Show notes
This week, Allen, Joel and Phil discuss RES acquiring drone inspection company Sulzer Schmid, EDF Renewables entering the Korean offshore market, and Equinor's choice to downsize their renewables division.
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Allen Hall: I'm Allen Hall, president of Weather Guard Lightning Tech. And I'm here with the founder and CEO of IntelStor, Phil Totaro and the chief commercial officer of Weather Guard Lightning Tech, Joel Saxum. And this is your News Flash. News Flash is brought to you by our friends at IntelStor. If you want market intelligence that generates revenue, then book a demonstration of IntelStor at IntelStor. com. RES has acquired Solzer Schmidt. A Swiss firm specializing in autonomous drone inspections for wind turbine blades. This acquisition aims to strengthen RES's digital solutions and operations and maintenance services. Solzer Schmidt's 3DX blade platform uses autonomous drones for wind turbine blade inspections, providing 100 percent coverage and high quality inspection data, which is one of the reasons that RES acquired them, obviously.
Phil, there's just, does seem to be a number of inspection companies and O& M companies merging to grow bigger and bigger at the moment.
Philip Totaro: There is. And what's interesting about this deal isn't so much, the, the companies specifically getting together. It's the fact that yet another O& M company or an O& M generalist.
Is getting a specialist in doing something, whether it's blade inspections, whether it's gearboxes, whether it's anything. This has been happening over the past six or, nine months and we've been talking about it on, on Newsflash. And the reality of this is, this is yet another kind of piece of the puzzle where you're gonna see more and more consolidation in the O& M space because the generalist O& M firms need the, the specialists not only for the contracts that they've got in place but also these capabilities because a company like res can bring scale to what they're doing here and it's it's an impressive thing.
We didn't see any financial details of the deal disclosed, but it's still an impressive opportunity for for both companies to be able to. Continue moving forward together.
Joel Saxum: So, Sulzer Schmid and the ebb and flow of drone companies has kind of its own carved out spot. They do a lot of work in the, in Europe.
They recently had a contract to inspect over 4, 000 turbines with Vestas over in Europe. I think they've had it for two years. So that's very impressive on their side. They've gone in some of the technological directions of some of the others with You can fly your own, train your pilots on site fly your own drone.
Here's a smaller drone with an autonomous flight software as a, as as well as their, big enterprise drones to do inspections, but what's really, it really is a shining part of their business is their software as a service. So that 3DX blade platform, if you've ever used it is very, very good.
It's seamless. It's easy to look at inspections. The quality is there. So, big, good pickup by R. E. S. to grab Soltar Schmidt in my mind, probably the, the best fit for someone to grab right now of the large drone inspection companies, you have your Skyspecs and stuff, and they're starting to grow arms and legs themselves, whereas Soltar Schmidt has remained in the kind of that The niche that's good for an acquisition.
So kudos to RES for strengthening their internal business portfolio. And congrats to Solter Schmidt for the sale.
Allen Hall: EDF Renewables has acquired 100 percent of Shell Overseas Holding limited shares in West Sea Energy One, marking its entry into the South Korean offshore wind market. The company is now exploring the development of a large scale offshore wind project in South Korea.
Three identified zones have been, three identified zones have an estimated capacity of up to 1. 5 gigawatts and wind measurements have already been conducted across these areas. Bill, we have seen a number of large operators withdraw from Asia, essentially. Why is EDF headed into that void?
Philip Totaro: Exactly for what you just mentioned, Allen.
Because Shell is the one that they bought this stake from, and Shell is the one pulling out of Asia. So why does E EDF want to be in South Korea? Because they have confidence in the market and they were probably able to get these assets at, at a, particularly good price, so it, it gives them the opportunity to continue the development process, which is likely to be lengthy in, in South Korea, while they're still kind of figuring a few things out about the policy and, and the tax structure and whether or not they're going to have local content regulations and, and to what extent.
So it's a good opportunity for EDF because eventually South Korea will become a major global market in offshore wind. And, EDF gets to kind of get in early. At a, pretty fair price.
Joel Saxum: To follow on with what Phil said there, the South Korean wind market is interesting because like on shore, there's less than 2 gigawatts.
It's there's not very many. I think it's like 1700 megawatts or something in the whole country and the government of South Korea has large renewable energy goals, just like everybody, every other major country does in the whole rest of the world. So the only place that they're really. Is the best opportunity to grow, to get to those goals is an offshore wind play.
So, there's some near shore things. There's also a lot of floating offshore capability in South Korea there. So the offshore play will be something that is going to get developed in South Korea in the next, three, five, 10 years. So good looking out by UDF getting in there.
Allen Hall: Norwegian energy giant Equinor is planning to downsize its renewable energy unit to prioritize profitability over growth.
This move reflects the challenges faced by the renewable energy sector, particularly in offshore wind, including rising costs and low returns. Equinor will implement fewer renewable energy projects, fewer markets. Phil, we're really seeing a lot of withdrawals from European companies in other areas that tend to be focusing on Europe at the minute, and they're also limiting their renewable investment and going back to oil and gas for a little while.
Is that a long term strategy or is this just a short term recovery approach?
Philip Totaro: It's likely to be a short term thing but following on what we just talked about with EDF buying out Shell's interest in South Korea Econor is pulling out of Vietnam, Spain, and Portugal canceling projects there that had been in largely the early stages of development given the maturity of the company in those markets.
Or the markets themselves in the case of Spain and Portugal, they don't really have, Portugal's got a demo floating project. But beyond that, they, they just have a wishlist of, of offshore things they'd like to do. So I think that's also part of it that, they're, they weren't making progress fast enough, but it's also coupled with things that we've talked about on the show, for a number of weeks and months now where with interest rates being so high.
Companies can't get access to the volume of capital that would be necessary to fund all the projects. So they're starting to reprioritize and they're reprioritizing markets where, like in their case, Norway, where they think they're going to have better success at building something as opposed to some of these, these far flung markets.
So it's unfortunate. It is, as, as you pointed out, Allen, likely to be a short term thing where. When renewables becomes more profitable again, everybody, including the oil and gas companies, will pile back in, but for now, they're gone. They're scaling back.
Joel Saxum: So this is exactly as Phil saying, everybody's BP got their new CEO in last year, the statement was, we're going to return to profitability for our shareholders.
And it's making sure that they're protecting their, basically economic interests. Econ or we'll be back in the offshore wind world or not, not back, but they'll, they'll expand in it. But this is a, this is a, A temporary pullback to just make sure that all of their basically shareholders are happy.
Funny note here, their main shareholder, 67 percent of the company is owned by the Norwegian state, right? So the Norwegian sovereign fund owns or is a part of a lot of what Econor does. So to maintain that, they're wanting to de risk their operations, much like a lot of the other oil and gas majors are doing.