global Energy decides: Global Energy Decisions has acquired KW International Ltd. (KWI), a leading energy trading and risk management software firm. The acquisition will help Global Energy to increase the range of operational and financial solutions that it can provide to companies active in the energy market place.

IEE opens in China: The IEE, the largest professional engineering society in Europe, has opened an office in Beijing, China. The organization, which has over 120 000 members – 20 000 of which are outside the UK – aims to provide services to Chinese engineers and win more members.

Vestas builds in China: Wind turbine manufacturer Vestas is to build a blade factory in the Tianjin Economic Development Area in north China. With an investment of $30m, the factory will produce 39 m-long blades for its 2 MW V80 wind turbines.

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